Social Accounting

Reporting Principles

There are a number of basic principles on which social accounting is based: some of them are fairly obvious and some are a bit more complicated.

In order for an accounting report to be considered as socially acceptable, it has to be complete. This is also a basic principle of accounting as set out by the Accounting Standards Board. Don't leave anything out!

Similarly, the basic principle of comparability says that in order for us to be able to make sense of any accounting report, I need to be able to compare it with last year's.

That is, in order to see whether the company has developed - improved, grown, got worse or shrunk - I need to be able to calculate things like rates of change ratios and so on. I can't do that if I can't compare this year's accounts with last year's because they have changed the layout or headings or something.

In the diagram from AccountAbility that we saw before, we saw the word embedding but we didn't define it. What embedding means is that the company must integrate social accounting and corporate social responsibility into everything that it does. Not just pretending and not just saying that it's going to do it - it must be doing it.

Of course, for anyone to assess any company, its accounts must be externally verifiable. This means that an outsider can go into the company and check that what they are publishing is true. An external auditor does this, for example.

The final principle must be the one of continuous improvement, known in business circles as kaizen these days! That is, it's not enough to be socially responsible and embedded, there must be a desire to improve at all times. To work up to and beyond the minimum, rather than simply waiting for someone else to change anything and then changing when they have to.