Contemporary Issues in Accounting

1. AKKI MARUTHI
Assistant Professor
Department of Commerce
SKNG, GFGC, Gangavathi
akkimaruthi@gmail.com

2. LEARNING OBJECTIVES
• Approaches of Social Accounting
• Preparation of Social Income Statement and Balance
Sheet
• Numerical Part on Social Income Statement and
Balance Sheet
• Social Accounting and Reporting Practices in Indian
Context
• VSKUB Past Four Year Question Paper Questions

3. APPROACHES OF SOCIAL
ACCOUTING
Approaches in Social Accounting Many different are
used in corporate social accounting. However, no
one approach is widely recognized as the most
appropriate for social accounting. Some of these
approaches in social accounting are as follows :-
(i) Cost-Benefit Analysis approach
(ii) Socio-Economic Operating Statement Approach
(iii)Integral Welfare Theoretical Approach
(iv) Descriptive or Narrative Approach

4. CONT.
(v) Goal Oriented Approach
(vi) Value Added Approach
(vii) Pictorial Approach
(viii) Regulatory Requirements
• Cost- Benefit Analysis Approach
This approach has been developed and used by Abt Associates
in the United States. Under this approach presentation of social
information in a quantitative form is made. It consists two parts
viz., (i) Social Income Statement and (ii) Social Balance Sheet.
The objective of this approach is to determine the full impact
of corporate activities on different constituents.

5. CONT

12. CONT.
(ii) Socio-Economic Operating Statement Approach
This approach was suggested by David Linowes and Ralph W. Estes.
Linowes proposes the development of a ‘Socio-Economic Operating
Statement’ for social reporting which aims at focusing on ‘what
corporation has done for society’ on one hand and ‘what it has
failed to do’ on the other.
He suggested that a firm should prepare a social statement
periodically along with the Corporate Balance Sheet and Income
Statement.
According to SEOS the firm presents the positive and negative
aspects of its social activities. The positive aspects are termed as
‘social benefits’ and negative aspects as ‘social costs’.

13. CONT.
Lee. J. Seidler has given two reporting formats for disclosure of social
information in his article.

14. CONT.
(iii) Integral Welfare Theoretical Approach
This approach deals with all activities which are expected to be
undertaken by business enterprises. The conceptual approach of this
school of thought is well summarized by Eichhorm (1974) in his book on
‘Social Accounting’. It intends to develop an integral assessment of all
activities on the part of business corporations from the view point of
society. This school of thought involves the preparation of a social report
comprising social benefits and social costs.

15. CONT.
(iv) Descriptive or Narrative Approach
This is the simplest and traditional method of reporting social
information. According to this method the social activities of
business corporations are presented along-with financial
statements in narrative form. Usually, only positive social aspects
of a firm are presented in a non-quantitative form. Thus, the
impact of social activities is not measured under this method.
(v) Goal Oriented Approach
It is based on the recognition of the fact that companies usually
have elaborate goals and purposes describing the economic and
social objectives which they have set for themselves. Therefore, it
involves two aspects :
• The selection of social goals, and
• The reporting and assessment of company’s performance
according to these goals.

16. CONT
(vi) Value Added Approach
Under the Value added Accounting, the income accruing to the
enterprise after external payments is taken into account. It
represents the value added to goods and services, required by the
enterprises as a result of the efforts of management and
employees.
(vii) Pictorial Approach
Under this approach, photographs of health care center, school and
hospital etc. run by the firm are presented in annual reports.

17. CONT.
(viii) Regulatory Requirements
The reporting is done by other methods also which include
mention of social activities by an enterprise in the Chairman’s
Report, Director’s Report or Auditor’s Report. This approach is
followed by many public and private sector enterprises, because
it is simple to present.
SECTION 134 Board’s Report & its contents of Companies Act
2013 and Rules,require information regarding (A) Conservation of
energy,(B) Technology absorption,(C) Foreign exchange earnings
and Outgo.
Disclosures requirement under this rule has covered some
aspects of social reporting. Indian economy is based on the
principle to democracy and socialism and as such the social audit
has greater importance for our country.

18. LIMITATIONS OF SOCIAL REPORTING OR
ACCOUNTING
Though the importance of social responsibility and reporting is
being recognized by many companies in India, yet its progress
and performance is hindered due to the following reasons :
• Not Mandatory
• No Standard format
• Lack of clear cut definition of social reporting
• No cadre of social auditors
• Auditing social cost and benefit is an intricate function
• Imputations
• Double Counting
• Inventory Adjustments
• Depreciation
• Public Services

19. Social Accounting in India
The Sachar Committee in its report in 1978 recognised the need for
social disclosures. The concept was relatively new for India and is
to gain momentum.Tata Iron Steel was the first in India which
conducted social accounting with the sole aim to examine and
report to what extent company has been able to fulfil its objectives
regarding its social and local community.
India may become the world’s first country to make corporate
responsibility mandatory. Paths have been cleared for
of the Companies Bill, 2011, in the monsoon session. If the bill is
passed after endorsing all the propositions made by the
Parliamentary Standing Committee on Finance, corporate social
responsibility (CSR) would become mandatory for the first time in
the world in any country.

20. CONT.
In August 2012 the parliament has panelled CSR to be
mandatory. The statement advocates that those companies with
net worth above Rs. 500 crore, or an annual turnover of over Rs.
1,000 crore, shall earmark 2 percent of average net profits of
three years towards CSR.
In the draft Companies Bill, 2009, the CSR clause was voluntary,
though it was mandatory for companies to disclose their CSR
spending to shareholders.
It also suggested that company boards should have at least one
female member. (Times of India dated 16/10/12) There is a
growing realisation among organisations that it is not merely
sufficient to provide funds to support causes initiated by non-
profits, and when employees volunteer for a cause, it’s a win-win
situation for both the organisation and the employee as it helps
improving managerial skill and enhancing profit

21. SOCIAL ACCOUNTING PRACTICES OF INDIAN
COMPANIES
Tata Group
Tata Group in India has a range of CSR projects, most of which are
community improvement programs. For example, it is a leading
provider of maternal and child health services, family planning, and
has provided 98 percent immunisation in Jamshedpur.
The company also endorses sports as a way of life. It has
a football academy, archery academy, and promotes sports among
employees. It offers healthcare services all over the country with
programs like rural health development. Tata Steel India won this
award for Corporate Social Responsibility from among the following
short-listed nominees namely Coca-Cola Enterprises, CSM, Findus
Group, Firmenich, Nokia, The Body Shop, Unilever, etc in 2011.
Tata Group also has an organised relief program in case of natural
disasters, including long-term treatment and rebuilding efforts. It
laudable work during the Gujarat earthquakes and Orissa floods. It
also supports education, with over 500 schools, and also is a
benefactor of the arts and culture. It has done abundant work in
improving the environment and local populations around its
industries

22. Aptech
Aptech a leading education player with a global presence that has played
broad and continued role in encouraging and nurturing education
throughout the country since its inception. As a global player with
complete solutions-providing capabilities, Aptech has a long history of
participating in community activities. It has, in association with leading
NGOs,provided computers at schools, education to the deprived, and
training and awareness-camps.
Infosys
Infosys is aggressively involved in a variety of community growth
In 1996, the company created the Infosys Foundation as a not-for-profit
trust to which it contributes up to 1 percent of profits after tax every
year.Moreover, the Education and Research Department at Infosys also
works with employee volunteers on community development projects.
The management team at Infosys continues to set examples in the area of
corporate citizenship and has involved itself vigorously in key national
bodies. They have taken initiatives to work in the areas of research and
education, community service, rural outreach programs, employment,
healthcare for the poor, education, arts and culture, and welfare activities
undertaken by the Infosys Foundation.

23. Mahindra & Mahindra
At Mahindra & Mahindra, The K. C. Mahindra Education Trust was
established in 1953 with the purpose of promoting education. Its
vision is to renovate the lives of people in India through education
and financial assistance across age groups and across income
The K. C. Mahindra Education Trust undertakes a number of
education plans, which make a difference to the lives of worthy
students. The Trust has provided more than Rs. 7.5 crore in the
of grants, scholarships and loans. It promotes education mostly by
the way of scholarships.
The Nanhi Kali (children) project has over 3,300 children under it
and the company aims to increase the number to 10,000 in the
two years by reaching out to the underprivileged children,
in rural areas.

24. Reliance Industries Limited
RIL's contribution to the community are in areas of health,
education, infrastructure development (drinking water,improving
village infrastructure, construction of schools etc.)environment
(effluent treatment, tree plantation, treatment of hazardous
waste), relief and assistance in the event of a natural disaster, and
miscellaneous activities such as contribution to other social
development organisations etc.
RIL plays a pivotal role in supporting Government's initiative
towards education of girl child. In Gujarat, under the project
"Kanya Kelvani", RIL's Dahej Manufacturing Division has extended
financial assistance towards education of girl child in the state.
RIL has developed Community Medical Centres near most of its
manufacturing divisions to provide comprehensive health
.A unique joint initiative of RIL and National Association of Blind,
Project Drishti has undertaken over 9000 free corneal graft
surgeries for the visually challenged Indians from the
underprivileged segment of the society. Likewise there are
schemes and social services undertaken by reliance.

25. References
• Shodaganga.Inflibnet.ac.in
• Lovely professional University, KK Varma Contemporary
Accounting 2012
• S. N. Maheshwari, Vikasa publishers Adavanced Accounts
volume-II
• Www.Researchgate.net ( Research Articles)
• Volume 6 Issue II, February 2018- Available at www.ijraset.com
• Sustainability ISSN 2071-1050
www.mdpi.com/journal/sustainability
• Business and The Environment with ISO 14000 Updates.
(2007), Vol. 18 Issue 7. CERES.(2002)
• Www. Scrip.org/ journal/ Ojacct( open journal accounting)
• UGC NTA, ICAI, Study Materials
• e PGpatashala.inflibnet. ac. In

26. HAPPY LEARNING
THANK YOU