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Introduction
With the world facing globalization, all the spheres of human activities have been subjected to tangible changes. Recently, the work of the International Accounting Standards Committee has faced the issue of harmonizing accounting standards for them to be beneficial for both business and society (Braithwaite and Drahos 121). This is why the financial statements of the enterprises started presenting information “about the financial position, performance, and changes in the financial position of an enterprise that is useful to a wide range of users in making economic decisions” (Idowu and Filho 19). Within the next ten years, the International Accounting Standards Board is likely to release an International Financial Reporting Standard (IFRS) which will require extensive disclosure of a corporation’s environmental and social impacts; the process of this standard is going to consist in the organizations’ reporting about their compliance to ten universal business principles and making their reports transparent and comparable rather than simply information-packed.
Main text
The new IRFS will make the organizations keep to universal business principles, which will ensure the transparency of their financial reports. These principles focus on human rights protection, avoiding human rights abuses, recognizing the right to collective bargaining, fighting with compulsory labor and demanding the abolishment of child labor, eliminating discrimination at the working place, being environmentally conscious, and using environmentally friendly technologies (Kubr and International Labor Office 528). The tenth principle was adopted in 2004 and it consists in fighting corruption in all its forms (Suder 12). Therefore, the new IRFS will make the organizations report on keeping to these principles thus contributing to the company’s social responsibility.
Moreover, according to the new IRFS, the organizations will have to submit annual sustainability reports which will allow assessing their impact on the society and environment. These reports are going to be more detailed than environmental or social reports which most of the large organizations have to release at present (Rugendyke 142) because they will provide an assessment of “the sustainability of the enterprise’s operations and products about the development of society” (Disclosure of the Impact of Corporations of Society 11). Such reporting will be a part of each company’s communication program and is going to require joint effort on the part of the company’s departments, as well as sufficient resources and management commitment (Jolly 134). Thus, with certain efforts on the part of the organizations, it will be possible for them to report not only about their governance and performance on the corporate level but about their impact on society and the environment.
Finally, making the sustainability reports comparable will further contribute to the disclosure of the corporations’ social and environmental impact. Comparability of these reports will make it possible “to evaluate their relative position in the field of corporate social responsibility, the results they achieved and the changes in this position” (Jaarverslaggeving 48). In this way, the new IRFS will allow not only comparing the reports within one organization but assessing the performance of other relative corporations and learning from them.
Conclusion
In sum, the introduction of the new IRFS within ten years will help to disclose the impacts of the corporations on the society and environment through making the companies report about their keeping to ten universal business principles and organize their reports transparently and comparably.
Works Cited
“Disclosure of the Impact of Corporations on Society.” United Nations Conference on Trade and Development. New York and Geneva, 2004. Web.
Braithwaite, John and Drahos, Peter. Global Business Regulation. Cambridge: Cambridge University Press, 2000.
Carmichael, Douglas R., Whittington, Ray, and Graham, Lynford. Accountant’s Handbook. New York: John Wiley and Sons, 2007.
Delaney, Patrick R. and Whittington, Ray O. Wiley CPA Exam Review 2009: Financial Accounting and Reporting. New York: John Wiley and Sons, 2008.
Epsteain, Barry J., Nach, Ralph, and Bragg, Steven M. Wiley GAAP 2008: Interpretation and Application of Generally Accepted Accounting Principles. New York: John Wiley and Sons, 2007.
Ho, Thomas S. and Yi, Sang-Bin. The Oxford Guide to Financial Modeling: Applications for Capital Markets, Corporate Finance, Risk Management, and Financial Institutions. Oxford: Oxford University Press US, 2004.
Idowu, Samuel O. and Filho, Walter L. Professionals Perspectives of Corporate Social Responsibility. London: Springer, 2009.
International Accounting Standards Board. International Financial Reporting Standards (IFRSs) 2008: Including International Accounting Standards (IASs) and Interpretations as Approved in 2008. Amsterdam: Kluwer, 2008.
Jaarverslaggeving, R. Annual Report Guideline 400: Version 2003. Amsterdam: Kluwer, 2004.
Jolly, Adam. OECD Economies and the World Today: Trends, Prospects, and OECD Statistics. London: Kogan Page Publishers, 2003.
Kubr, Milan and International Labor Office. Management Consulting: A Guide to the Profession. New York: International Labour Organization, 2002.
Lewis, Richard and Pendrill, David. Advanced Financial Accounting. London: Pearson Education, 2004.
Nobes, Christopher and Parker, Robert. Comparative International Accounting. London: Pearson Education, 2008.
Rayman, R.A. Accounting Standards: True or False? New York: Taylor & Francis, 2006.
Rugendyke, Barbara. NGOs as Advocates for Development in a Globalizing World. New York: Taylor & Francis, 2007.
Suder, Gabriele G.S. International Business under Adversity: A Role in Corporate Responsibility, Conflict Prevention and Peace. London: Edward Elgar Publishing, 2008.
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