What is Social Accounting?

Any business accountant of an enterprise or any organisation can describe the conditions of that organisation. Social accounting is that kind of movement by which everyone can analyze the same thing as like a business accountant. The main aim of social accounting is to produce data, indices and other information to help everyone about an organisation.

Social accounting is also known in various names. These are social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or sustainability accounting. This is actually a procedure of communicating in which the social and environmental belongings of organisations (NGO, Charities, may be Government agencies etc.) are included. This is a way by which an organisation can express the level to which it meets its societal or ethical goals.

Social Accounting

Social accounting is distinct from evaluation in that it is an internally generated process whereby the organisation itself shapes the social accounting process according to its stated objectives. In particular it aims to involve all stakeholders in the process. It measures social and environmental performance in order to achieve improvement as well as to report accurately on what has been done.

There are some key factors in social accounting by which everyone can understand the difference between social accounting and conventional accounting. Main focus of social accounting is mainly on issues which can develop a correlation in between society and organisation. In maximum aspects social accounting is not focusing on financial data but sometimes it needs financial data for making a report. The purpose of social accounting is to be liable to a large number of stakeholders.

With the help of these reasons social accounting may be described as “Social accounting is the voluntary process concerned with assessing and communicating organizational activities and impacts on social, ethical, and environmental issues relevant to stakeholders”. – Crane and Matten Material on Social Accounting

With the help of social accounting it is clearly understandable that organizations or companies manipulate their outer environment during their performance and should consequently account for these belongings as part of their standard accounting practices. The intelligence of the accounting is nearly closed to economic concept of externality. It offers a substitute explanation of important economic bodies. It has a prospective to disclose the apprehension between following economic profit and chase of environmental and social objectives.

Reasons for taking over Social Accounting by Organizations

The principle of social accounting for accountability is intended to sustain the search of society’s aim. These objectives can be defined in the term of social and environmental desirability and sustainability. The society is seen profit in various ways with the help of the implementations of social and environmental approach to accounting. Such as, it honours stakeholders’ rights of information, it balances corporate power with corporate responsibility; it increases transparency of corporate activity; it identifies social and environmental costs of economic successes.

To sustain and make easy the success of an organization’s own idea, social accounting is considered mostly for the standard of management control, because this is concerned with self reporting on a systematic way which is considerable. But all the individual reports are frequently referred and those are known as societal audits. After implementing this kind of social accounting the organizations also benefited in various aspects. It increases information for making a decision; it is more exact product; it is enhancing illustration supervision as well as public relations; it is identifying social responsibilities; and also it is identifying market development opportunities.

For these given reasons everyone can understand that after taking over the social accounting the corporate world or the organizations can reach to a profitable condition. So anyone can suggest to a corporation to take over an improved social accounting.

Scope of Social Accounting

Social Accounting allows a co-operative or social enterprise to build on its existing monitoring, documentation and reporting systems to develop a process whereby it can account fully for its social, environmental and economic impacts, report on its performance and draw up an action plan to improve on that performance. Through the social accounting process an organisation can understand its impact on the surrounding community and on its beneficiaries and build accountability by engaging with its key stakeholders. In this way it can prove its value and improve its performance. Basically, social accounting involves clarifying what a co-operative or social enterprise does, what it is trying to achieve and who it is working with. Then, on the basis of this, it collects quantitative and qualitative information and data which relates to its overall objectives and underlying values. This usually lasts one year and runs concurrent with the financial year. At the end of the social accounting year the organisation brings all the information together in the form of social accounts that are independently audited and after revisions the social accounts form a Social Report.

Qualities of Social Accounting

If the social accounting is good then all the views and accounts of all main stakeholders will be reflected. In good social accounting the communication is mainly two way communications with the main stakeholders. Good social accounting compares different period’s data with other organizations and makes relation with external standards. In good social accounting all the various areas of organizations are shown. In good social accounting changes is also happened due to changing of stakeholders expectations. Actually good social accounting has a tendency to make over the good aspects of stakeholders. A good social accounting always makes correlations in between system and procedures to control and estimate the effective institutionalization carefully. With the help of good social accounting all stakeholders can get a brief description about all the accounts and reports. They can get all these reports in the basis of their needs. In all characteristics of good social accounting one of the most important characteristics of social accounting is to support the continuous improvement. That means a good social accounting always encourages an organisation to develop and increase its improvement continuously and it also helps an organization to enlarge its area of assessment.

Global Standards of Social Accounting

There are main three standards which are established or prepared for making social and environmental report. These are 1) Global Reporting Initiative (GRI), 2) SA8000 and 3) AA1000S.

  1. Global reporting initiative is actually famous as GRI. It was started in the year 1997. It was tying up with United Nations Environment Programme (UNEP) to work on social accounting for various organizations. The main aim of GRI was to prepare the report about all the steps which are related with economic, social and environmental sides of an organization. In one word the main motto of GRI was to make a sustainable report of organizations. GRI reaches to a success in making of sustainable reports.
  2. SA8000 is a social accountability standard. It was also established in the year of 1997. It covers a number of key labour rights. Working time; strained work; unfairness etc are some examples of key labour rights. With the help of these key labour rights SA8000 could make a report and all the examination, making facilities can be authorized as SA8000 compliant. SA8000 was developed through consultation with a large number of stakeholders including workers, employers, NGOs and unions. In the year of 2006 it had authorized approximately 900 facilities in 50 countries.
  3. In the year of 2002 there was another standard AA1000S established. This was the first attempt to give a logical and healthy source for assuring a public report. It was making reports with the help of the principles of accountability and stakeholder engagement. The standard was specially intended to be reliable with the GRI sustainable reports.

Bookmark the permalink.