Advanced Financial Accounting (The FASB and IASB) - Essay Example

?ADVANCED FINANCIAL ACCOUNTING 12 'Corporate social responsibility (CSR) reporting to stakeholders is based upon the assumption that companies have wider responsibilities than simply to make money for shareholders.' Should companies produce CSR reports to stakeholders in addition to traditional financial reports to shareholders? Discuss the information that might be included in a CSR report to stakeholders, giving illustrations and examples. Overview of CSR reporting Corporate social responsibility has been an integral part of corporate functions since time immemorial. It is very difficult to trace the roots of the phenomenon or how it all started but one fact is clear that corporate social responsibility has come to stay with the corporate world. Perhaps the undeniable fact is that the benefits of undertaking corporate social responsibility cuts across several quarters of business functioning including to the ordinary customer or citizen who lives in the neighbourhood of a given company. A clear instance can be given as a multinational company that makes regular end of year donation to given Children’s Hospital in all countries where they have their branches. In such a situation, the ordinary citizen in the said country will benefit from the donations that are done to hospital but the benefit will not end there as the publicity that the company will receive from the media by way of broadcasting their donations as well as the good will that beneficiaries will develop will lead to the eventual expansion of the company in terms of the company’s customer base. It is against this background that The Corporate World (2011) explains that corporate social responsibility is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” Having realised the framework around which corporate social responsibility operates, it is important to make the point that corporate social responsibility should not be undertaken by companies merely for the fact that they are hopeful of some kind of benefits to derive in the long run. Rather, it is important that these companies understand the rudiments and core principles that guide the operation of corporate social responsibility so that all parties involved the act benefit equally. Identifying the parties involved in corporate social responsibility as stakeholders, Haddija (2006) state that the only way that stakeholders can be assured that companies are interested in corporate social responsibility not just because of their share of the benefit is to implement and effective corporate social responsibility reporting system. The role of stakeholders in CSR Reporting There are three major stakeholders who can be identified as far as corporate social responsibility reporting are concerned. These stakeholders are staff and managers of companies, shareholders of companies and beneficiaries of corporate social responsibility. Each of these stakeholders have very important roles to play as far as corporate social responsibility reporting is concerned that cannot be compromised in anyway (Prempeh, 2008). Management and Staff In the first place, the staff and managers of various organisations who undertake corporate social responsibilities are enshrined to keep comprehensive data at three stages of any corporate social responsibility project. These three stages are pre-implementation, implementation and post-implementation stages. Before any corporate social responsibility project is undertaken, the leadership of the institution is expected to set a budget and planning team whose responsibility will be to estimate how much the company wishes to spend on the entire project. The planning and budget are integrated in such a way that the entire plan of what is expected to be achieved in the course of the corporate social responsibility project but have an even allocation of funding. The role of the planning and budget team and by extension the role of the staff and managers in the corporate social responsibility reporting therefore becomes to give accounts of proceedings of what went on during the project and how monies and resources were used. As much as possible, what is stated on the planning sheet must be achieved at the time of reporting. Monies and resources must also be according to plan as under spending and over spending both have implications to the success of the project (RAAS Reporting, 2011). Shareholders The second group of stakeholders in the corporate social responsibility reporting are shareholders. It is no secret that the biggest of the world’s corporate social responsibility are very large multinational and international companies. One unique feature about these multinational and international companies however remains that these companies are corporations are backed by very large shareholder base. As much as the shareholders contribute to the growth, success and development of the companies, they are also very particular about the profits they make in the companies. As a matter of fact, the core reason for investing in any company as a shareholder is to make profit. Because of this situation, shareholders are always very particular about accountability with all projects and programs in the company that demands management to visit the coffers of the company to fund any external projects. Because of this situation, shareholders are always at the accounting end, receiving detailed accounting of why and when money and resources were taken from the company and what they were used for. Due to this, shareholders always take briefing of accounts records and data after all major corporate social responsibility project. Baker (2006) observes that an effective accounts reporting system to shareholders after all major corporate social responsibility project enlightens the image of the company in the sight of prospective shareholders and actually attracts more shareholders to the company. It is for this reason that corporate social responsibility reporting has been taken to a global standard with the global reporting initiative. Beneficiaries The final stakeholders who play very crucial role in corporate social responsibility reporting are beneficiaries of the actual projects. This group of stakeholders play very important role in corporate social responsibility reporting. The problem however is that sight is commonly lost of their role and the importance of it. However, beneficiaries are in a position to report on the corporate social responsibility in the form of giving feedback on the impact of the corporate social responsibilities on their lives and how they wish things were improved. Based on such feedback, organisers are always in a position to make improvements in future corporate social responsibility projects should they pay attention to feedback from beneficiaries. In collecting reports from beneficiaries, organisers can adapt several methods and strategies including the use of questionnaire and interview. Through these research instruments, tangible primary data can be collected on the influence of the particular corporate social responsibility on the life of beneficiaries and on the kind of changes they wish to receive in future corporate social responsibility projects. REFERENCE LIST Baker M, 2006, ‘The Global Reporting Initiative’, Retrieved December 4, 2011 RAAS Reporting, 2011, ‘Sustainability Reporting Standards’, Retrieved December 5, 2011 Prempeh R. D. 2008, ‘Corporate Responsibility and the Company’, PrintMark Group Limited: Durban Hadijja F. G. 2006, ‘The Basis of Corporate Social Responsibility for Cotemporary Businesses’, Print Time Press House: London Corporate World, 2011 ‘What’s Wrong with Corporate Social Responsibility?’ http://www.corporatewatch.org/?lid=2678 Read More