It is believed that, as a company operates within a society, it is a member of that society. It can be argued that their existence depends on the willingness of society to continue to allow them to operate (ODonovan, 2002). This correlates to the concept of companionable contract between the composition and the society. The societal contract suggests that the organisation has a moral obligation to act in a fondly amenable manner (ODonovan, 2002). The question is, how do we story for this moral obligation? The topic of accountability should also be considered here. Accountability can be defined as a duty to provide an account (by no means inevitably a financial account) or reckoning of those actions for which one is held responsible (Deegan &type A; Samkin, 2011). Traditionally, accountability has been interpreted only as integrated accountability to shareholders with no focus on the society (Brennan & Solomon, 2008). Should a company be held responsible for their environmental and social impacts? And if so, how do we account for it in the financial statements? This essay aims to hash out whether the conventional accounting methods can be used for insurance coverage social and environmental issues.
Conventional accounting systems are found on the conceptual framework.
The conceptual framework seeks to identify the accusatory of general utilisation financial reporting and the qualitative characteristics that financial information should possess (Deegan & Samkin, 2011). The GAAP or chiefly accepted accounting practice also fall to a lower place the conventional accounting system. This includes the specific rules, practices and procedures relating to particular circumstances, together with the gigantic concepts and general application (Deegan & Samkin, 2011). The qualitative characteristics that general purpose financial statements should possess are; understandability, relevance, reliability and comparability.
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