SOCIAL RESPONSIBILITY ACCOUNTING AND ITS EFFECT ON THE HOST COMMUNITIES A CRITICAL REVIEW OF SELECTED OIL COMPANIES IN PH
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SOCIAL
RESPONSIBILITY ACCOUNTING AND ITS EFFECT ON THE HOST COMMUNITIES A CRITICAL
REVIEW OF SELECTED OIL COMPANIES IN PH
CHAPTER
ONE
1.1 OVERVIEW OF THE STUDY
Social
responsibility accounting is seen as the branch of accounting that considers
the social effects of business decision as well as their economic effect.
Bagley (1995:20). Similarly from the Wiklpedia (Pg 1), it is the process of
communicating the social effects of organization economic actions to particular
interest groups within society and to society at large.
The
issue of social responsibility accounting is not stated in the companies and
allied matters act as well as the Nigerian Accounting Board (NASB).Since Social
Responsibility is viewed as the disclosure of information of the effect that
the operation of an entity has on their natural environment. This disclosure
could be in the company’s published annual report or on a separate environment
report.
Social
Responsibility accounting has been unpopular, since is not given by 1977
Government green paper. As a result many people are unaware of the view that
the problem inherited in social responsibility accounting such as unit of
measurement, the extent of social accounting companies should bear. Social
responsibility accounting widens the scope of conventional accounting by
considering the social consequences of decision as well as their economic
effect and requirement of new measurement for defining social objectives and
assessing towards social goals.
Over
the years, many well-published environment disasters that occurred in the late
1980s, led to the creation of awareness for the need for social responsibility
accounting. Also, in recent years it has become the center of political debate
and search for solution to social problems that has also led to its
development. In the business world today, whether in the Government or private
sector, nothing has ever been so challenging and goal achieving than adhering
to the dictates of social responsibility which social change has imposed unto
the society.
D. Crowther defines social accounting as an
approach to reporting a firm’s activities which stresses the need for the
identification of socially relevant behaviours, the determination of those to
whom the company is accountable, for its social performance and the development
of appropriate measures and reporting techniques. It implies that social
accounting has the potential to expose the tension between pursing economic
profit and the pursuit of social and environment objectives; thereby showing
the effect on those concerned.
Corporate
performance is no longer seen simply as being equivalent to and consequently
measurable in terms of profitability alone; by extension business are no longer
responsible to their shareholders alone, rather they are also responsible to a
variety of shareholder comprising of internal Customers, that is employees
external customers, that is buyers of their products/services, suppliers, the
government the local community and society as a whole. It implies that each of
those stakeholders have one reason or the other to have their expectations of
the business. In addition organization’s social responsible behaviors. In order
to communicate to the stakeholders, in clear terms, the social and economic
benefits created by the organization; social and economic costs thus incurred
should be included and recorded in the organization annual report.
Despite
the government and stakeholders efforts in evolving a policy on the environment
and the need for taken responsibility, many of our oil companies are polluting
and endangering our environment at will, not because they do not know what to
do or the effect on the communities but because they want to maximize profit.
The numerous demands for oil companies in our communities to participate in the
social well-being and other wise of the society in which they operate. Delay
and other absolute refusal of these companies in social and other involvement
is increasingly leading to a period of demand for actions and ultimate
enforcement by those concerned.
1.2 STATEMENT OF PROBLEM
Many
well publicized environmental disasters; the kidnapping of people by militants
has been experienced in recent years. Iieme (1990-1992) reported how the people
of Umuechem village in Rivers State staged a protest match against their
neglect by an oil firm operating in the community, which led to the violent
destruction of lives and properties. Prior to Umueche disaster, according to
him the Ogoni Community also in Rivers State had earlier, through their leaders
of thought addressed a sober news conference in Lagos. Even recently we have heard
how the people of Ogoni land asked Shell Petroleum to vacate their communities.
Also how the Bonny land, blocked all the entrance for Nigeria L.N.G. The
nations, Dec3 2008 also recorded how soldiers and indigenes were killed in
Ogoni Community.
Furthermore, the
issue of Social Responsibility accounting may have resulted to a very many problems
that have hindered the organization and the communities concerned from
achieving their desired goals; to the communities in areas of contributing to
their well-being and development of their communities. More importantly
protecting their physical environment and providing essential social amenities.
Also, the political elite that do not allow the grass social to benefit from
it, and dissatisfaction of Youth that gives rises to militant activities and
kidnapping.
However,
the accounting implication observed is that some company have chosen to
disclose misleading information about the effect of their activities on the
government and community since there is no standard practice to follow.
To
the end, it becomes necessary to provide an exposition to the existing effect
of social responsibility accounting on host communities.
1.3 PURPOSE OF THE STUDY
The
main purpose of this study is to investigate the effect of social
responsibility accounting on the host communities.
Aside
from the main purpose stated above, other specific objectives include;
1. To
examine the effect of total cost incurred by company on environment issue and
its effect on infrastructures development (education)
2. To
examine the relationship between total expenditure by the company and
infrastructures development (health)
3. To
examine whether the company that use social responsibility accounting perform
better than those that do not use.
4. To
examine whether adequate disclosure, not misleading information are made about
the social responsibility cost.
1.4 RESEARCH QUESTION
1. Is
there relationship between total cost incurred by company on environment issues
and its effect on infrastructures development (education)?
2. Is
there relationship between total cost incurred by the company on social
responsibility issues and infrastructures development (health)?
3. Is
there significance difference in the performance of company that makes use of
social responsibility accounting and those that do not?
4. Is
there significance difference in disclosure on information by company that sue
social responsibility accounting and those that do not.
1.5 RESEARCH HYPOTHESES
H01:
There is no significance relationship between total cost incurred on
environmental issues and infrastructures development (education)?
H02:
There is no significance difference between total costs incurred in social
responsibility issues and infrastructures development (health)
H03:
There is no significance difference in the performance of Company that use
social responsibility accounting and those that do not use.
H04:
There is no significance difference between investment on community development
and peace in the host communities.
1.6 SIGNIFICANCE OF THE STUDY
As
already stated, the importance of this study cannot be over emphasized. The
result of the study will be relevant in Macro Economic, Political planning,
accounting development, Government and local communities as well.
Additionally,
the study and its results are expected to sensitize managers and accountants of
companies, so as to develop accountant principles and policies that are
adequate for accounting for social responsibility cost, there by noticing its
effect on those concerns.
Finally,
findings and conclusion of this study will be useful to numerous stakeholders,
employees, government, local communities and the society as a whole.
1.7 LIMITATION OF THE STUDY
A
study of this magnitude is usually faced with some constraints. An obvious
constraint is the availability of data and its collection. The heavy work
schedule of the researcher in addition to the time demanded by this research
exerted pressure on the available time, hereby making time constraints
inevitable.
Also
the attitude of the respondent will pose serious problem. Most of the
respondent will conceal vital information on the ground that they are
confidential.
1.8 DEFINITION OF TERMS
Social Responsibility Accounting:
This is also known as environmental accounting, sustainability accounting. It
is the branch of accounting that considers and communicates the social effects
of business decisions as well as their economic effects to a particular
interest group.
Environmental Cost:
This consists of environmental measure and environmental losses.
Environmental Measures:
Environmental measures are those are incurred on preventing, reducing or
repairing damage to the environment and of conserving resources.
Environmental Losses:
Environmental losses are cost which bring no benefit to the business, such as
fines, penalties, compensation, and disposal loses relating to assets which
have to be scrapped or abandoned because they damage environment.
Community: This refers to a group of people with common
origin, who live and share things together with common interest.
Organization:
This refers to a group such as a club or business that is formed for specific
objective.
Environmental Reporting:
This is disclosure of information of the effect that the operations of an
entity have on the natural environment.
1.9 ORGANIZATION OF THE STUDY
This
study is organized into five chapters in attempt to present the information
sequentially. Chapter one contains overview of the study, statement of the
problem, purpose of the study, research questions, research hypothesis,
significance of the study, definition of terms, scope and limitation of the
study and finally organization of the study.
Chapter
two deal with a review of related literature by previous researcher. Chapter
three deal with research methodology which encompasses, research design,
sampling procedure, operational measures of variables, data collection method
and data analysis technique. While chapter four encompasses; data presentation
and analysis. Finally Chapter five deal with discussion of the findings,
conclusion and recommendations.
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