Social And Enviromental Accounting Reporting - Literature review Example

A research assignment on the social and enviromental accounting reporting (Author’s name) (Institutional Affiliation) Introduction Corporate social responsibility is a function of management that looks at the accountability of a company or organization to their surrounding environment. Better known as CSR, the system is one of the impacts of the adaptation of a globalised world. The practice of capitalism has over the years grown from western countries to all over the world. Capitalism entails the increase of a company’s output so as to maximize on the output. This has created a society where large companies are in control of the change in dynamics in all aspects of life (Kotler & Lee, 2005). One of the effects of the creation of multinational is the destruction of the surrounding environment. The improper treatment of the environment affects the ecosystem negatively giving rise to an unsustainable community. To solve this issue, companies are beginning to recognize the need to invest in the environment. The introduction of social environmental accounting reporting is one of the methods used by companies to give back to society. A number of leading companies are beginning to recognize the underlying issue that communities face at the hands of their activities. It is thus essential to recognize companies that place high emphasis on the need to adopt a culture of social and environmental counting reporting (Bacher, 2007). The focus of this paper is to provide an analysis of the corporate social and environmental accounting reporting. The paper provides a better understanding and awareness of CSR accounting and its adaptation by influential companies. The companies in question are the Australia National Bank and GlaxoSmithKline Company. The paper offers a literature review concerning research written on the latest forms of CSR. This is followed by the analysis of the some of the common theories used in the accounting process. Literature review (Hawkins, 2006) states that the practice of the corporate social responsibilities in the environment has become a growing concern in the global market. CSR activities are closely related to the observation of human rights. Corporations play a significant role in the growth and sustainability of the society that human beings reside. They are responsible for the provision of employment to able and capable youth who in turn earn a living. Corporations on the other hand are notorious for exploiting the community in one way or another. Most activities are geared towards making a profit without acknowledging the safety of the environment as a whole. The inception of the practice of CSR by large companies was impacted by the deterioration of the environment as a result of the pollution by the corporate companies explains (Bacher, 2007). (Kotler &Lee, 2005) describe corporate responsibility is the accountability of the corporations to the communities in the surrounding environment. The shareholders of such corporations realized the need to elevate the state of the environment. Most of the activities of companies are influenced by the need to make profit. The profit received is shared by a small number of the people in the community. This lives the majority of the population in the same economic position that they previously had. Introducing CSR activities improves the livelihood of such people making them part and parcel of the developing community suggests (Clesse, 2004). According to (Katz, 2010), the principles of accounting are vital to the management and control of any business. Companies are run by a number of stakeholders who have different interests vested in the establishment. There are a number of relationships recognized during the performance of business transactions. Some of the relationships include owners and managers, managers and the employees. All these parties have responsibilities to play in the success and function of the business. These responsibilities are measured though accountability that reports the success or failure or an operation writes (Subhabrtata, 2007). There are different forms of accounting theories used in the current business world. The application of a certain theory may be effective in one establishment but ineffective in another. It is therefore up to the management to decide the right theory to take on in the event of a transaction. The first form of accounting used in the global world is the normative accounting theory. The normative accounting theory is classified under the non empirical accounting. The theory relies of falsifiable statements and is thus unreliable when it comes to taking account of a decision concludes (Mallin, 2010). Theoretical background One of the theories that receive a considerable amount of exposure to date is the agency theory. The agency theory gets its roots from the traditional aspects of economics that define the relationships between owners and stakeholders. Introduces in the 1970s, the agency theory was created to define the different roles of various principals in an investment. The principals in this case are the shareholders and the managers. The shareholders have the bulk of the ownership rights in that they are responsible for coming up with the capital for the business. The managers of the other hand carry out the instructions of the shareholders whose interest is to grow their share capital (Hawkins, 2006). Managers are on many occasions presumed to rally for their own interest making the company vulnerable to mismanagement. The introduction of an outside party increases the certainty of accountability amounts both parties. The principals thus give the agency a significant amount of authority to monitor the activities of both parties. This ensures that both sides of the agreement to not overstep their boundaries during the conduction of business transaction. The application of corporate social responsibility by companies to their surrounding neighbors is dependent on the form of accounting reporting used. A number of accounting theories are not effective owing to the elements that they represent (Katz, 2010). History of CSRs in the two respective countries Australia is at the forefront of the observation of all the changing dynamics that are experienced in the corporate world. Most of the companies in the country have enlisted themselves as members of the CSR trademark. It was initially difficult to get companies to register as providers of such services. The circumstances have begun to change due to the focus of branding and public image. One of the companies in the country that has defined the growth of the economy is the National Australia Bank (Bacher, 2007). The bank is the second best performing company in the country making it influential in providing services to the community. As a member of the Advisory Council on Corporate Responsibility, the bank is one of the leading companies to embrace the observation of CSR accounting. The National Bank of Australia plays a key role in forming strategies which affiliated to helping the community. The company uses its position as a financial advisor to change the perception of the country about investing and saving. It thus sets and caries out the latest trends in regard to banking and financial investing. The bank also reports on the feedback concerning the reception of community to the introduced programs. The banks dedication to the welfare of the community is reciprocated in that it continues to record one of the highest rates of returns on each financial year (Hawkins, 2006). The United Kingdom is known for its long history that dates back to the 10th century. The country has thus used its political, social and economic prowess to maintain its success over the years. The countries economy is one of the most viable due to its observation of the social changes which affect the way business is performed. One of the company’s that is credited for contribution to the growth of the country’s economy is The GSK. Better recognized as the GlaxoSmithKline Company, the business is well recognized for its role in the pharmaceutical industry. GSK is one of the key brands in the country known for its growth in the global market. The company has managed to franchise all over the globe due to its recognized brand that has been developing over the years. The company is renowned for its immense contribution to the GDB of the economy (Katz, 2010). Along with its high performance in terms of the rate of returns, the company has managed to provide its employees with a sustainable lifestyle. GSK is credited for its contribution to the development of communities in the country. The activities range from educating less fortunate children, donating of money to needy communities and providing drugs at affordable prices to communities who cannot afford the normal prices. The business forms its policies with the observation of ethics that guide the management. One of their main focuses is providing drugs that sustain the health of the community in the long run. This in turn, caters for the needs of people who cannot afford basic healthcare and insurance. The company is accountable to the management that observes company policy (Subhabrtata, 2007). Types of research methods available The type of research methods used in the finding is reflective of the analysis provided. The research method used is in the computation of data is qualitative in nature. The paper approaches the question from the different points of views. The main focus of the information is based on the significance of corporate social and environmental accounting reporting. The paper looks at the reason for the investment of companies in the practice of corporate social responsibilities. The analysis places emphasis on the interview of two successful companies in and outside the country. Information is derived from the interview of key figures in both the national Australia bank and the GlaxoSmithKline Company. Qualitative research is ideal for this form of analysis due to the small number of participants. The samples of participants are thus representative of the company’s activities. Qualitative analysis does not require for the recording of data due to its basis on performance of interviews. Most of the information is derived from the daily activities of the company with the main focus on the history and trends experienced (Crowther & Bacchus, 2004). Discussion of findings The findings in each part of the analysis display the adaptation of the practice of the CSR accounting in current businesses. During the initial stages of the introduction of the practice of CSR accounting, most companies were reluctant to invest in the trade. This however, changed over the years owing to the advantages that companies received from taking part. Implementing CSR accounting by companies takes a considerable amount of research and examination due to the various forms of accounting theories. Some of the theories discussed are the agency and the normative theories. These are just but a few theories used by companies when accounting for the transaction and decisions amongst key players in the establishment (Kotler &Lee, 2005). The incorporation of corporate social responsibilities by companies in their policy has changed the dynamics of their performance. Companies that practice accounting reporting tend to attract an enormous amount of investors. This system is not only ideal for the development and sustainability of the environment. It also markets the corporation that takes on this challenge making it improve its image. A look at the Australia National Bank and GlaxoSmithKline Company displays the involvement of leading companies in the process. Their role in the practice of the CSR is reflective of their performance in that they record high rates of growth in each financial year (Werther, 2010). Conclusion The business world continues to change on a daily basis. Most of the changes are brought about by social effects that influence the way economies trade. The introduction of social effects such as globalization, communication and technology encourage the global market to change as a result. The need to maximize on profits has in turn influenced the business ethics that most companies uphold. This has changed the perception of the business world by the general public. Most of the corporations are known to invest in a venture for their financial gain. This has created an imbalanced society where the gap between the rich and the poor continues to rise. The introduction of the CSR accounting reports programs is thus one of the solutions for the eradication of this system. Reflection The following paper is a response to the analysis of the introduction and role of CSRs in the global market. A large number of companies have realized the benefits that come with the incorporation of the system in their policy. CSR continues to gain recognition amongst the best performing countries across the globe. CSRs can however not be put into effect without the implementation of an accounting theory. The theories that have been examined in this case are the normative and the agency theory. The paper places emphasis on the agency theory which is to date the moist practiced accounting theory. A look at the National Australia Bank and the GlaxoSmithKline Company displays the levels in which the practice of CSR accounting has grown. More companies continue to join the likes of the NAB and GlaxoSmithKline Company. Both companies represent different cultures and regions across the globe. Despite their differences, their policies represent the same goals and objectives making viable businesses in the future global market. References Bacher, Chris (2007). Corporate social responsibility. Cheltenham : Edward Elgar. Crowther, David. , Bacchus, Daniel. (2004). Perspectives on corporate social responsibility. Aldershot ; Burlington (VT) : Ashgate, cop. 2004 Clesse, A. (2004). The vitality of corporate social responsibility. Amsterdam: Dutch Univ. Press [u.a.. Hawkins, David. (2006). Corporate social responsibility balancing tomorrows sustainability and today’s profitability, Basingstoke : Palgrave Macmillan. Kotler, Philip. Lee, Nancy. (2005).Corporate social responsibility: doing the most good for your company and your cause, Hoboken : John Wiley & Sons. Katz, J. S. (2010). Competing for global dominance: Survival in a changing world. Silicon Valley, Calif: Happy About. Mallin, Chris. (2010). Corporate social responsibility: a case study approach Cheltenham : Edward Elgar. Nourick, Shari. (2001). Corporate social responsibility: Partners for progress. Edward Elgar. Subhabrtata, Bobby. (2007). Corporate social responsibility: the good the bad and the ugly. Cheltenham : Elgar. Werther, William. (2010). Strategic Corporate social responsibility: stakeholders in a global environment, Los Angeles: SAGE. Read More