Holy Angel University

College of Business and

Accountancy

XGoodGov

Submitted By:
David, Lemmuel Jeremiah
Kong, steffie Cherine L.
Roxas, Myjorie
Vergara, Rochelle Anne F.

A-431
Submitted to:
Dr. Albert G. Morales
I. Issues to be discussed based on the activity presented.

1. The objectives of accounting found in accounting standards do not explicitly designate a

role for accountants in CSR reporting, however the profession has shown that it does
see a role for itself, demonstrated by the preparation of various discussion papers and
projects.
2. In the US and Australia, there does not appear to be the emphasis on CSR and
sustainability that is found in the UK and European professional accounting bodies.
Work undertaken in Australia has long been said to simply follow initiatives taken in other
countries, such as Canada, the USA and the UK (Medley, 1997). The Australian
professional body with the largest membership, CPA Australia describes has little about
social responsibility on the homepage of their website, choosing to focus on triple
bottom line and sustainability. In their submission to the PJCCFS inquiry however, CPA
Australia suggested that organizations do not currently have adequate systems in place
to support mandatory reporting. Similarly, the Business Council of Australia opposed any
proposal to legislate corporate social responsibility (Adams and Frost, 2007).
3.
II. Actions that can address the issues cited on I.
1. The International Federation of Accountants (IFAC)s Professional Accountants in
Business (PAIB) Committee prepared an information paper entitled Sustainability the
Role of the Professional Accountant in Business (IFAC, 2006b) that identifies
mechanisms for enhancing sustainability ...that are directly relevant to the role of
professionally qualified accountants. These include: transparency, standards,
stakeholder engagement, codes of conduct, benchmarking, regulation, reporting and
assurance. In addition, the PAIB Committee commissioned a series of telephone
interviews of professional accountants operating in business throughout the world, to
seek their views on the topic. The resulting publication is entitled Professional
Accountants in Business At the Heart of Sustainability? (IFAC, 2006a), and concludes
that: Good ethical practices are here to stay. For professional accountants in business,
being answerable for behaviour on the issue of sustainability is vital to improving public
perceptions and to winning stakeholders trust. All professional accountants in business
now need the knowledge to handle the responsibility that comes with their expanding
roles as it is clear sustainability can no longer be an optional add-on for business (IFAC,
2006a, p. 12)
2. PwC carry out many surveys of businesses and practitioners about the issue of CSR. In
2003 they asked whether anyone beyond a small group of activists, care if the board is
taking into account wider social issues (PwC, 2003 cited in Dellaportas et al., 2005, p.
213). They concluded that the general public does care, and hence the increase in
interest in ethical investments. In addition, the Commonwealth Parliamentary Joint
Committee on Corporations and Financial Services (PJCCFS) in Australia conducted an
inquiry on the social responsibility of corporations, to determine whether the
Corporations Act should include a requirement for some organizations to report on the

social and environmental impact of their activities (PJCCFS, 2006). Among the
recommendations of this report were:

That companies should inform investors of their top five sustainability risks.

That companies should be encouraged to include longer-term corporate

responsibility performance measures in remuneration packages.

That the Australian Government should attempt to quantify the benefits of

corporate responsibility reporting.
Submissions to this inquiry were sought from relevant stakeholders, including the
accounting profession. Unsurprisingly, mandatory reporting was supported by
some stakeholder groups, such as the Australian Conservation Foundation, and
the St. James Ethics Centre.

3.
III. Implementation processes of the actions on II.
1. In addition to professional accounting associations, the large accounting (Big 4) firms all
state their commitment to CSR and sustainability. An inspection of their websites
identifies that they see it important to both state their own commitment to CSR, and to
advertise their services to others in helping businesses to develop responsible strategies
and prepare reports. Most also offer some form of assurance services in this area.

KPMG for example, on their international website say that they are committed to
CSR, categorizing it into four major areas people, clients, communities and
efficiency. They are also signatories to the United Nations Global Compact,
stating that the principles are aligned with KPMGs Values. KPMG specifically
offer services in this area, and have a trademarked Global Sustainability
Services, which defines CSR as incorporating environmental, social, ethical,
and economic issues in the strategy development processes.

PriceWaterhouseCoopers (PwC) focuses on what they term responsible

leadership.1 Both PWC and Ernst and Young provide a variety of services to
clients, including environmental services such as emissions trading services and
environmental risk management; stakeholder engagement processes;
development of metrics and KPIs; sustainability reporting (including TBL/CSR);
and verification.

Deloitte Touch Tohmatsu also offer similar services, but devote a section of their
website to discussion of their approach to corporate responsibility and how they
ensure improvement in this area.

2. A number of organizations and accountancy bodies have issued guidance in this area,
including Accountability who, with the International Register of Certified Auditors, offers a
professional qualification in sustainability assurance practice (Owen, 2007). Built on the
AA1000 platform, the program is aimed at both internal and external practitioners.
Similarly, the accounting body of the Netherlands, NIRVA, drafted a Standard for
Assurance Engagements Relating to Sustainability Reports (ED 3410) in 2004.
Globally, the Association of Chartered Certified Accountants (ACCA) holds internationally
recognized awards for sustainability reporting, and draws upon the GRI guidelines in
their analysis. The aims of the ACCA UK Awards for Sustainability Reporting Awards
are:

To give recognition to those organizations which report and disclose

environmental, social or full sustainability information

To encourage the uptake of environmental, social and sustainability reporting,

and

To raise awareness of corporate transparency issues.

IV. Positive and negative effects of the actions and implementation processes on II and III.
1.

For the positive effect; Owen (2007, p. 168) reports a discernable increase in the
number of reports accompanied by some form of externally prepared assurance
statement. Similarly, KPMGs (2005) International Survey of Corporate Responsibility
Reporting indicates growth in this area although the rate of growth is slowing and the
nature of the assurance is patchy and is dominated by the major accounting firms
(Owen, 2007, p. 169. For the negative effect; notwithstanding the growth in this area,
there is evidence of much variability in the practice of CSR and sustainability assurance
(ODwyer and Owen, 2005; Owen, 2007). ODwyer and Owen (2005) similarly find
variability and inconsistencies, although they do point to some improvement in particular
practices over time, particularly in validating data. Pava and Krausz (2006) note that the
inconsistencies have already impacted on the credibility of the profession in this area
with stakeholders.

2.

The negative effect; Few countries however, have adopted regulated or mandated
standards in this area (Owen, 2007), although IFACs International Auditing and
Assurance Standards Board (IAASB) issues ISAE 3000 Assurance Engagements Other
Than Audits or Reviews of Historical Financial Information (IAASB, 2004b) and an
International Framework for Assurance Engagements, (IAASB, 2004a) which have been
used to guide assurance of corporate responsibility and sustainability reports (Owen,
2007). CPA Australias (2004) study of worldwide assurance statements refers to the
variability of assurance statements, noting in particular the name use for the statement,
differing objectives and scope, and a tendency not to disclose reporting criteria or
standards used. The positive effect; the ACCA and CorporateRegister.com provide a
database of reports (Owen, 2007) and Owen (2007) notes that nearly 40% of them
included an assurance statement in 2004, more than double that found 10 years earlier.