what do you think about measuring sustainability in an accounting measures and its effect on the auditing profession quality?
I think you will first need to decide on what metric you are going to use to measure sustainability. To do this you will first need to define sustainability and give it dimensions. Has anyone managed to do this in a generally cceptable way yet? I would be very interested. In all the articles I have seen sustaoinability is treated far more as an art than a science . . . But this has to be solved. Best wishes with your investigations!
I think the following papers might be a good help to you. Please check them out.
Is accounting for sustainability actually accounting for sustainability… and how would we know? An exploration of narratives of organisations and the planet
R Gray - Accounting, organizations and society, 2010 - Elsevier
“Measuring sustainability”: a multi-criterion framework
G Munda - Environment, Development and Sustainability, 2005 - Springer
Dear professors thank you for your appreciated comments and directions but as far as I know I did not face any accounting measures for sustainability yet.
What are the statements of financial position (Balance Sheet), statement of financial results (Income Statement), and statement of cash flows if not a presentation of the financial condition of the company? In fact, one of the considerations that auditors must make is whether the company is likely to continue as a going concern. If you consider sustainability to be the capacity of the firm to continue to operate, its profitability, capital structure, liquidity, and resources provide excellent metrics to assess. However, if you define sustainability in a different manner, different metrics may be required.
Dear Sammy you can also use weighted scoring model that can be a useful measures or concentration index of sustainability and of course you should consider the financial statements and other disclosures information which will help you to find your destination.
If you consider sustainability to be the capacity of the firm to continue to operate, its retained earnings may also be metrics of measurement. I believe sustainability measured with accounting measure will increase audit quality.
It would be helpful if you would define "sustainability." The literature does not seem to have settled on a clear and operational definition. Likewise, among doctoral students and professors, I often hear vague definitions that do not align well with precise metrics.
Sustainability of accounting could be effected on the events after the reporting period as well. I think accounting disclosures might be helpful to measure sustainability. I read a paper that accounting quality has been measured on audit fee. But not the audit quality.
I think Kenneth's comment is very meaningful. Sustainability is defined in many different ways and applied to different situations and entities. The financial sustainability of a company for example gives no indication of the ecological sustainability of the processes it uses in the course of its business. I suggest any worker in this field first defines what they mean by sustainability and then go on to develop a thesis based on that definition. Using words with ill defined meaning is a certain way to get into endless and futile argument. In my view the word should be applied to processes only, and the test of sustainability is the energy required to make sure that all the outputs of that process can act as inputs to other processes - so in effect there is no 'waste'. But that is just one possible definition!
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