Advanced Financial Accounting; Corporate Social Responsibility - Essay Example

? of Learning: Advanced Financial Accounting; Corporate Social Responsibility (CSR) Corporate social responsibility normally referred to as CSR covers the corporate citizenship, corporate conscience, the social performance and business sustainable development. CRS is a corporate self-regulation form that is mostly integrated in the models of most business. The policy of CSR operates is self regulated and built in a mechanism in which a business ensures and monitors its compliance with the spirit of ethical standards, the law as well as international norms. When employed, CRS aims at embracing responsibility for the actions of the business and encourage desired impacts through its operations on the consumers, environment, stakeholders, communities and employees (Kvaal and Nobes, 2010, p. 180). CRS aids the business’s mission and guides it to stand for the will of its consumers. Sustainability development embraces business ethics through applying ethics that examine moral and ethical principles that are common in any business environment. CRS ensures a sustainable development approach to the business’s economic development, responsible environmental management and social progress (Luez and Verrecchia, 2000, p. 100). This follows the fact that CSR helps the organizations to have continued commitment to contribute to the development of the economy at the same time behaving ethically to improve the life quality of the employees as well as the local society and community at large. Businesses over the years have been promoted through CSR strategies now that the public, consumers and the investors expect them to be responsible and sustainable (Milllon, 1993, p. 1). In selected cases, CSR may result in a number of environmental, social and economic pressures and has been regarded as a strategy to divert the attention of interested parties from the environmental impacts and negative social impacts. The above situation has led to scholars to argue that businesses tend to tame the sustainability concept to imply that it is more than just an environmental and social engagement that businesses can be able to easily accommodate (Neville, 2012, p. 37) Businesses focus their strategies on identifying and employing CSR forms that lead to win-win situations for the wider stakeholders and business. They consider CSR as an extensions of the existing management toolkit meant to enhance shareholders wealth through offering business new opportunities and this is can be achieved through sustainable development like coming up with financial value, improving their management system, encouraging innovation, transparency to stakeholders, continuous improvement, risk awareness and enhancing reputation (Sheeba, 2011, p. 95. ). Apart from considering CSR as a trade off or managerial distraction against profits, case proponents promote the idea of having the corporations taking charge of their social environment making it part of their main business activity. Including social considerations in the decisions of the business and employing a leadership role in social matters can also be looked at as means of promoting a light-handed strategy to regulations (Shim & Siegel, 2008, p. 81). CSR can end up reducing the future regulation prospects and be regarded as an alternative to business regulations. In such a context, CRS is hence mainly placed in the traditional framework of creating value for the owners of the business through putting more interest in the possibility of a win-win situation. Managing, understanding and responding to the expectations of shareholders can be looked at as self-interests that have been enlightened (Siegel & Shim, 2008, p. 29) Most businesses justify their approaches and strategies by referring only the positive correlations between profits, the activities of CSR and shareholders returns (Freidman, 2002, p. 63). This however should not be the case as any approach assumed by a business in relation to CSR depends on how ethical investment is defined and that the stronger the approach is applied, the higher the chances that ethical funds will raise complains on the lack of information needed to effectively asses the performance of CSR (Stoltz, 2007, p. 81). Another consideration is that the CSR doctrine has been widely employed in businesses but such businesses go further to associate their ideas with stakeholders, corporate citizenship and sustainable development. If CSR is not properly employed within any business, it can end up resulting in possible harm and can reduce the well being of the community as well as undermining the market economy (Vishwanath, 2007, p. 23). Political rhetoric and corporate mission statements that are meant to promote the stakeholder theory may look innocuous but are representation of a dangerous doctrine which undermines private property. Concerns have been expressed with regards to managers promoting their ethical image which ends up fueling the expectations of the public. Some of the business managers have admitted that legitimating strategies was almost impossible and counter-productive especially when dealing with cynical public. In some cases where the stakeholders are powerless, the managers can easily ignore them (Watson & Head, 2009,p. 72) One of the main components of CSR and sustainable development is accountability in all areas of the business. Accountability offers a mechanism that ensures social control. In most cases, it is the stakeholders who normally hold an organization accountable for their actions. From their perspective, they expect plural accountability in the responsiveness of constituencies’ interested multiplicity in the corporate performance. In addition, groups such as consumers, employees and the local community have the right to be informed as well as apply the sanctions and rewards through voice, loyalty and exit options (Watson & Head, 2009, p. 82). The stakeholder’s capability to impose sanctions and reward is significant in the process of accountability. Considering the pluralist of such a relationship, it is important that a consensus has to be reached involving all the groups on the relevant performance dimensions as well as on what is bad or good performance. Stakeholder’s accountability has been considered to be mutually beneficial with regards to business and stakeholders relationships (Carr, 2000, p. 218). A business that treats its staff decently is likely to reap benefits as a result of increased production. This implies that businesses have to be regarded for their efforts to evolve social expectations and attitudes if they wish to maintain their social license. However, in most businesses, this is not the case, the operations of most business are in such a way that there exists harmony of interests that are self-evident between the shareholders and the managers as well as other stakeholders (Briloff 2000, p. 53). It is not clear how businesses should react in case of a win-win situation that results in low hanging fruits. This has resulted to a conflict of interests and in most cases the shareholders claims are normally ignored by business. Shareholders accountability takes into consideration both the propositions involved. It is true that most businesses remain more concern with their image and not the substance of sustainability and citizenship (Boyce, 2000, p. 47). Both socializing and individualizing accountability forms contribute differently to the understanding of the self and relationships among different groups in a business. Accountability is used to reflect both the involved parties interdependence and separateness (British Telecommunication, 2003.p. 67). This brings in the issue of a communication framework within the organization which brings forth the supranational corporations era increasing the intention given to expanding the public involvement in businesses. Stakeholder accountability depends on the understanding of right to manage on the sides of management and the required corporation as the main tool for maximizing the wealth of shareholders (Brown, 2000, p. 50). The main concern in this case is from the society with regards to the impact such accountability has on the business and not the impact of the business on society. Consumers, employees and community groups have to be reported to and taken into consideration to the level that it benefits both the ultimate owners of the business as well as the corporate profits. Managers, who are considered to be equity capital agents have to remain accountable majorly to the shareholders when it comes to the making of decisions (Burritt, 2007, p. 17). CSR appropriates business aspects of the sustainable development shift including business risks and the economical use of resources in an effort t cut down on business costs and this has called for change in the businesses strategies. Businesses are expected to come up with fare strategies that put into consideration all the stakeholders and shareholders and that are to the best interests of the business, stakeholders and the community at large (Burritt 200, p, 82). Bibliography Boyce, G., 2000. Public Discourse and Decision Making. Accounting Auditing & Accountability Journal 13(1): 27-64 Briloff, J., 2000. The responsibilities of the CPA for fair corporate accountability. Financial Analysts Journal 22(3): 51-55 British Telecommunication, 2003. Just Values-Beyond the Business Case for Sustainable Development, BT: London Brown, J. 2000. Competing ideologies in the accounting and industrial relations environment. British Accounting Review, 32: 43-75 Burritt, R. 2007. Australian commonwealth entities: An analysis of their environmental disclosure, Abacus, 33(1): 1-19 Business in the Community (BITC). 2003. The Business Case for Corporate Responsibility, BITC: London Carr, A., 2000. Critical Theory and the management of change in organizations. Journal of Organizational Change Management, 13(3): 208-220 Co-operative Insurance Society (CIS). 2002. Sustainability Pays. CIS: Manchester Freidman, A., 2002. Developing stakeholder theory. Journal Management Studies 39 (1):1-21 Global Reporting Initiative (GRI). 2002. Sustainability Reporting Guidelines, GRI: Boston Kvaal, E & Nobes, C., 2010. International differences in IFRS policy choice: a research note. Accounting and Business Research, 40(2), pp. 173-187 Luez, C. and Verrecchia, R., 2000. The economic consequences of increased disclosure. Journal of Accounting Research, 38, pp. 91-124 Milllon, D. K., 1993. New Directions in Corporate Law communitarians, Contractarians and The crisis In Corporate Law.Washington and Lee Law Review 50(4), p. 1. Neville, Simon., 2012. BBC iPlayer top of the brands as tax scandal hits Starbucks and Amazon.The Guardian, [online] 25 December Available at: http://www.guardian.co.uk/business/2012/dec/25/bbc-iplayer-tops-brand-rankings [Accessed 15 February 2013]. Sheeba, K., 2011. Financial Management.Mumbai:Pearson Education India. Shim, J. K. and Siegel, J. G., 2008. Financial Management. 3rd ed. Oxford: Barron's Educational Series. Siegel, J. and Shim, J, 2008. Financial Management, 3rd ed, Barron's Educational Series, Beijing. Stoltz, A., 2007. Financial Management.Johannesburg:Pearson South Africa. Vishwanath, S. R., 2007. Corporate Finance: Theory and Practice. 2nd ed. California: SAGE. Watson, D. and Head, A., 2009, Corporate Finance Book and MyFinancelab Xl. 5th ed. New York: Pearson Education, Limited Read More