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Many corporate boards are now agreed on the need to take responsibility for any potential or actual social impact caused by their companies’ activities. This...
Answers
(a) Key issues include:
- Staff: Increased wage levels or new working conditions
- Social: Access to education and stakeholder appraisal
- Educational: Public social development in schools and businesses
- Cultural: Increases in social responsibility and social development
- Environmental: New production processes with reduced environmental damage
- Legal: New laws or statute books
- Shareholders: Profit levels, dividend pay out ratio etc
- Customers: Product quality and safety
- Government:: Level of taxes paid from profits.
(b) Benefits
- Development of policies and strategies based on understanding of current performance and future expectations
- Targeting of management systems to deliver expected outcomes
- Strengthened relationships with all key partners and stakeholders
-Enhanced public reputations
- Competitive advantage to secure long term viability
- Tax relief from the government
- Avoiding Government intervention through regulations and imposition of penalties.
(c) Practical challenges
- There are no laws e.g the Companies Act which will reinforce the reporting of the social activities of the firm. The Companies Act reflects the interests of the shareholders and not the society as a whole.
- Markets do not reward ethical companies i.e social responsibility accounting is not reflected in companies market prices.
- There are no common accounting benchmarks to measure the attainment of social responsibility.
- A company’s management will be biased in that it will not be willing to report company activities with negative impact on the society.
- It is dismissed as a public relations issue, not an accounting one.
- It involves extra work, time and cost
- Benefits from social responsibility accounting are hard to quantify.
- The business of the business is to do business and remain in business, not to undertake social responsibility activities.
marto answered the question on February 13, 2019 at 08:31
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