Accountancy and Social Responsibility

Frontmatter

Chapter 1. Introduction

Abstract

This chapter provides an overview and the main intention of the book that is directed to accounting academics, professionals and managers in various organizations. It can be interesting for students of economy and sociology as well. Each of thirteen chapters is briefly introduced and explained.

Živko Bergant

Chapter 2. Accounting and Accountancy

Abstract

In this chapter, different definitions of accountancy are discussed. The broader meaning of accountancy comparing to accounting is emphasized. The difference between accountancy and accounting in an organization is deeply explained. To do this, the partial system approach is used. Accounting is defined as a part of information system with its information functions. Accountancy is discussed through tree partial systems and their connections. Some shortcomings of accounting theory are shown, especially its direction to external reporting and to mere process of accounting and neglecting its impact on socio-economic and political development. The main process of accounting (from data to information) is illustrated and deeply explained. Processes of accounting (book-keeping, forecasting, analyzing and controlling) are shown through their partial systems (operational, managerial and informational) and their connections are discussed.

Živko Bergant

Chapter 3. Accounting and Reporting

Abstract

This chapter is devoted to reporting that is to be understood separately from the creating of information. It is discussed through three partial systems and also quality of reporting. The latter is given an especial emphasis regarding mistakes in the theory and practice as well. The reporting should cause socially responsible responses from decision-makers. The quality of reporting therefore depends on whether one can make as socially responsible decisions. Accounting reporting is not and should not be neutral, regarding social responsibility. The basic precondition for a good information process is the cooperation and trust between the user and the analyst, for which they are both interested. However, this depends to a large extent on the analyst’s empathy towards the information user.

Živko Bergant

Chapter 4. Risk and Its Social Aspect

Abstract

In this is very important chapter, the risk and its social aspect are discussed. It stems from existence as the source of human needs and thus also the right to work. Human work in a broader sense creates the value added that means an increase of welfare of people and presents also a source of reserves for risk management. At the same time, value added is main long-term information. It is a prerequisite for company’s long-term survival. Its information content is compared to profit as better measure of companies’ performance. A broader understanding (not only from accounting point of view) of the value added is present and explained. Some advantages and disadvantages of the value added are explained.

Živko Bergant

Chapter 5. Law on Value Added

Abstract

The value-added law is revealed and formulated. It has its own creative and distributive dimensions that work regardless of the socio-economic system or human history and in all types of organizations. In opposite, the inequality is devastating and the entropy of the system increases. Value-added law requires the distribution of value added between all stakeholders that bear risk according to their work contribution. Important economic and social aspects of the value-added law are shown. The distribution of the value added to the stakeholders is discussed and detailed value-added structure is presented. New categories, basic labor costs and surplus value added are defined and proposed to make the procedure of the distribution of the value added easier and comprehensive. A special emphasis is given to the retained surplus value added.

Živko Bergant

Chapter 6. Value-Added Statement

Abstract

This chapter provides a brief history of value-added statement and its purpose. The typology of value-added statements is formulated regarding the standardization, the purpose and reporting. The surplus value-added statement as the most important outcome is proposed, comparing to the income statement. The surplus value-added statement shows its creation and distribution and takes into account the equality of stakeholders as an integral part of an integral reporting. Fundamentals of the value-added analysis are shown, together with operational and financial leverage. Starting points for economics of the organization, based on the surplus value added are proposed and some accounting ratios about surplus value added are offered as well.

Živko Bergant

Chapter 7. Management and the Value Added

Abstract

In this chapter, management is positioned in a business process through three partial systems. A comprehensive model of management is built including its four dimensions (organization, leadership, ethics and risk). Management model on the basis of the value added regarding sustainable development is proposed. It is show also from cybernetic point of view. Special emphasis is given to human resource management regarding value added. It is stressed that employees in business bear relatively the greatest risk. They are important holders of intellectual capital and long-term interests. Therefore, they are legitimate contributors to an organization’s controlling system. Investment decisions are discussed from value added point of view. A model of comprehensive financial policy is proposed with the emphasis on its capital adequacy.

Živko Bergant

Chapter 8. Accountancy, Ethics and Sustainable Development

Abstract

There is some argument for personal ethics (comparing with business and professional ethics) and its relation to sustainable development. This means that there are not several types of ethics, but there is always only one: personal ethics. Therefore, business and professional ethics represent two partial systems (and not subsystems) of personal ethics. The importance of accounting information from ethical point of view is emphasized. Factors of accounting development are discussed. A brief history of accounting theory is given together with some radical critics of its recent development. Open questions in the accounting theory indicate the need for a different approach to build more consistent and useful theory.

Živko Bergant

Chapter 9. Accountancy and Social Responsibility Aspect

Abstract

This chapter presents the mainstream of the book, it is accountancy from social responsibility perspective. Based on the shortcomings of recent theories and on the implementation of better understanding of accountancy, the concept of comprehensive accountancy theory is offered. It is based on a surplus value added as a common denominator for all objectives in all organizations. It includes three basic areas: principles and rules of accounting process, principles and rules of management in accountancy, and accountancy system, regarding its tangible and intangible resources. It is emphasized that the right way for accountancy development is its social responsibility. Different behavior of people is discussed and crucial causes are found. Individual accounting statements are proposed from social responsibility point of view.

Živko Bergant

Chapter 10. The Role and Position of Accountancy

Abstract

The reflections so far in all previous chapters make it possible to find the position of accountancy in relation to social responsibility and to a sustainable future.

Živko Bergant

Chapter 11. Summaries of Findings and Main Points

Abstract

This chapter systematically presents the main findings useful for the reader to get a brief summary of the book along the red thread.

Živko Bergant

Chapter 12. Who Should Do What?

Abstract

The last chapter contains some challenges and invitations. The first to be challenged is the academic sphere and the education system. They are followed by politicians who should follow academic insights. Nevertheless, the most important factor is the state government which has to ensure the safeness and wellbeing of citizens in the broadest sense. Governments of all states should recognize their role as an important stakeholder in organizations, together with trade unions.

Živko Bergant

Backmatter