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Social accounting

Social accounting is a process that applies accounting principles to measure a company's social and environmental performance. It identifies and quantifies a firm's social costs and benefits to determine if its strategies are consistent with social priorities and making information available to the public. Social accounting approaches include the classical profit-focused view, descriptive reporting of social activities, and indicators that measure net income plus contributions to human resources, the public, the environment and products/services. The objectives are to measure a company's social contribution and ensure its alignment with social welfare.

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SOCIAL ACCOUNTING
INTRODUCTION  Social accounting is a kind of movement by which everyone can analyze like a business accountant.  Expresses its level of social goals to the society
Meaning  Process of communicating the social effects of organisations economic actions to the society Definition “Social Accounting is the application of double entry book keeping to social economic analysis.” — Kohler
Objectives To identify and measure the contribution of a firm towards the society.  To determine if the firm’s strategies are consistent with social priorities.  To make available, relevant information about the firm's goals, programmes, performances, use of scare resources. To Quantify and properly present the social costs and benefits of an enterprise.
Scope of Social Accounting  Net income contribution  Human resource contribution  Public contribution  Environmental contribution  Product or service contribution
Features  Expression of a company’s social responsibilities.  Related to the use of social resources.  Emphasize on relationship between firm and society.  Determines desirability of the firm in society.  Application of accounting on social sciences.  Emphasizes on social costs as well as social benefits.  Easy to understand the activities of the firm.
Benefits • It counters the adverse publicity or criticism leveled • It assists management in formulating policies and programmes. • The firm proves that it is not socially unethical • It acts as an evidence of social commitment. • It improves employee motivation. • Necessary from the view point of public interest groups, social organisations investors and government. • It improves the image of the firm. • The management gets feedback on its policies aimed at the welfare of the society. • It helps in marketing through greater customer support. • It improves the confidence of shareholders of the firm.
Social Accounting Approaches ♫ Classical Approach: Milton Friedman. The social responsibility of business is to use its resources and engage in activities designed to increase its profits. ♫ Descriptive Approach: Social activities of a business are presented along with financial statements in a narrative form. ♫ Integral Welfare Theoretical Approach: It advocates the preparation of a social report comprising social benefits and social costs. ♫ Social Indicator (Brummet Approach): Different areas of social contribution to be undertaken. Total performance = Net income + Human resource combination + public contribution + Environmental contribution + Product/Service contribution. ♫ Linowes operating statement approach: Social contribution = Social benefits – Social costs.
CONCLUSION  A systematic assessment and reporting on those parts of a company’s activities, which have a social impact.  Reporting the information of the social activities of the concern to its users (both internal and external)
Social accounting