Social Accounting Meaning
Social Accounting is referred to the information regarding the company’s production, consumption, expenditure etc. and how it is fruitful to the overall social environment. All organisations must account for their social costs and benefit for sustainable development to achieve their goals.
Types of Social Accounting
#1 – Environmental Accounting
It provides information about the impact on the natural environment, in other words, it can provide information regarding how an organisation activity impacting on Land, soil, climate change, Air, change in water, reduction in natural resources such as coal, zinc, petrol, Gas, etc.
#2 – Sustainability Accounting
Also known as corporate social responsibility, it provides information about the social and economic sustainability. It has a direct impact on society, the environment and the economic performance of an organisation. For example, the use of materials through the recycling process can help to become more sustainable.
#3 – National Accounting
It refers to accounting techniques that analyse the economic activity of a nation. It analyses the total expenditure incurred by the country to perform a business activity. For example, a government has to keep a record of their spending on each project to avoid misuse.
Apart from the regular audit, they conduct special audits to know if there is any misuse of expense.
- Corporate Social Responsibility like the construction of a hospital in their local area
- The paper manufacturing sector uses waste paper to recycle the same to produce paper.
- Manufacturing units set up outside the local area because of the release of toxic air which is harmful to both living things and non-living things.
- Use of waste disposal techniques to avoid water pollution.
- It built trust in society through its transparency.
- It is beyond financial reportingFinancial ReportingFinancial Reporting is the process of disclosing all the relevant financial information of a business for a particular accounting period. These reports are used by the stakeholders (investors, creditors/ bankers, public, regulatory agencies, and government) to make investing and other relevant decisions. because it covers social impact.
- It provides information to the government, people, society.
- It helps achieve social objectives by providing transparent information.
- It is also helpful in measuring social cost-benefit analysisCost-benefit AnalysisCost-benefit analysis is the technique used by the companies to arrive at a critical decision after working out the potential returns of a particular action and considering its overall costs. Some of these models include Net Present Value, Benefit-Cost Ratio etc..
- It is a notional cost, and therefore, non-monetary.
- It does not impact on financial terms of financial reporting.
This has been a guide to Social Accounting and its meaning. Here we discuss its top 3 types along with examples, benefits, and limitations. You can learn more about fixed income from the following articles –