Accounting: the expanded

An Introduction to Social Accounting

Social accounting provides a way of looking at how well an organization is performing economically, socially and environmentally. It expands the range of criteria that are taken into consideration when measuring performance, by looking at the organization in relation to its role in the larger community. To do this, it looks at the organization’s impact on a number of stakeholder groups, for instance, employees, customers, owners, society and the environment.

Social accounting can also be applied to a community, as is being done in Newfoundland¹⁷ and Nova Scotia.¹⁸ In both areas, a System of Community Accounts attempts to measure the security and well-being of the area, using resident feedback on their feelings of safety, incidence of crime, volunteering, health, social supports, time use and other socio-economic factors.


¹⁷ See http://www.communityaccounts.ca/communityaccounts/onlinedata/getdata.asp
¹⁸ See http://www.gov.ns.ca/finance/communitycounts/
Typically, social accounting focuses on three inter-related components: economic, social and environmental:

• 
  economic: of relating to or based on the production, distribution, and
  

consumption of goods and services

• 
  social: of or relating to human society, the interaction of the individual and the group, or the welfare of human beings as members of society
  
• 
  environmental: the complex of physical, chemical, and biotic factors (as climate, soil, and living things) that act upon an organism or an ecological community and ultimately determine its form and survival.¹⁹
  

The definition of social accounting followed in this chapter is “a systematic analysis of the effects of an organization on its communities of interest or stakeholders, with stakeholder input as part of the data that are analyzed for the accounting statement” (Quarter, Mook, & Richmond, 2003, p. xix). This can be contrasted to definitions of traditional accounting, which focus only on the reporting of financial items for economic decision-making:
Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions of action. (American Institute of Certified Public Accountants (Accounting Principles Board), 1970, Section 1023).
Thus, social accounting differs from traditional accounting in its focus on community impact, on stakeholders, and on its wider scope than on financial items alone.

19. 
    http://www.m-w.com/dictionary/economic