Rapid development of accounting after the industrial revolution has lead accounting report to be used as the tool of responsibility for the capital owners. This has led to the capital owner oriented accounting. Consequently, enterprises uncontrollably exploit natural resources and social resources that lead to ecological damage and finally result in decreased welfare of human life. Capitalism, which is profit-oriented, has destroyed the balance of life through excessive stimulation of human economic potentials and led to lower prosperity and poorer social condition. In conventional accounting (mainstream accounting), the focus of enterprises are the stockholders and bondholders while ignoring other stakeholders. To date, in addition to the interest of management and capital owners (investors and creditors), enterprises are expected to attend the interests of employees, consumers and community. Enterprises are expected to hold corporate social responsibility for the parties beyond the management and capital owners. However, enterprises sometimes ignore this responsibility on reason that such responsibility does not contribute anything to the company. This is particularly true because the relationship between the enterprises and environments is non reciprocal , meaning that the transaction between the two does not result in mutual contribution. Discussion : What’s relationship between Social Accounting and Corporate Social Responsibility (CSR)? How Social Accounting work for CSR? Is it true CSR as a part of Social Accounting?
Enterprises are expected to hold corporate social responsibility for the parties beyond the management and capital owners. However, enterprises sometimes ignore this responsibility on reason that such responsibility does not contribute anything to the company. This is particularly true because the relationship between the enterprises and environments is non reciprocal , meaning that the transaction between the two does not result in mutual contribution
How to design Accounting Information System for CSR disclosure and activities?. Available from: https://www.researchgate.net/post/How_to_design_Accounting_Information_System_for_CSR_disclosure_and_activities [accessed May 12, 2017].
It needs news reporters or conscious person to explore the damages to the general public and let them give up their purchasing from the no responsible businesses.
Edwin,
The question could be looked at from practical perspective and believe literature is another. Anyways, I am providing some of my personal opinion as what happens in real world.
To inform several stakeholders such as regulators, investors, owners, communities and agents, the financial accounting information needs to be captured and reported either voluntarily or mandatorily.
Think about what information would be "required/reported" examples - General Ledger account level roll up to specific textual description as donation, tax reconciliation, community project, subsidies, support payments, education support etc....
Now all different types of accounting information will be part of any organisations financial statements. If I owned a company WAC $20 billion AUD (Public listed co), the question would be that if I invest in a system to capture the above financial accounting information, do you think the company's share price will increase or the value of WAC increase, the answer is "NO". One may term this as look good approach, there is no value add by reporting.
However, in a similar situation if a company discloses the warranty claims, product recalls and litigation issues, the share price may definitely fall. These impacts can be empirically tested and proven from financials.
The accounting system can be a guideline. But, personally, I do not believe the accounting system can prevent all of the irresponsible business. There are always high pay CPA to know how to play the game to hide items or modify the financial report in a highly acceptable way. That's always the reality and the academic researchers' gape. Besides the accounting system, the business owner, key staffs and the investors moral ' consciousness are an important factor to achieve the goal.
If all of the business owner, key staffs and the investors moral ' consciousness are high, there is not need for any new accounting system, that increase small business owners' accounting cost.
It's always the small business owner's burden to bear the idealizing images' redundant's regulations to pay for minority's immoral behavior. If news reporters can report those irresponsible businesses and the general public all agrees to support the responsible businesses and employees only work for responsible businesses instead of working for a higher pay but no responsible employers, that's the way to solve the root problem.
The issue on designing "an ideal" Accounting Information System for Corporate Social Responsibility is a complex matter. The consumer´s society in general should have the culture to restrain to use the goods or services from corporates that neglect the sustainable business practice.
I think that the person in charge the account system design should have broad social experiences, accounting and IRS auditing experience.
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