Sustainable Development to Reduce the Risk and Ensure Better Development - Essay Example

The increasing demand for greater accountability as seen from the growth in the corporate organization can be seen from the changes that the world has presented. The fact that traditional accounting and financial recording method cannot provide the required sustainability has increased the pressure on the professional accountants and has made them look towards ways of achieving sustainability. Sustainability is seen both as a challenge and an opportunity for the accountants. The accountants have to understand and realize that government, society and individuals have an increase interest in identifying the contribution of the business towards environment, social and economic which the accountants have to provide. This requires an increase role and effort on the part of an accountant to ensure that complete description regarding the different areas are provided so that the external agencies are satisfied. This essay presents the manner through which the role of accountants has increased in maintaining sustainability so that better results for the business can be determined. This paper further looks to present a complete picture of sustainability and ensure proper sustainable development to reduce the risk and ensure better development and abiding by the professional code of conduct. Before moving on it is important to understand what sustainability development means from the view point of accountants. Different definitions from different renowned authors and scholars have been provided in this direction but the best one fitting according to the accountant criteria is development which helps to ensure that the present needs are met but doesn’t even compromise on the future generations and ensures that they are able to meet their needs (Deegan, 2002). This means that accountants have to keep in mind the longer perspective and based on it needs to take decision. This includes different parameters like the investment avenues, waste treatment or thrown away without providing the required changes to be ensure that future potential is not affected is an area which accountants need to lay stress on. This is pure sense means that the accountants have to ensure that true and correct picture is provided which helps to ensure that the resources which are used by the business doesn’t affect the future potential capability and not using it in a way which will affect future generations. Instead it requires that the accountants provide complete and true picture of the scenario and brig forward to the people the different areas which has an effect on economic decision with respect to natural environment, social conditions and the overall use of resources of the society (Morhardt, 2009). It has even been identified that many accountants look towards using corporate social responsibility and sustainability by interchanging them with each others. Instead the accountants have to understand the sustainability is a much wider concept as compared to corporate social responsibility and aims at long term future potential of the business by ensuring proper use of the financial, natural and social capital. Corporate social responsibility on the other hand is a short term concept used for short term issues and developments (Dellaportas, Gibson, Alagiah, Hutchinson, Leung and Homrigh, 2005). The role of accountants to ensure proper sustainable development strategies and bringing forward the actual issue in front of the common people increases due to additional pressure from different areas. The increased pressure from government bodies to ensure that environmental degradation are not carried out by organizations has made it important that accountants clearly identify the issues and present is before the people. Along with it the increased role of consumer organization and non-governmental bodies have increased pressure on the accountants to ensure transparency and clarity by highlighting the steps taken by the business with regard to sustainability development (International federation of accountant. 2006) The risk for the business with identifying the issues of sustainable development increases due to the different challenges which the situation creates. The inability of the business to meet the requirements will result in risk pertaining to strategic, business and reputation for the entire enterprise. This makes it imperative that the accountant looks towards furnishing complete and true picture regarding the manner in which different aspects of sustainability development has been looked at. Bringing incorrect information in this regard would thereby make the accountant liable as it is his role to ensure that correct and true picture regarding the issue is provided to the general public and interested parties (Moradzadeh & Hamid, 2006). The fact that government has become strict and looks towards ensuring that the organization takes steps to reduce environmental harm requires that a framework is developed by the business which aims at reducing environmental degradation. This could otherwise result in risk as additional cost will be imposed through fines on the business which would increase the cost of capital and would make it difficult for the business to continue their operations. This requires that the accountant takes the sole responsibility of providing the correct information and looks towards disclosing all material facts as otherwise the accountant will be held responsible for the acts. The accountant thereby has to act fair and ensure that all information pertaining to the situation is disclosed for better results (Gray, Owen and Adams, 2006). It should also be noted that organizations that abides with the sustainable development requirements are able to find better opportunities to innovate and modernize their overall development strategies. This is because of the fact that each group is able to provide their support which increases the financial viability of new developments. This is an area which an accountant needs to understand and gauging by the different benefits that will accrue towards the organization has to ensure better sustainability. Accountants have a role in ensuring that the organization they are looking after is abiding by the different legal requirements. Highlighting the sustainability development and ensuring clarity in brining forward the issues will ensure that the accountant has acted in fair interest. This will help to bring forward the actual situation and will act as a guide through which the business will be able to improve their operations (Bebbington, 1997) The role of an accountant multiplies invariable due to the fact that it is his responsibility to ensure that through his actions the organization is able to demonstrate understanding and efficiency so that sustainable business practices can be implemented. To ensure sustainable business practices the accountant has to ensure that clear analysis and reporting which is transparent, accurate and true to the actual situation is provided (Lamberton, 2005). This aspect includes both the financial and the non financial transactions so that the users of report are able to gauge the efficiency and the manner in which the organization was able to gain efficiency. This will promote their interest over long term growth and will have a bearing on the shareholders wealth as this will help to multiply their wealth and deal with the business challenges in an effective manner (Carol & Whelan, 2009) It has to be understood that the role of accountant is not only related to collecting, analyzing and reporting sustainability related activities but has a much wider role. The fact that accountants are also involved in various decisions and especially for decisions which can have an impact on the business decision it is important that the accountants oblige with their role. This will require that the accountants clearly highlight the issue and especially institutions where decision have been taken after consultation with the accountant it is their responsibility to highlight the sustainability related activities which is true (Francesca & Citterio, 2009). The role of accountant multiplies as decisions which a business takes are made after consultation with the accountant so that better financial and non financial feasibility can be identified. This should be a situation which should make the accountants understand their contribution and should make the management understand the effect of the decision on long term prospects of the business. This will help in guiding the management in taking decisions which looks towards developing sustainable activities and will help the organization to be able to ensure better opportunities of growth in the future (Baxter, Bebbington and Cutteridge, 2002). This requires that the accountant is able to collect the relevant information pertaining to sustainability development by using the skills that he has. Sustainability in an organization depends on a large extent on production, analysis, reporting, and assurance regarding the information which has been collected and includes both financial and non financial information. This thereby makes it necessary that the accountant understands the role and looks towards improving the overall conditions so that shareholders value grows over a longer period of time The different roles and responsibility of the accountant with regard to maintaining sustainability in the organization includes the following (Carl & Fredrik, 2003) The accountant has to ensure that policies which are developed within the organization addresses the issue of sustainability, their application and monitoring over the entire organization so that the risk associated with it can be identified. This will help in developing risk mitigation strategy and will help to reduce the impact of the decision on the business outcome The accountant has to look towards increased involvement with the logistics management especially the production units so that information relating to the purchasing policies and standards can be identified. This will help to find out whether the business is abiding by the sustainable requirements or the decision taken by them looks towards environmental or social degradation Increasing the role of stakeholders by ensuring constant engagement with them so the readily accessible information pertaining to the different developments are passed on which will improving the monitoring process (Frost, 2007) The accountant has to find out the different environmental codes which are applicable for the business and has to integrate those codes in their working scenario so that the business is able to abide with the sustainable development policy. This will also help in the development of management information system and will provide the basic developments through which the business is able to ensure better sustainability policies The accountant also has to ensure that different emission trading schemes which is applicable to the business is clearly identified so that better information can be collected, interpreted and monitored. This will help to provide a direction through which the various activities of the business can be monitored and will help to provide important clues pertaining to sustainability related activities (Federica & Guthrie, 2009) The accountant has to thereby work on the different aspect which looks towards improving enterprise sustainability through accountability, transparency, governance, risk management, and competitive advantage. This will add towards adhering to the different guidelines and objectives so that better sustainable development policies can be developed which will help to improve the working style of the business (Bebbingon, 2007) The challenges for an accountant is immense as while looking towards ensuring sustainability development the accountant has to ensure proper strategy to collect, interpret and implement the sustainability related information into the mainstream business. This will require a lot of work and integration strategy so that better development of the strategy is available for the business. The fact that the accountants are well placed to handle the different responsibility due to the knowledge and skills they have has increased their role and pressure in ensuring that the accountants are able to perform and deliver according to the standards (Adams, 2002). The different reasons and opportunities that sustainability provides for the organization and the role of the accountant in ensuring that the business is able to achieve the required inputs has led towards the use of increased efforts on the part of the accountant. This has increased the pressure on the accountant as they have to ensure that the business abides with the requirements and not being able to do so would make the accountant responsible for the acts that the organization has taken (Yongvanich & Guthrie, 2007). Sustainability thereby presents different opportunities and risk for the accountants which have to be dealt in the most diligent manner. With increased importance being given to environment and social considerations the role and responsibility of an accountant has multiplied as they have to ensure that the business is able to yield efficiency at the same time ensure proper sustainable development. The role of accountants who are part of the decision making process and involved in organization which deals in environment related activities have to ensure proper monitoring, gathering and analysis of the material information so that better sustainability related information can be gathered. This thereby increases the role of an accountant and accountants who are unable to match with the requirements of the job will be held responsible for the acts. The fact that accountants are well placed to handle the situations which thereby will ensure that they are able to deliver on the required standards and ensure that the organization abides by the sustainability development requirements References Adams, C. 2002. Internal Organisational Factors Influencing Corporate Social and Ethical Reporting: Beyond Current Theorising. Accounting, Auditing and Accountability Journal, 15 (2), 223–250 Baxter, T., Bebbington, J., and Cutteridge, D. 2002. Spe 73968: The Sustainability Assessment Model (Sam), Society of Petroleum Engineers Inc. Bebbingon, J. 2007. Changing Organizational Attitudes and Culture through Sustainability Accounting. Sustainability Accounting and Accountability, Routledge, Abingdon Bebbington, J. 1997. Engagement, Education and Sustainability: A Review Essay on Environmental Accounting. Accounting, Auditing and Accountability, 10 (3), 365–381. Carl, H. & Fredrik, V. 2003. The global reporting initiative and corporate sustainability reporting in Swedish companies. Corporate social responsibility and environment management, 10, 153-164 Carol, A. & Whelan, G. 2009. Conceptualizing future change in corporate sustainability reporting. Accounting, auditing & accountability journal, 22(1), 118-143 Deegan, C. 2002. The Legitimising Effect of Social and Environmental Disclosures – A Theoretical Foundation. Accounting, Auditing and Accountability Journal, 15 (3), 282–311. Dellaportas, S., Gibson, K., Alagiah, R., Hutchinson, M., Leung, P., and Van Homrigh, D. 2005. Ethics, Governance & Accountability, a Professional Perspective, JohnWiley & Sons Australia Ltd, Milton, Qld Federica, F. & Guthrie, J. 2009. Sustainability reporting by Australian public sector organizations. Accounting fourm, 33, 89-98 Francesca, B. & Citterio, A. 2009. Sustainability report in small enterprises. business strategy and the environment, 18, 162-176 Frost, G. 2007. The Introduction ofMandatory Environmental Reporting Guidelines: Australian Evidence. Abacus, 43 (2), 190–216. Gray, R., Owen, D., and Adams, C. 2006. Accounting and Accountability: Changes and Challenges in Corporate Social and Environmental Reporting, Prentice-Hall, London International federation of accountant. 2006. Why Sustainability Counts for Professional Accountants in business. Retrieved on September 11, 2012 from www.ifac.org Lamberton, G. 2005. Sustainability accounting- a brief history and conceptual framework. Accounting forum, 29, 7-26. Morhardt, J. 2009. Corporate social responsibility and sustainability reporting on the internet. Business strategy and the environment Moradzadeh, M. & Hamid, A. 2006. Corporate sustainability reporting. Monthly periodical of the accountant, 177, 17-25. Yongvanich, K. & Guthrie, J. 2007. UK preparers perspectives on intellectual capital reporting media. Paper presented to the EAA Congress, Lisbon, 25-27 Read More