28 Sep 2022


Social Accounting: What It Is and How to Do It

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Social accounting incorporates social and environmental impact into traditional financial accounting. It is the process of monitoring, measuring and reporting to the members of the business organization on the social and environmental effects of the organization's actions. Through social accounting, an organization gets to check its performance by collecting and analyzing information from the society. With social accounting, the impact of a given company on the society is properly monitored and assessed. The people, to whom the business organization impacts on, include those of the internal and external environments. Every business organization would want to have an influence on the society or the people living nearby or those that are directly served by the company. Therefore, a company must aim to make a good impression and impact positively on the public. Social accounting provides a business organization with the opportunity to check on the impacts and the influence that it has on the society. This paper will describe social accounting and issues and implications involved. 

Government and the public would like business enterprises and private companies to be more transparent about the nature of their businesses and their activities. Social accounting attempts to open up the operations of a business organization so that the government and the public can get to know its operations. Social accounting also ensures that a company looks closely at its activities and the way it carries out those activities and the influence of those activities on the public. Every business organization would like to have and maintain a good impact or relations with the people and the environment as a whole as asserted by Zadek, Evans and Pruzan (2013) . 

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Social accounting, therefore, works on two fronts. It keeps a company in check, requiring the company to look closely at the effects of its activities on the people and the environment. It also acts as a checkpoint for a company, whereby, it gets to look at the impacts of its operations and the effects of its activities on the people and the environment. In another way, social accounting also enables a business organization to maintain good relations with the public. 

Social accounting can be used in association with community-based monitoring. It emphasizes on the notion of a firm's accountability to the people and the environment. Basically, social accounting simply refers to reporting a company's activities. It emphasizes the need for identification of socially relevant activity and behavior, determines those to whom the company is accountable and stresses on the development proper measures and reporting techniques ( Gray, 2010) . 

Every business draws its inputs and gets it income from the society. One of the primary objectives of any business should be the welfare of the society. Every business or business organization should ensure that the society or the environment as a whole is not negatively impacted on. According to Zadek, Evans and Pruzan (2013), a company should maintain a good relationship with the community in order to grow. 

Social accounting expresses a firm’s social responsibilities. It shows the responsibilities of an organization to care for the society and the environment. Social accountability relates closely to the utilization, maintenance and conservation of social resources. This form of accounting stresses on the relationship between a business organization and the public. It is social accounting, which determines the desirability and popularity of a firm in the society. For a firm to do well in terms of business expansion and growth, its social relation has to be excellent. 

Social accounting comes with many benefits and advantages. The government and the general public would want to know about the nature of business of a particular company. Social accounting helps a firm to fulfill its social obligations. It enables everyone and the government to have a correct and a good opinion about a particular business. It also helps in countering adverse publicity or even criticism laid upon a company by other organizations and hostile media as stated by Gray (2010) . It creates a clear reflection of the company and allows the public and the government to see the activities of that particular company. 

Social accounting does more to a business organization by assisting the management in the formulation of appropriate policies and programs. A firm gets to prove to the public and the government that it is socially ethical regarding moral culture and environmental conservation through social accounting. Social accounting acts as an evidence of social commitment and accountability. Through social accounting, employee motivation is improved. Social accounting upholds the transparency of a company. Investors, public interest groups and the government require transparency of a company through its social accounting. Social accounting improves the firm's image and makes attract more people and investors. The management also gets feedbacks from the society on its policies, activates and impacts on the welfare of the society. Gray (2010) believes that w ith improved desirability, a firm's production and marketing significantly improve. The confidence of the shareholders of the company develops. 

In conclusion, business organizations should look closely at the impacts of their operations on the public or the environment. Social accounting aims to connect business organizations and the society. It gives accountability of a firm to the environment and the public. It acts as a tool for checking for the impacts and the influence of a company on the environment and the public. Interest groups, investors and the government would want to know about the nature of a firm's activities. Social accounting avails this kind of information. Social accounting is also important in creating good relations with the public. 


Gray, R. (2010). A re-evaluation of social, environmental and sustainability accounting: an exploration of an emerging trans-disciplinary field?. Sustainability Accounting, Management and Policy Journal , 1 (1), 11-32. 

Zadek, S., Evans, R., & Pruzan, P. (2013). Building corporate accountability: Emerging practice in social and ethical accounting and auditing . Routledge. 

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StudyBounty. (2023, September 14). Social Accounting: What It Is and How to Do It.


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