Discuss about the Financial Accounting Theory for Sustainable Development.
In today’s more complicated business scenario, business firms face lot of problems to maintain the transparency as well as accuracy in their financial statements and reports. In this situation, accountants of the business organizations play a significant role to develop sustainability and reliability in the business functions, accounting practices, and financial statements of the organizations. Along with this, sustainability creates several challenges as well as opportunities for accountants. The accountants face these challenges to promote sustainability within the organizations. They also capture opportunities for the overall growth as well as success of the businesses. Moreover, nowadays, the Australian business firms are emphasizing on integrated reporting to create value for the businesses. In other words, it can be said that, the importance of integrated reporting is increasing continuously in Australia. On the other hand, this research paper is valuable to portray the role of accountants and accountancy in the sustainable development of business organizations. This paper also illustrates the perspective, aim, and importance of integrated reporting in Australia.
It is well known that, business corporations face a lot of challenges to develop sustainability within the organizations. The main reason behind it is that they have to report, assess, and assure sustainability in an accurate manner. All the members of an organization have not proficiency in the area of sustainability. Only, the accountants of business firms have expertise in the area of sustainable development. It is because of an accountant is the one who has all the accurate information that is essential to sustainable development. In this situation, accountants play a critical role in the sustainable development of the organizations. This report of IFAC (International Federation of Accountants) makes it clear that accountants contribute to accomplish a complete set of sustainability goals of the organizations (Bebbington and Larrinaga, 2014). Along with this, nowadays, accountants are making their possible efforts; so that the organizations can meet the goals of sustainable development set by the UN. These goals involve social, economic, and environmental aspects to accomplish sustainable development in all its aspects.
On the other hand, accountants play a major role to condense the situation of sustainable development dilemmas in front of the organizations. These dilemmas may be related to the discrimination, poverty, climate change, social challenges, and ethical & moral challenges. Moreover, to remove these types of dilemmas and promote sustainable development, accountants focus on impartial quality education as well as lifelong learning opportunities to all the members of the organizations (Herath, 2005). They promote gender equality within organization; and consequently give equal power to women and girls of the organizations. Accountants endorse constant, comprehensive & sustainable economic growth, inclusive & dynamic employment, and decent work to the members of the organizations.
In the same manner, accountants play a critical role to ensure justice for all the members in order to endorse peaceful and inclusive sustainable development within the organizations. Accounting professions promote flexible infrastructure, comprehensive & sustainable industrialization and modernization to contribute to sustainable development within organizations. They also endorse business corporations to adopt & implement sustainable practices; and to integrate sustainability within the accounting practices and financial reporting of the businesses (Okafor, 2012). Along with this, the accountants of business firms portray the importance of the global partnership and encourage business firms to reinforce their resources; so they can rejuvenate their affiliations for the sustainable development of businesses.
In addition to this, accountants of business associations are qualified to provide information and assertion for the decision making related to sustainable development of businesses. They develop lots of strategies, implement energy efficiency procedures, invent & implement corporate social responsibility (CSR) policies, and propose management information systems to develop sustainability in an effectual and a proper manner (Kneževi?, Gržini? and Vukadinovi?, 2014). Moreover, accountants of business associations’ are completely familiar with the concept of sustainability. It is because of they involve sustainability as a key concept to deal with the funds, capital, income, and profits of businesses. The accountants have risk taking skills and; also proficient to respond according to market changes and public expectations. Along with this, the qualified accountants provide an accounting framework to maintain accountability as well as transparency in accounting practices of business organizations. The accounting framework not only measures the financial performance; but evaluates social and environmental performance as well (Bebbington and Larrinaga, 2014). In view of that, it can be assumed that, accountancy contributes to sustainable development. The accountants play a crucial role in order to develop sustainability in the functions and practices of the businesses.
Integrated reporting refers as a process that improves the ways organizations plan as well as report the picture of their businesses. Business association are using integrated reporting to commune an unambiguous, succinct, and integrated story that portrays how all of their assets are creating value for the businesses. Along with this, integrated reporting plays a major role to encourage business firms to think about their strategies as well as plans in a more holistic way. It is prepared by leaders and investors of the organizations (Erol and Demirel, 2016). In other words, it also can be assumed that, an integrated report is a brief communication regarding how the tactic, performance, governance, performance and prediction of an organization are helpful to create value in the short and long term. On the other hand, the aim of integrated reporting is to offer a holistic view of the organization. It involves the strategy, business model, and performance of business firms to present a holistic view appropriately. Moreover, another aim of integrated reporting is to give insights regarding the resources as well as relationships of the organizations. Integrated reporting also aims to portray the interactions of business firms with their external environment as well as capitals to create of value for the businesses (Adams, Potter, Singh and York, 2016).
In addition to this, at the present times, the Australian firms are mainly focusing on integrated reporting to create value for the businesses. The Australian firms use the integrated reporting to manage financial as well as non-financial aspects of business in an appropriate manner. Along with this, there can be seen lots of importance of integrated reporting in the context of Australia. For case, it plays an important role to measure the social, environmental, financial, and governance performances of businesses appropriately. It is also beneficial to attract stakeholders, as well as investors for the financial growth of the organizations (Eccles and Saltzman, 2011). Along with this, the IIRC (International Integrated Reporting Council), the Australian BRLF (Business Reporting Leaders Forum), GAAP (Generally Accepted Accounting Principles), IASB (International Accounting Standards Board), and IFRS (International Financial Reporting Standards) also provide support to the concept of integrated reporting. The IIRC promotes business associations to develop integrity and trustworthiness in integrated reporting (Abeysekera, 2013).
On the other hand, integrated reporting plays an important role in order to improve the alignment as well as integration of non-financial assurance with financial statements and audit reports of the businesses. The integrated reporting is beneficial to shareholders and investors in order to understand the financial as well as non-financial aspects of the businesses in an effectual and a proper manner. Moreover, a business corporation that is working to improve performance as well as outcomes for its investors and stakeholders may develop integrated reporting to see the interests of investors and shareholders in the firm (Adams, Potter, Singh and York, 2016). Apart from this, under the concept of integrated reporting, the Australian firms portray a clear and concise picture related to the future prospects of the businesses. They not only use financial resources, but also take into consideration all the resources as well as relationships that are used by the business in the previous years. With the help of the integrated reporting, the investors and shareholders would be able to settle on if the business model of an organization is resilient over the short, medium and long terms as well. As a consequence, it can be assumed that, integrated reporting plays a critical role to build image and create value for the business organizations.
Conclusion
On the premise of the above analysis, it can be said that, sustainability is an integral part of the businesses. Accountants play numerous important roles to develop sustainability and improve the overall performance as well as effectiveness of the businesses. Along with this, it is also viewed that, integrating reporting plays a critical role in the value creation of the organizations.
References
Abeysekera, I. (2013). A template for integrated reporting. Journal of Intellectual Capital, 14(2), pp.227-245.
Adams, C.A., Potter, B., Singh, P.J. and York, J. (2016). Exploring the implications of integrated reporting for social investment (disclosures). The British Accounting Review, 48(3), pp.283-296.
Bebbington, J. and Larrinaga, C. (2014). Accounting and sustainable development: An exploration. Accounting, Organizations and Society, 39(6), pp. 395-413.
Eccles, R.G. and Saltzman, D. (2011). Achieving sustainability through integrated reporting. Stanf Soc Innov Rev Summer, 59.
Erol, I. and Demirel, B. (2016). Investigation of Integrated Reporting As a New Approach of Corporate Reporting. International Journal of Business and Social Research, 6(10), pp.32-46.
Herath, G. (2005). Sustainable development and environmental accounting: the challenge to the economics and accounting profession. International Journal of Social Economics, 32(12), pp.1035-1050.
Kneževi?, G., Gržini?, J. and Vukadinovi?, P. (2014). The role of the accounting in the sustainable development: the case of serbia. Financial reporting function of the corporate governance, p.20.
Okafor, T. (2012). Natural resources accounting and sustainable development: The challenge to economics and accounting profession. African Research Review 6(3), pp.59-70.
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