The Development of Green and Ethical Accounting Practices as a New Accounting Discipline - Essay Example

? The Development of Green and Ethical Accounting Practices as a New Accounting Discipline Introduction Green accounting is deemed to be a significant mechanism of understanding the powerful factors of natural surroundings with respect to the economy. The information and data offered by environmental accounts are resolved to be in association to the involvement of natural resources in economic progress, and costs incurred, as a result, of resource degradation or pollution. Over the years, there has been increasing significance of business ethics and ethical resolution making, due to demands placed on business administrators by creditors, stockholders and other stakeholders affected by operations and financial performance of these businesses (Farouk, Cherian & Jacob 2012, p. 36). Anticipations of high principles of ethical corporate conduct are rising as corporations face economic and legal penalties for pursuing illegal and unethical practices. Businesses cause environmental degradation, which have negative impacts on society. Environmental degradation is an ethical concern among businesses and society. As a result, businesses have developed corporate strategies in order to address the growing concern of unethical behavior such as environmental degradation (Gowthorpe & Blake 1998, p. 178). This paper seeks to discuss the development of environmental and ethical bookkeeping practices as a new bookkeeping discipline. Green and Ethical Accounting Practices The advantage of corporate environmental bookkeeping initiative is recognized the capability, to establish and create consciousness regarding expenditures related to surroundings, which in turn assists in identifying the methods for avoiding and reducing such costs. This corporate environmental initiative has assisted in the improvement of the environment. The ecological costs that arise as a result of the financial results of a company’s operation may be established by means of environmental bookkeeping tool. The operational performance of an organization may be established with an aid of certain processes such as documentation and exposure of emissions of conservatory gases (Farouk, Cherian & Jacob 2012, p. 37). Aronson and Lofgren (2010, p. 21) argue that society commends for the ecological responsible conduct from businesses and government by investigating the environmental degradation and tragedies of world’s ecosystem. Businesses are given this responsibility by the society for solving the ethical troubles by considering either preserving the environment or promoting their profit. Wells (2013, p. 13) argues that there ought to be homogeneous and quantitative measures with an aim of controlling the business activities polluting the surroundings before executing a condition in which businesses are required to clean the effluence emitted by them. It is better preventing environmental degradation rather than avoiding since most of the ecological damages may not be restructured. Wells (2013, p. 18) recommends the establishment of environmental bookkeeping system in order to avert environmental degradation. The system deems the monetary measures, which have an impact on energy generation and utilization on environment. As a result of the process, the energy plant that highly affects natural resources is deemed and consequent actions needed are conducted. He also recommends that ethical predicaments may be resolved when ecological stewardship is put in terms of monetary way, and that achieves extra significance from business. The significance of the ecological predicaments has been augmented, as a result, of the continuous degradation of ecosystem and increasing ecological tragedies. Schaltergger & Burritt (2000, p. 44) argues that in order to entail ecological predicaments in normal life it is imperative to consider these predicaments with respect to legal, technical, economic, financial and accounting levels. In view of the ecological factors in terms of the economy for instance costs of products and services, organizations are capable of reducing the utilization of natural capital. In turn, this leads to savings of natural resources and address the ecological fulfillment of consumer health needs. In order for organizations to undertake the accountability, they have to experience the legal contemplation of the entailed in the ecosystem. The major source of accountability is due to noncompliance of the ecological legislative ensuing to sanctions. Hecht (2005, p. 28) recommended that the performance of the job may be assessed by means of documenting ecological costs and identifying ecological costs with respect to financial and bookkeeping perspective and their relation with financial revelation. In modern business environment, the execution of green bookkeeping is deemed to be a significant factor. However, the shortcoming of green bookkeeping is lack of suitable executing techniques. Environmental preservation and economic development are challenging aspects for developing nations. Power generating and power-reliant companies are usually under pressure to execute green bookkeeping. Organizations in all sectors of the economy are presumed to be executing green bookkeeping tool to a certain degree. Wells (2013, p. 21) suggests that organizations can have certain external and internal benefits by means of executing green bookkeeping system. He argues that conservatory gases bookkeeping emission entails, tracking emissions, bookkeeping and exposure. Firms and suppliers may develop a communication process by executing conservatory gases accounting that would result to costs reduction. The point is that the organization may reduce costs and achieve certain benefits related to ecosystem. Farouk, Cherian & Jacob (2012, p. 39) investigated the concepts of green accounting through exploring the methods, to create the ecological exposure, which enables the government to use and make organizations liable for their externalities. It is worth noting that, as consideration for the ecological bookkeeping increases, there is an analogous increase in assessing the ecosystem performance. In recent years, businesses had been attempting to integrate business policy and environmental preservation. This integration endeavor is, as a result, of government incentives and society’s consideration for the green accounting. In coming years, organizations will be experiencing challenges in the establishment and implementation of corporate strategies, which are concerned with green bookkeeping. Internal accountants of organizations will work along with ecological engineers in order to educate them about the methodologies entailed in ecological responsibility and the statistical methods required to assess compliance with the ecological regulations (Schaltergger & Burritt 2000, p. 47). Individuals who criticize green accounting argue that it is impossible to execute a standardized ecological accounting system. Although, execution of standardized ecological accounting system is difficult it is imperative for organizations in an economy to conduct green accounting following standardized principles. It is difficult to adopt an international standardized green accounting system due to diverse social economic settings of different countries. However, this does not rule out development of international green accounting principles. There are certain barriers and limitations of implementing green accounting in organizations. Business managers and accountants may not acknowledge the reality that, projects that violate critical environmental functions will not be permitted although they are efficient and profitable. Environmentally inclined managers will persuade customers to accept accountability for a larger share in their involvement when it comes to environment preservation activities (Hecht 2005, p. 30). There are some researchers suggests that the concept business ethics is a term that employs incongruous terms since business seeks, to optimize gains from its activities while ethics means a different basis for trade practices. In recent years, there has been an attention in ethical considerations by professional commerce organizations and corporate leaders partly due to the pressures of societies that have had to bear the cost of unscrupulous commerce operations of few traders and corporate collapses. All individuals have some internal understanding of what constitutes ethical conduct, but the definition of ethics is shaped by societal, cultural, professional and personal values, which are difficult to specify (Gaffikin 2007, p. 1). While studying ethics issue, there are some fundamental considerations on which to replicate. They entail questioning the degree to which the following influence attitudes to establishing what comprises moral conduct; religion, selfishness, conscience, justice, virtue, rights, respect and utilitarianism. These fundamental moral considerations impact on how individuals understand ethics (Gaffikin 2007, p. 2). Individuals who argue against ethical accounting practices cite the problematic nature of explaining what entails business ethics. Society considers that they have a right to clean environment and right to access the perfect information in relation to financial performance and operations of businesses. Environmental degradation as a result of business operations would deprive society the right to clean the environment. Failure to conduct green accounting by firms will result to deprivation of the right to perfect information (Jeffrey 2012, p. 132). Various corporations have responded to the increasing society concern about ethical resolution making, ethics and principles of integrity by studying their corporate cultures. These corporations have made ethics and moral conduct by its workers a key component of their corporate policies. Corporations that adhere to the practices suggested for effectual ethics programs, create official printed ethics principles, assign task for morals program to an employee who communicate morals principles, reports to senior administration, and develop measures to detect infringements. These steps assist in ensuring attainment of the corporate ethics goals (Jeffrey 2012, p. 135). The significance of principles of integrity and ethics is significant to members of a profession. Clients depend on accountants, to execute their work with the utmost degree of correctness and ethical integrity. The stability of free market structure depends on reliance that the society places on fair and accurate exposure, which is substantiated through an autonomous audit process. Evidence of the significance of high ethical principles for accounting professionals is noticeable in the securities rules and bookkeeping regulations in the United States. The significance of ethical principles is also apparent in the codes of behavior adopted by bookkeeping professional organizations (Jeffrey 2012, p. 138). Conclusion In recent years, there has been the development of green and ethical accounting practices in governments and businesses. Green accounting practices have been developing due to the growing significance of preserving the environment for economic development and sustainability. Governments and organizations are adopting strategies and policies aimed at promoting green accounting. Green accounting is related to business ethics especially in terms of financial reporting. Through corporate social responsibility and corporate strategies, corporations are increasing adopting green and ethical accounting practices. Therefore, green and ethical accounting practices are developing as new accounting discipline. Reference List Aronson, T & Lofgren, K. G. (2010). Handbook of environmental accounting, Edward Elgar Publishing, Cheltenham. Farouk, S., Cherian, J. & Jacob, J. (2012). Green accounting and management for sustainable manufacturing in developing countries, International Journal of Business and Management, 7 (20), pp. 36-39. Gaffikin, M. (2007). Accounting theory and practice: The ethical dimension, University of Wollongong, Wollongong. Gowthorpe, C. & Blake, J. (1998). Ethical issues in accounting, Routledge, London. Hecht, J. E. (2005). National environmental accounting: Bridging the gap between ecology and economy, Routledge, Washington. Jeffrey, C. (2012). Research on professional responsibility and ethics in accounting, Emerald Group Publishing, Bingley. Schaltergger, S. & Burritt, R. (2000). Contemporary environmental accounting: Issues, concepts and practice, Greenleaf Publishing Limited, London. Wells, G. (2013). Sustainable business: Theory and practice of business under sustainability principles, Edward Elgar Publishing, Cheltenham. Read More