• Internal Code :
  • Subject Code : BUACC 3714
  • University : Federation University
  • Subject Name : Accounting and Finance

The Stance and Initiatives of The Australian Accounting Profession on Corporate Social
Responsibility and Sustainability

Part-D

Corporate social responsibility refers to the act of giving back to society, by the business. As a business operates in society, it depends on it for various resources, including but not limited to manpower, water, electricity, etc. Also, the suppliers and vendors come to the business from society ensuring that their well being is also a responsibility of the company.

Further, the ill effect of the company's operations at times does affect the society negatively and to reduce or eliminate the impact of such effect, the companies do indulge in CSR activities, so that the positive effect of such activities reduces or supersedes the negative affect of operations.

Corporate social responsibility as well as sustainability has been gaining importance in recent times. Investors, employees, Governments, even society is questioning management on Corporate social responsibility and sustainability-related topics. The accounting profession in the new era is not limited to accounting for the numbers related to the business, as they exist, rather, the accounting profession has taken up a broader role, which covers activities, including but not limited to regulatory compliances, business advisories, various financial services, etc.

Since, the accountants are considered to be the owner of the data, based on which, various critical corporate decisions are taken, they are believed to have the required technical skills to be able to consider the impact of sustainability on the projects that the company is willing to undertake.

Each country’s financial reporting is guided by the conceptual framework of the Accounting standards set up by the regulatory body of the county, In Australia, such body is ASRB, the conceptual framework for accounting, applicable, has been focusing on ensuring that the financial statements prepared by the companies in Australia are useful for making decisions, by various stakeholders, who use the financial statements for taking the decisions, the objective is to make available the information which is relevant and can also be relied upon by the users of financial information and also helps them in deciding as to whether or not should they invest their resources, which are scarce in the company.

The conceptual framework as explained above is not restricted to the reporting of financial numbers about the business of the company, it extends to even the information, which is non-financial but is relevant for the users of the financial statements, examples of such information could be, the location of a new plant of the company being proposed to be set up, this will help the users in understanding the risk that they would be carrying if they decide to invest their money in the company and also, this information helps the users in understanding the environmental impact such project of the company could have, on the adjoining villages and also the opportunities that it will create for the people nearby. This information is thus, relevant and also goes in the direction of sustainability reporting, as the company would also disclose the positives as well as negatives of the new plant being proposed by the company to be setup.

In my view, the accounting profession can play a considerable role in ensuring Corporate Social responsibility and sustainability principles, being followed by the companies, as accountants are involved in deriving the impact of various business decisions that a company might take. While computing the impact that various such decisions would have on the image and goodwill of the company in the market, the accountants need to consider the impact of the CSR and sustainable practices being followed or not followed by the entity.

In addition to the conceptual framework for accounting, prevalent in Australia, The Corporations Act 2001 (Cth) also has two sections that impose the requirements to report information, which indirectly related to CSR. These sections are Section 1013D(1) and Section 299(1)(f).Section 1013D(1) imposes obligations on superannuation, life insurance, and managed funds to disclose the extent to which they take account of environmental, social, labour and ethical standards in their investment decisions.Whereas, Section 299(1)(f) requires companies to include within the details of their annual report of breaches of environmental laws and licences.

References:

Carol Ann Tilt, Corporate Responsibility, Accounting and Accountants, 2010, viewed on 28 May 2020.

Macquarie University, Sustainability in key professions: Accounting, 2010, An action research program.

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