Advanced auditing Essay Example | Topics and Well Written Essays - 2500 words

Advanced auditing - Essay Example Rob Gray tries to identify the scope of social accounting as "the preparation and publication of an account about an organisation's social,environmental,employee,community, customer and other stakeholders' interactions and activities and where possible the consequences of those interactions and activities" With the increase in the business activities backed by globalization, business enterprises have started locating their production facilities across the world, breaking cross border barriers. Such a rapid development, many a times will result in the firms overlooking their social obligations in the interest of maximizing their profits. Hence there has been a good deal of efforts being taken to devise the techniques that measure the contribution of an enterprise to the society. These developments may be considered as the result of the increasing realization of the Social Responsibilities of the enterprises and it becomes necessary that the performance of these enterprises should be s een in the context of their fulfilling their social obligations.According to George Clark "What is now coming to be called Social Auditing is similar in many ways to Financial Auditing except that it is about everything else that an organisation does apart from handling money."There has been a number of proposals put forth to design an extended accounting system that measures the social performance of an enterprise. Linowes has proposed the preparation of a Socio-Economic Operating Statement (SEOS) to show the various social costs and benefits of actions of enterprises. This statement proposes to indicate monetary values of various actions of an enterprise classified in to following categories: Relations with people - to include items like training programmes for handicapped workers, contribution to schools for employees, extra costs incurred in hiring persons from minority or suppressed communities. These items would constitute the contribution of the enterprise in 'improving' the relations with the people. The 'detriments' that need to be shown may be items like postponement of installing safety devices etc Relations with Environment - monetary values of improvements and detriments are to be listed and the net effect shown separately. Relations with Products - In a similar way, monetary values of improvements and detriments are to be listed. Since there is yet to be a significant development to take place in this area, many of the existing models aim at measuring the performance of an enterprise vis--vis the society tales into account the factors like human resource contribution, public contribution, environmental contribution, product or service contribution and net income of the enterprise. 1.2 Environmental Audit: "An environmental audit is a means by which businesses can assess the environmental impacts of their operations. At its core is the measurement and evaluation of all inputs and outputs from the production process." (Australian Government) In the context of the increasing emphasis on protection of environment, environmental accounting and auditing have assumed special importance in recent years. Environmental Accounting aims at measuring the impact of the activities of an organization on the environment. The resultant product is the environmental statement, containing the following among other things to be asserted by the management: A brief description of the activities of the organization and the effect of such activities on the environment as envisaged by the organization A description of the organisation's environmental policy, programme and management systems to implement the stated policies A summary of the figures of emissions which may cause pollution of air and water, waste generation, consumption of raw material, energy, water and other significant environmental aspects. There should also be presented a comparison of such data with the legal norms if any