Environmental Social Accounting Matrices

Question: Discuss about the Environmental Social Accounting Matrices. Answer: Introduction The essay is made up of three sections the first one the purposes of the financial analysis; The second the instruments for financial analysis and finally the importance of financial statements in decision making. It shows in each of them a brief but very complete definition, approaching the subjects from different points of view, consulting information of documents of websites on the analysis of financial statements, where the students in administration and related careers orient their attention to this subject, Who when they become graduated professionals, their approach changes, all of the above is through the execution of the financial diagnosis with a business approach, in which entrepreneurs easily identify the current state in which they are, proposals and suggestions from the situation To achieve the objectives set in your company. By relying on them, accounting enables the identification, measurement, classification, recording, interpretation, analysis, evaluation and report ing of the operations of an economic entity in a clear, complete and reliable manner. Its application is also necessary for those who are not obliged to keep accounting, pretend to make it valid as evidence. Corporate sustainability in Financial Accounting of Companies Corporate sustainability is a long term business approach that is used to enhance employee-customer value by creation of a green strategy towards a sustainable green environment while taking into consideration the cultural, socio- economic environment. It is also used to foster employee development through cultivation of ethics and transparency in the organization. It is the evolution of what was traditionally known as corporate social responsibility and the ethical strategy towards maintaining a good environment (Benn, Dunphy and Griffiths, 2014). The structural changes in commercial companies include; transformation, fusion, and assignment of assets and liabilities of the company. Social Accounting is defined as the measurement and reporting, internal and external, of information concerning the activities of the company as well as its objectives. The objective of the work is the analysis of basic guidelines for the preparation of Social Balance as the externalization of everything that expresses social transcendence in organizations, referred to CSR and that is auditable (Brockett and Rezaee, 2013). Financial Accounting Analysis It should be noted that economic activities are measured through financial accounting with generally accepted standards, while social accounting does not have established standards. Therefore, it is necessary to work on the development of the same without ignoring traditional accounting and its generally accepted principles. In the 1970s, Milton Friedman argued that the sole objective of the organizations was to increase shareholder equity (Campbell and Mollica, 2009). This was because the Theory of Shareholders was fully accepted and it was believed that if the organization operated efficiently maximizing the welfare of its owners then society also benefited. However, this theory did not consider the effect that the behavior of the company could generate on other interest groups, nor could it be clearly seen if the welfare of society improved or was maximized. The Impact Of Financial Accounting On Companies Report The scope of social accounting goes beyond the mere report of econom ic effects, they begin to measure and evaluate the social and environmental impacts that the company has on society. In general, social accounting attempts to identify, measure, evaluate, inform and monitor the effects that the organization is having on the whole society or in a specific interest group that is not covered by the company's financial reports (Hewings and Madden, 2011). The process of developing social accounting requires that; classify the areas of social impact, develop objective measurement systems in those areas and then conduct an empirical research. The Social Accounting in Companies The communication of the business social performance is initially carried out with internal purposes tending to improve the decision-making process and then to inform the interest groups which are the activities and the impacts on society generated from the activities of the company . Report Results in terms of social investments for a given period destined to fulfill the social responsibilities set by an organization. " The financial statements generated as part of an accounting process intended to report the economic results of a period and in response to the governmental and tax laws governing the operation of each company; Do not represent the exact measurement pattern to measure and evaluate the fulfillment of the economic and social objectives of an organization with a sense of social responsibility. The Social Balance is defined as the state that reflects numerical information which shows the situation in which the organization is in everything related to the social issue and is born as a response to the need that companies have under this new environment of social responsibility, Of carrying a different type of accounting to financial accounting, and generating specific reports to measure and evaluate the origin and destination of resources applied in the fulfillment of the social objectives set by the organization for a given period (Retolaza, San-Jose and Rui?z-Roquen?i, n.d.). The bases of the Social Balance are defined in the concepts of Social Assets and Liabilities, items that must be in balance as well as income and expenses. Social assets are defined as those resources that the company possesses (money, tools, time, people, etc.) applicable within certain parameters of possibility, to the solution of the needs defined as part of the Social Liabilities, these being the demands, Gaps, gaps, and defined needs within the social objectives to be developed or fulfilled for a period of time. To the extent that social liabilities are being satisfied, they become part of the property or assets of the beneficiary sectors, in a positive image of the organization and the basis of its social assets. The perspective of accounting as controlling rationality Which links control, accounting and management from a perspective for the benefit of society; Finally, of recent appearance; An evaluation of the Approach to International Financial Reporting Standards (IFRS) from the theory of Accounting and Control,) linking some of the previous perspectives, together with) , To the analysis of the International Accounting Regulation. We can find others, however it is not pretense of the present essay to make a total state of the art. The issue of Corporate Social Responsibility has acquired relevance in recent years if we consider that only in the second half of the last century began to seriously question the economic objective of companies. Nowadays, there is a demand from society around human rights, environmental protection, corruption, decent work, among others, which oblige employers, and to be more precise, employers to consider Ethics in their decisions, which implies having as a primary reference the so-called civic ethics, moral consciousness achieved by society, ie, shared universal principles and values. Thus, companies are morally committed to society, so it is necessary to discover the needs to be met and to which the efforts will be directed, giving it meaning and legitimacy before society, in addition to defining and establishing in Consequently the goals of the company as well as the values and habits necessary to reach such goals, the challenge lies in applied ethics. Considering that this depends on the decision maker, and in SMEs is centralized the decision-making in the owner-manager, there arises from there the central theme of this essay: Importance of Social Reporting and financial accounting To follow up on a Development plan, companies use different management and administrative tools such as Strategic Planning, Just in Time, Total Quality, Marketing Techniques, Plan of Action, Budget, among others working on different mechanisms that reinforce their permanence. But companies also have much broader objectives than economic ones to ensure their survival and the welfare of existing social systems. These objectives are translated into actions and programs of common benefit, which are evaluated periodically in order to control their behavior and the continuity of social policies that the company has adopted on a voluntary basis (Wojewoda, n.d.). For more than ten years, Australian companies have had a management tool that allows them to evaluate the fulfillment of their social responsibility: Social Balance and Social Reporting. As with the financial statement; The social balance must be evaluated and presented jointly at the end of each period. It is important then to di fferentiate the concepts, since the social balance is part of a whole process, which, at the end of each period and according to the results of its analysis will provide the necessary information to evaluate the fulfillment of social responsibility against goals Established inside and outside each institution; While the social report only describes social performance in a period that is usually used in the first year in which social actions are evaluated. The objectives of the social balance As a management tool it allows the company to update policies and programs related to its social responsibility, as it creates more effective instruments to measure and control the consequences, costs and benefits that emanate from its actions. Its practice facilitates the development of a voluntary and non-taxing social policy, since it is a fundamental tool for making decisions related to social responsibility freely assumed. It allows rationalizing the resources with which the company counts evaluating their effectiveness It provides a greater knowledge of the socio-labor characteristics of the personnel and the contribution of the company to the integral development of the man. The social balance is an instrument that facilitates the establishment of social policies at the company and sector level. It constitutes a valuable contribution to collective bargaining (Wojewoda, n.d.).The social balance shows the contribution of the company to the human development of the country. At times, as we enter the business world, we observe how a series of actions stemming from the commercial traffic of society and decision making within the company take place at a dizzying pace, allowing strategic alliances with third parties, preventing failures And reorganize business structures according to the present and future needs of the company. Recommendations One of the major shortcomings of current financial reporting is its inability to reflect the fair value of companies and the evolution of their value. This is mainly due to the fact that financial statements are prepared on the basis of legal accounting principles, while valuation is carried out in accordance with economic expectations. Hence the prepares of financial statements should follow the international reporting standards on issues of sustainable reporting. The stakeholders should have an input during the preparation of financial reports. This allows financial statements to be more comprehensive by factoring in social costs reported by external groups.The consequences of this situation, the exclusive use of financial statements prepared on the basis of traditional accounting principles are multiple, both internally because accounting as an information system is an instrument of management, motivation and Of control of activities, as external, in the allocation of the resources of investors and society as a whole. Therefore, the aspect of allowing external stakeholders to have an input allows the financial reports to be more comprehensive and thus more representing a true and fair value of the company. Also, the financial statements must faithfully present the financial situation and performance of the company, as well as its cash flows.The correct application of the International Accounting Standards, accompanied by additional information where necessary, will, in almost all cases, give rise to financial statements that provide such a faithful image in the presentation.Any company whose financial statements follow the International Accounting Standards must give an account of this fact. It should not be stated that the financial statements follow International Accounting Standards unless they comply with all the requirements of each Standard that apply to them, as well as the relevant interpretations issued thereon by the Interpretations Committee.Inadequate accounting treatment is not warranted or given information about the accounting policies followed, nor for the inclusion of notes or other explanatory material in this regard. In the rare circumstance that management concludes that compliance with a requirement required by a Standard could be confusing, and therefore that it must be abandoned to achieve a fair presentation, the company must report on the following. The IASB's advice is that financial statements prepared to provide useful information in economic decision-making5 meet the needs of the majority of users. Most of them make economic decisions, for example: Conclusion Various solutions have been applied to improve the external information of the companies on their situation and activities, but the solutions that have been applied have been developed by the companies themselves, or by consulting firms for specific applications, therefore expensive , Of minority use, and not constitute a standardized system that facilitates their widespread use and comparison between entities. However, it is important that companies use international guidelines when preparing these financial statements, this includes incorporating corporate sustainability reports which are mandatory in todays accounting. References Benn, S., Dunphy, D. and Griffiths, A. (2014). Organizational change for corporate sustainability. Abingdon, Oxon: Routledge. Brockett, A. and Rezaee, Z. (2013). Corporate sustainability. Hoboken, N.J.: Wiley. Campbell, T. and Mollica, D. (2009). Sustainability. Farnham: Ashgate. Edey, H., Peacock, A. and Cooper, R. (2011). National income and social accounting. 1st ed. London: Routledge. Hewings, G. and Madden, M. (2011). Social and Demographic Accounting. Cambridge, GBR: Cambridge University Press. Islam, M. (2016). Social compliance accounting. [Place of publication not identified]: Springer International Pu. Macintosh, N. and Hopper, T. (2005). Accounting, the social and the political. Amsterdam: Elsevier. Marti?nez de Anguita, P. and Wagner, J. (2012). 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