Page 69 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes Identifying adverse effects on the environment of the business houses.
Social reporting improves credibility and reputation of business.
Transferring cost of social activities to other segments of society.
Social reporting is a rational assessment of and reporting on some meaningful, definable domain
of a business enterprises activities that have social impact. This reporting aims at measuring
(either in monetary or non-monetary units) adverse and beneficial effects of such activities both
on the firms and/or those affected by the firm. Being concerned with the social, human and
environmental constraints on organizational behaviour, it measures social costs and benefits.
The social reporting information is communicated to social groups both within and outside the
firm. Thus social reporting implies the measurement and reporting, internal or external, of
information concerning the impact of a business enterprise and its activities on society.
The concept of social responsibility extends beyond the provisions embodied in current law.
Essentially, it represents an emerging debate having its roots in political and social theory.
While designing the contents to be included in social reporting, due care should be taken to see
that it does not conflict with the shareholders’ interest. Social reporting presently is being either
included in the Annual Reports or finds some reference in the Chairman’s Address or the
Director’s Report. Social reporting format tends to vary from one company to another company
as till date no format has been described by any Act in India.

Social Corporate Reporting in India

In India, the Companies Act 1956 deals with the preparation of balance sheet and profit and loss
account. The Act requires the auditor to make report under Section 227 to members (shareholders)
and express an opinion whether the company’s balance sheet ad profit and loss account exhibit
true and fair view of the company’s state of affairs.
Although, this Act has been amended from time to time, no specific provision has been made
requiring companies to provide social responsibility disclosures to their annual reports. The
Government of India appointed a Committee under the chairmanship of Justice Rajinder Sachar
to consider and report on the changes that are necessary in the form and structure of the Act. The
Committee (1978) recommended the inclusion of the following, inter alias, in the directors
report:

“Steps taken by the company in various spheres with a view to discharging its social
responsibilities towards different segments of the society, quantifying where possible and in
monetary terms. The Board should also reports on the future plans of the company towards the
discharge of its social responsibilities and duties.”
Some Indian companies have made attempts to provide information on their responsibility
activities in published annual reports and/or through separate means of disclosure. Some
companies prepare social income statements and social balance sheets and report them in their
published annual reports.

Notes List of Social Indicators
Quality of Management

Human Rights
Environmental Performance
Contd...

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