Question:
Write report on accounting theories and contemporary issues in today’s business world.
Accounting theories and contemporary issues are growing as a baking issue in today’s business world. Currently, there are various research studies and debating has been happened on the process of effective implementation of the theories and contemporary issues into the business. This research study will be focused on the effective implementation of the theories and contemporary issues into the current business organization. The logic of sustainability accounting will be scrutinized; there will be also a brief discussion about the elements of sustainability accounting. The study also connects these elements with the work under taken presently by the companies. The proper direction will be provided on the process of engaging the employees with this new system in this study. There will be brief arguments on the support of this Sustainability accounting system as well as opposing this system. Why these accounting theories and contemporary issues are demanding more importance and why it is very important to have a separate division for the companies also be stated. What are the benefits of incorporating these theories and contemporary issues into the business? The core reason is for convincing the companies to introduce sustainability accounting into their business (2013 Awards for Excellence, 2014). Why sustainability accounting should be, adopt within the companies present accounting practice. The cost benefits of sustainability accounting also described briefly and in due course the study unlock all the aspects of sustainability accounting.
Sustainability has become the major concern of the big as well as the small companies. As the competition is increasing due to the globalization, the global leaders are creating mammoth competition for the local companies. Open market has influenced this competition to become greater war. For sustaining, the companies are testing several effective techniques and strategies, so that they can achieve better edge over their rivals. It is evident in several studies that the companies should have a focus on their non-financial aspects besides their focus on the financial aspects. Owing to the fact that financial sustainability is very much influenced by the non-financial aspects of the company. The sustainability accounting assembled with such issues like environmental issues, social issues as well as the legal issues. All these issues have great impact on business. An upcoming organization cannot avoid these issues if it wants to sustain or create a better position. A flourishing company must adopt the sustainability accounting theories into their existing accounting process (Botes, Low and Chapman, 2014). The theories of sustainability accounting will help immensely for their future progress. The purpose of the report is to evaluate the procedures of incorporating sustainability accounting in a company, how sustainability help a company how it will be beneficial to a company, cost effectiveness of sustainability accounting also be examined. There are lots of scopes for this research, as many companies are not yet aware of this new divisions. For this research, both qualitative and quantitative data is used for better understanding of the issues. However, initially the companies have to bear extra expenses for initiating a new division for sustainability accounting or adopting the strategies and techniques of sustainability accounting in their existing accounting process, in long run for sustaining in the industry this initiative will be very helpful for the companies. The core reasons for incorporating sustainability accounting into the accounting process are – for evaluating the companies’ environmental aspects as well as the social aspects and the issues of corporate governance. Sustainability accounting consists of the non-financial aspects of the companies that are beneficial for the sustaining of the company such as the environment of the company; external natural environment as well as their internal environment (Freedman and Jaggi, 2010). The social issues those are connected to the company; the favorable as well as the adverse issues, the human capitals and the company’s reputation and brand image in the market. The companies should look after these issues very carefully as the sustainability accounting helps to growth immensely. A small company can be improved and keep a better position by these strategies of sustainability account. Most of the big giants already have the separated division for their sustainability accounting. The flourishing companies are incorporating these techniques into their accounting system. They are organizing several enhancement learning and training program for their employees so that the techniques of sustainability accounting is implemented properly in the companies. As there is, a time constraint and less of availability of appropriate information and as there are mostly tangible assets their actual valuation ac not be possible (Gray, 2010). Hope this study will provide a brief knowledge of sustainability accounting to the readers.
The core purpose of incorporating sustainability accounting in the system of the companies is mainly for evaluating the companies’ environmental aspects as well as social issues and for examining the rule and regulation of the companies which, governance the companies through an account. These are basically, non-financial properties of the companies, however, they has significant role in the growth of the companies. The companies can achieve sustainable growth with the help of these non-financial properties of the companies. The sustainability accounting is connected with the sustainable factors such as human resources, environmental issues as well as social aspects and issues of corporate governance. The core objective of sustainability accounting is to up to date the progress of an integrated business strategy to the managements of the companies and measure the threats for the sustainability as well as the opportunities, which are inbuilt with the investment decisions. There are significant relation between the sustainability account and financial account. Sustainability accounting is totally dependent on the structure of the present financial accounting system. The companies evaluates their financial accounting data as well as the sustainability accounting data by keeping the information side by side for better evaluation of their performance. The policies taken by the companies on the environmental issues are help them to avoid the adverse situations, which may be occurs if the policies are violated. The sustainability accounting practice help to improve communications between the employees, therefore it is cost efficient communication component (Hopwood, Unerman and Fries, 2010).
For sustainability of a company the basic attribute are, commitment for long duration, leadership qualities, monetary as well as time investment, executive business plan, effective team of management and effective team work. There are four pillars for economical sustainability, proper planning of strategy and financial, diversification of income, striking administration along with finance team, own income creation.
In the same way the attitude of facing the social issues, the policies regarding the social issues saves the companies from the social mishaps as well as help the companies to progress. Better control over the companies incorporates rules and regulations help the companies to grow steadily. So therefore, the management should form a separate sustainability accounting division, which will be responsible for governing their sustainability account (Jones and Ratnatunga, 2012). Therefore, it should be incorporate in the existing accounting pattern.
The core elements of sustainability account are environmental issues, social capital or dependencies, the human capitals, business models and invention of new techniques, the leadership and the control of the leaders in their business. These elements or factors of sustainability accounts are tangible assets such as the social status of the company, the reputation of the company, the brand image, customer relation, the customers’ loyalty, the staff controlling power of the management and the environmental and legal issues related with their business. The success of the companies hugely depends on the management of their sustainability account. Companies use to form their distinct division of sustainability accounting, as they have understood the essentiality of sustainability accounting. The employees are recruited, who have better experience and expertise in this field. Simultaneously, the appropriate and adequate learning and training sessions are arranging for the employees and always keep an eye on their performance according to their training and learning sessions. These help the development of the employees as well as give extra power for progressing the companies’ development process (Löfgren and Li, 2011).
Environment is the core part of sustainability account; it has a significant role in the perception of the company. A company hugely depend on the surrounding environment, from the environment, company get resources for their organization (Mayo, 2011). The resources can be natural resources such as water, soil and the minerals, the production materials, which the companies utilizes for their production as well as for their servicing. There might be several environmental issues, the companies must be well aware of the issues and look after the issues. The laws regarding the environmental issues should be followed strictly for avoiding adverse situations. The use of natural resources must be controlled and should avoid the misuse of natural resources. It must be watched that pollution level always stays on permissible level. The environmental externalities or harmful emission of poisonous gases must be controlled so that the pollution to the environment can be prevented. In a phrase, the companies impact on the environment, either by using of non-renewable natural capitals, as the ingredients of production such as water, minerals, ecosystem and biodiversity or by the environmental externalities or other harmful emission to the environment which leads to air, water, land pollutions by disposal of wastages and green house gas emission.
The connection of the companies with the society is determined by their social capital or dependencies, by this element the contributions of the companies to the society is measured. The companies execute the requirements of the people with their basic business principle. The companies established with a vision and to reach their predefined goal companies acquire a mission through this companies attain their goal. The theories of relationship management help immensely for achieving the predefined goals of the companies. The companies’ social capitals are their stake holders, their consumers, their whole sellers, their CNF’s, their logistic helps, transporters, their retailers, the communities and the Governments (Löfgren and Li, 2011). The issues relating the availability and affordability of their product and services and responsible industrial exercise in marketing and managing consumers’ privacy are main objective of this element.
The human resources or human capital is the basic factor of the companies’ sustainability. The companies’ staffs play a significant role for sustaining a company.The capable and liable employeespossess a significant position in the company and provide a lot to the company by their valuableservices, which the employees cater for the company. So therefore, the company must encourage their staffs to deliver quality service with providing the greater value of their job as well as giving value to their personal necessities (Mayo, 2011). The companies should offer better salaries and compensation to their employees compare to their competitors so that the employees influenced to work for better. There should be appropriate and adequate learning, training and development program for the employee, so that the abilities of the will be enhanced and the developed capabilities of the employees help them to cater better service. Company should look after the health and safety of the employees so that the employees will make their services available without any fear. The company should nourish the special talents properly, there should be skill enhance program, the employee should properly educated about company’s visions and missions. The companies should establish the safety as well as security culture and there should be proper training of the safety culture for the employees (Mingat, Ledoux and Rakotomalala, 2010). The security and safety system should be checked on a regular basis and the management should look after that whether the security and safety culture deployed by the company is followed properly or not.
The business modelsare very important aspects of the companies; the particular models followed by the company has greater significant for that company. The overall impact of the particular model on the surrounding environment as well as on society has lot of substances. The effects of newer inventions on the environment as well as the society are also major factors. It deals with the amalgamation of environment and social factors in the worth creation procedure of the company. The models of several businesses take a shape by the company’s sourcing proficiency and other innovation related to the production process as well as product invention and effectiveness andaccountability of the project. (Schaltegger, Bennett and Burritt, 2006) There is several effective business models applied by the companies, which are basically according to their respective business, the size of their business, the location the existing threat and opportunities of the business all are measured with equal importance. The business model works from the evaluating the demand then prepared aproper segmentation of the prospective consumers then proper positioning of the products to the targeted consumers.
All profit as well as non-profit organizations have leaders and the companies proceed by the talents and capacities of the able leaders.The effective leadership quality of the leaders, contributes a lot to the company. The companies can progresssecurely and steadily by the abilities of their leaders. The capable leaders can determine and state properly the company’s mission and visions to their employees as well as to the society to the other stakeholders of the company such as consumers of the company, the communities who provide lot of impact to the company, and the Government. The leaders, who hold top management position of the companies has potential accountabilities towards the company, the future of the companies are mostly contingent on the capabilities of their leaders. The leaders ought to adequate understanding about the trade of the company and they must have knowledge of the good as well as the worst impacts of the company in society and about the strength and drawback of the company. They have to be capable promoter so that they can influence their employees to bring out their best (Special issue on Sustainability accounting for the industrial use of biomass, 2011). The leadersought tocultivate all the anthropologicaltraits, which support them to work meritoriously. They must have familiarity of the security and safety requirements of the firm. They should well cognizant of the rules and regulations of the concern so that they can describe it appropriately to the staffs, and force them to follow the rules strictly. They are answerable for the complete performance of the company. They are in authority for evolving the companies policies, for creating the strategies of the companies, for executingnewer more effective techniques in these ways the leadersenacts a very substantial role in the development of the company as well as they are accountablefor dropping the growth rate of the companies. The company must ensure that each stage of business operation managed sustainability accounting. Owing to this, the company must deployed capable middle groups of managers, who will be accountable for effective implementing of sustainability accounting of their departments. The middle manager works as a bridge between the employees and top-level managers. Beside this, the middle managers are responsible for ensuring the logistic operation and the retail business of the company by obeying the sustainability strategies, which help the company to keep sustainable growth (Unerman, Bebbington and O’Dwyer, 2007). They also provide the ideas of sustainability accounting across several departments and ensure smooth progress of the eco ambassador schedule. Procedures to engage the employees in the program of sustainability account:
There ought to be ample of learning and training curriculum for the staffs so that the staffs will acquire better acumen of the sustainable dynamics. Every Tom, Dick, and Harrywishes to sustain in his or her position as well as wish for progresses. No one can disagree with the fact; he or she may be common human beings as well as the small or big companies. Each personwishesviabledevelopment. So therefore, first of all the companies should educate their employees for the future development of their staffs as well as companies.. The employees ought tobe acquainted with the elementary rules and regulations of the business. They ought to be wellconscious of the safety and security rules of the companies as well as they have tobe familiar with the operations of safety and security functions accurately. They essentially should have adequateinformation of the resources, the accurate use of the resources and the process of reducing the wastages must be understood (Young, 2010). They must be well conscious about the brand image of the company and must carry out the brand image in anappropriate approach. They ought to be furnished with ample of training on customer management so that they can retainhealthier relation with the valued customers of the company on behalf of the companies.
The internal as well as the external stakeholders of a company are screening interest in introducing sustainability accounting into a company. As the internal stakeholders or employees are conscious about the pollution at their workplace, the external stakeholders consist of local communities, the social Aspects of the company, the environmental activist and government regulators conscious about the pollution produced by the company that affect the surrounding area and also manage the social issues. The companies should introduce sustainability accounting for managing all the aspects so the companies look forward to sustainable growth. Therefore, the companies can avoid any mishaps, which might be occurred in case of not introducing sustainability accounting (Young, 2010). However the companies initially have to put money as well as efforts to introduce a new division in a long run it will be helpful to the companies. The possible name for this division can be Sustainability Management.
The major cost benefits are it helps a company to avoid the legal hazards due to the issues of environmental and social. Owing to this, the company may stop their operation and has to pay handsome money as a fine. Beside this by practicing this properly, company can increase the productivity so that earn more capital. There a company must incorporate sustainability accounting into their existing accounting practice.
Conclusion:
The sustainability account is equally significant as the traditional financial accounting. Presently the financial evaluation of a company is performed by keeping side by side all the information of financial accounting as well as the information of sustainability account. The aspects of the sustainability account are equally significant as the financial accounting. It contributes a lot to the growth of a company. The companies proceed properly with the help of these aspects of the sustainability account. The environment and social factors are the core factors of financial accounting. The sustainability account includes the non-financial aspects of the company such as the environmental, social and the corporate governance issues (Löfgren and Li, 2011). The sustainability accounting is necessary be introduced in a business organization, it has greater significance and can play very important role in the growth of a company. The sustainability account department, look after the practice of sustainability account, whether the strategies of sustainability accounting is properly practiced in the organizations. Quite a lot of non-financial factors possess crucial role in the growth of the company. If the companies ignore these aspects, company has to face several troubles, which could be constraints for the development of the company. By incorporating sustainability, accounting company can avoid such constraints. This accounting method also helps the company to accomplish its financial goal by reducing recurring cost as well as help to increase company’s overall turnover so that company accomplished better profit ratio. The existing accounting procedures of a company also adopt sustainability accounting into their system. Those can be easily linked with their accounting process and provide equal benefits (Young, 2010). By the help of the strategies of sustainability, accounting companies can reduce the misuse of the resources, in this way companies can save money for purchasing the resources. In addition to that as it, help to avoid the mishaps so that save money for the company.
References:
2013 Awards for Excellence. (2013). Employee Relations, 36(1).
Botes, V., Low, M. and Chapman, J. (2014). Is accounting education sufficiently sustainable?.Sustainability, 5(1), pp.95-124.
Collin, R. and Collin, R. (2010). Encyclopedia of sustainability. Santa Barbara, Calif.: Greenwood Press.
Dyball, M. and Thomson, I. (2013). Sustainability and Accounting Education. Accounting Education, 22(4), pp.303-307.
Freedman, M. and Jaggi, B. (2010). Sustainability, environmental performance and disclosures. Bingley: Emerald.
Gray, R. (2010). Is accounting for sustainability actually accounting for sustainability…and how would we know? An exploration of narratives of organisations and the planet. Accounting, Organizations and Society, 35(1), pp.47-62.
Hopwood, A., Unerman, J. and Fries, J. (2010). Accounting for sustainability. London: Earthscan.
Jones, S. and Ratnatunga, J. (2012). Contemporary issues in sustainability accounting, assurance and reporting. Bingley [England]: Emerald Insight.
Löfgren, K. and Li, C. (2011). Green national accounting and sustainability. Cheltenham, UK: Edward Elgar Pub. Ltd.
Mayo, E. (2011). Coâ€Âoperative performance. Sustainability, 2(1), pp.158-164.
Mingat, A., Ledoux, B. and Rakotomalala, R. (2010). Developing post-primary education in Sub-Saharan Africa. Washington, DC: World Bank.
Schaltegger, S., Bennett, M. and Burritt, R. (2006). Sustainability accounting and reporting. Dordrecht.
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