Accounting for Sustainability Oradea May 2011

8/6/2019 Accounting for Sustainability Oradea May 2011

http://slidepdf.com/reader/full/accounting-for-sustainability-oradea-may-2011 1/22

Accounting for Sustainability: What

Next?

A Research Agenda

Gary M. Cunningham

Arne FagerströmLars G. Hassel



This is a working paper. Please do not

cite or quote without explicit

permission of the authors.Feedback is especially welcome



Urgent Needs Expressed Everywhere

� Accounting research conferences

� Award-winning authors, e.g. Friedman (2009)

� Television and daily newspapers



Many uncoordinated responses

� New Journals

� Centre for Social and Environmental

Accounting Research, Accountability,Transparency, Sustainability (CSEAR)



No commonly accepted notions:

� What is sustainability

� What is or should be role of accounting



Traditional view of Sustainability

� Much of previous research is based on

Buntland, U.N. 1987

�

Ensuring sustainable development meetscurrent needs without sacrificing needs of

future generations

� Creative and innovative at that time

� External focus



Working definition for this paper

� Sustainable entity is one that is as well off atthe end of a period as at the beginning withrespect to use of all resources:

± Environmental and ecological

± Human and social

± Financial

± Technological

� Focus on sustainable company

� Subject to change as this research agendaproceeds



Traditionally

Sustainable reporting is:

� Ecological, social, and sometimes governance

activities� Narrative of how good we are i.e.

greenwashing

� Triple bottom, e.g. Swedish State enterprises

� Oriented almost exclusively to sustainability of

ecology and natural resources



Current focus

Accounting and reporting for sustainable entity

� Use of resources

�Financially

� Legally

� Etc.



Now recognize� Scope is much broader than mere use of

ecological and social resources, e.g.

� Sustainability of entity as a business, e.g.

± Supply chain, markets, products

± Financially

± Legally

� Interests of users of information

�

Audit and assurance issues� Consequences of failures

± Privatize profits but socialize losses



Initiatives to date

Major focus on so-called integrated reporting

� Principles of Responsible Investment (PRI)

Academic network -U

N� Accounting for sustainability project

� International Integrated Reporting Committee



Many remaining issues

� No common notion of what is integratedreporting

± Parallel

± Incorporate in financial measurements

� No consideration of users of integratedreports

�No consideration of auditing and assuranceissues

� No systematic framework for analysis



Accounting theory issues

� If sustainability issues are integrated into

traditional reports, then many accounting

theory issues must be addressed

� Especially if sustainability items incorporated

into accounting measurements

� Must either modify theory or adapt integrated

reporting



Accounting theory issues (Continued)

� IASB (and other) conceptual framework is

based on needs of investors as primary users

�

Advocacy and study of sustainability reportingso far has not extensively considered needs of

users information, whether investors or

others.



Accounting theory issues (Continued)

� IASB conceptual framework says reporting

objective oriented towards future cash flows.

�

Many uses of free ecological dont have cashflow consequences, or not near term, that can

be readily measured



Accounting Theory (continued)

Postulates� Going concern

± Essentially same as sustainability but more thanfinancial

� Entity ± More than traditional consolidated group; include

supply chain and consumers of products

� Monetary unit ±

Many ecological factors not measured monetarily� Time period

± Sustainability consequences extend over long period



Accounting Theory (continued)

Postulates (continued)

� Exchange transaction

± Not all uses of resources represent exchange

transactions



Research Issues

� Accounting research framework foraccounting for sustainability

� Reporting sustainability information including

integrated reporting

� Users of sustainability information

� Auditing and assurance of sustainability

information� Financial distress, accounting and auditing

failure, lack of enforcement.



Research Issues and methods

Accounting research framework for accounting forsustainability to include:

� Roles and levels of accountability

� Relevant interest groups and persons

� Sustainability entity, which can vary depending onanalysis

�

Common taxonomy and language� Uses general systems theory methodology that

has been used for such frameworks before




Reporting sustainability information including

integrated reporting

�

Standards for reporting; different standardsexist at moment

� Objectives of companies in such reporting,

e.g. reputational

� Objectives of organizations promoting

� Methods: content analysis; field studies




Entity failure, accounting and auditing failure, lackof enforcement

� Extent to which users of sustainability

information view the link between ecological andfinancial failures

� Impact of non-compliance with accounting andauditing standards and lack of enforcement on

users.

� Methods: market studies, bankruptcy preditionmodels



Thanks for your attention

Comments and feedback especially welcome!

Date post:	07-Apr-2018
Category:	Documents
Upload:	mihai-cociuba
View:	220 times
Download:	0 times

Accounting for Sustainability Oradea May 2011

Documents