Question 1
The directors of Tasmanian Shipbuilders Ltd have recently reviewed their legal financial reporting obligations to shareholders and are satisfied that the company’s financial reports meet all the required accounting standards. However, they are aware that many companies are voluntarily reporting extra information about the effects of their businesses on the environment and society generally, and that the Commonwealth Government has been considering whether or not to set up compulsory reporting standards for these areas of activity.
The directors have some knowledge, but not much, about CSR, TBL/Sustainability Reporting, the GRI, Sustainable Development, and the ideas of a social contract and the ‘good corporate citizen’. They now want to know more and have asked you, their chief financial officer, to research these areas and report back to them.
Required
As chief financial officer:
a Write a brief report to the directors explaining and linking the underlined concepts shown above.
[15 marks]
b Briefly explain three major social ‘pressures’ managers may perceive, or experience, to influence their decision to voluntarily produce sustainability reports.
[9 marks]
c Give arguments for and against the company voluntarily disclosing its own social and environmental (CSR) reports, and make a recommendation to the directors.
[6 marks]
[Total for Question 1 = 30 marks]
(Word limit = approximately 900 words)
Question 2
An important issue in Corporate Social Responsibility reporting is how to account for ‘externalities’, the harmful effects that a corporation’s activities may have on social groups, the environment and the way profit is traditionally measured.
- Explain the concept of ‘externalities’ and why the present accounting model and its concept of the accounting entity and definitions of asset and expense prevent them from being reported as part of an organisation’s net operating profit.
(12 marks)
- From a corporation’s point of view, what might be typical arguments by corporations against trying to measure and report harmful ‘externalities’.
(6 marks)
- Research recent issues of the Financial Review and the Business section of the Australian newspaper (or go to their websites) and select at least two examples of corporate activities that have caused harm to social groups or to the environment. Attach the examples to the assignment.
(2 marks)
(Total for Question 2 = 20 marks)
(Word limit = approximately 600 words)
(Total for assignment = 50 marks)
(Total word limit = 1500 words)
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