Accounting Theory and Analysis

This essay will address the following quote from the article of Australian CPA by Ian Nash and Adam Awty entitled "Just clowning around?" (Australian CPA, 2001). The quote is “Basically, environmental and social reporting is when the accounting profession eases into its Birkenstock sandals and becomes green, fluffy and friendly. Its the type of reporting that nobody in the market could possibly take seriously, and, even if it's on the horizon, it's a long way from becoming a regulatory and legal issue.’’ The essay will evaluate and provide opinion whether the quote is true or false by reference to the accounting theories.

Environment and Social Reporting

The Word Business Council for Sustainable Development (WBCSD, 1999) describes firms’ environmental and social reporting as continuing obligation by business to perform ethically and to be instrumental in economic development while enhancing the quality of life of the workforce, their families, the community and the public. According to Cullen, there are benefits from environmental and social reporting (corporate social responsibility reporting), it helps to make sure a values-driven culture is incorporated at all levels, management development, attraction for potential employee and give higher value for the firm in existing employees. CSR could act as a benchmark to evaluate firms’ performance within or across industries and act as an environmental management approach to communicate with stakeholders (Cullen, 2013, 320). This report has a critical role in strengthening firm accountability as it is commonly described as an instrument to impel firm policies and organization system in order to diminish unfavorable environmental and social effect. It is supported by the survey conducted by Economist online survey (2008), where approximately 55 percent from 1,192 global executives has stated that the firm put high priority to firms’ responsibility policy in order to make a better brand and reputation.

Positive...