Download Studies on the Accountant Problems Under the Idea of Sustainable Development

ORIENT ACADEMIC FORUM
Studies on the Accountant Problems Under the Idea of Sustainable
Development
ZHAN Zhongcan
Hunan Institute of Science and Technology, China, 414006
Abstract: The sustainable development is a kind of economic development model which proper
attention to both economy, social and the environment,mainly includes enterprise own sustainable
development and the social sustainable development. This article utilizes the qualitative analytic method
to analyze the main problems of traditional accounting based on enterprise own sustainable development
and under the social sustainable development theory separately, proposed that establishing accounting
responsibility entity and the multi-dimensional omni-directional measurement assumption, increasing
the accounting content and the sustainable development accounting performance report and the
evaluation system, introducing price changes accounting and time value theory patterns and so on.
However, due to the time sense consciousness, community responsibility consciousness of present
enterprise is not strong as well as sustainable development accountant itself theory is not
mature,practical operational difficulties and other reasons,sustainable development accountant has the
development barrier.
Keywords: Sustainable development, enterprise itself, society, barriers
I Introduction
The sustainable development is one kind simultaneously gives dual attention to the economy, the society
and the environment in spatial and the time dimension efficiency and the benefit economic development
pattern. “Sustainable development” the concept was firstly discussed in 1972 at the United Nations
human environment seminar which holds in Stockholm the official discussion.According to the bootran
report which was published by the world environment and the Development committee in 1987,the most
widespread definition of sustainable development is : "development that meets the needs of the present
without compromising the ability of future generations to meet their own needs." Deng Xiaoping
proposed “we must take the economy development and population, resources into consideration together
and make overall arrangement.” Jiang Zemin pointed it out that" we can’t run out of ancestral
resources,and destroy the future of future generations.” as well as Hu Jintao proposed” scientific
development concept”and so on.These views are all brilliant expressions of the concept of sustainable
development and continuous distillation.
Accounting for Sustainable Development is a new concept, it was first proposed by Elkington (1993)
formally proposed, which is the accounting object from the economic, social and environmental
dimensions in space and time on the two dimensions accounting supervision and accounting of a
accounting. It is the emergence of a significant breakthrough in the traditional financial accounting
scope and content, but also a breakthrough in environmental accounting of the breadth and depth.
Foreign Accounting for Sustainable Development can be divided into the following four stages. The first
stage: integrate internal environmental considerations into their accounting measurement and reporting
system - in this stage the internal environmental factors and the physical units of measurement will be
included into the accounting measurement and reporting system. In this process, Gary (1993) put
forward three important measurement framework, namely, sustainable development, cost accounting,
natural resource accounting and input-output accounting, although Gary mainly discussed the
Organization's activities within the environmental measurement,did not cover all the environmental
costs, but it opened up the accounting measurement perspective, contributed to the next phase of
in-depth study The second stage: integrate business activities of all environmental considerations into
accounting measurement and reporting system, at this stage measuring the environmental costs, from the
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organizational environment and its stakeholders point of view, of which full-cost mode of measurement
and control elements of sustainable development of the accountancy have expanded the scope of
measurement and reporting, but it only relates to environmental factors at this stage, in order to achieve
enterprise-wide measurement and environment of reporting, social and economic costs and benefits of
the objectives, needs to consider other factors; The third stage: integrate full costs and benefits of
business activities into accounting measurement and reporting system, at this stage ,social factors also
try to gradually incorporated into the accounting report system .The representation of the accounting
model has Elkington (1999) based on sustainable development three-dimensional definition of the
triple-profit accounting, and so made relatively comprehensive overview of the content covered by
sustainable development, However, there is still difficult to observe the long term, such as its economic
performance indicators and the linkages between sustainable development objectives and other
theoretical issues, and voluntary disclosure or mandatory disclosure of accounting information produced
by sustainable development, the cost of commitment to the practical application problems, etc. The
fourth stage: to make sustainable development and -related researches a systematic accounting--the
main building to use traditional financial accounting framework of the sustainable development of
accounting theory and accounting theory to supplement the traditional form of sustainable development
and expansion of two modes of accounting theory. Among these, Geoff Lamberton (2002) have tried to
borrow the framework of traditional accounting theory to build Sustainable Development of Accounting
Theory. Britain's "Forum for the Future" (Forum for the future, 2003) also raised the theoretical
framework of accounting based on discussing the connotation of sustainable development and its
evaluation model.
Domestic Accounting for Sustainable Development of environmental accounting classes more common
in literature, mainly environmental accounting academic point of view, which dealt with the
environment and natural resource difficulties.
Professor Guo Daoyang made earlier in the domestic resources, environment and sustainable
development of accounting thought, He gave a more comprehensive exposition for the establishment of
resource accounting and resource accounting system, from a macro point of view,and proposed the
environmental costs of the connotation and denotation that based on "cost shunt control" and "ecological
cost" of academic theory.This guide the direction ofFuture domestic-related academic research.
Dr. Guo Xiaomei (2003), set forth their own framework for environmental management accounting
theory which divided into macro-and micro-environmental accounting and environmental accounting
after introducing domestic and foreign environmental accounting research status and cutting-edge
issues . Dr. Zhang Yalian (2006) described the influences of economic decision-making process, control
process and performance evaluation process of the organization of ecological systems on the micro level
in his papper. Zhao Yingchun (2007) also discussed Problems in practical operation which were found
on accounting recognition, measurement and evaluation system attributes and units of selection of
indicators of sustainable development in China's current accounting, from a practical point of view , and
propose to build the theory of the relevant principles.
Overall, studies done abroad are relatively early, and has formed the basic theoretical framework of the
prototype, also its research process accumulated a lot of experience. Accounting for Sustainable
Development of China's theoretical research is still in its early stages, at present most of the major
targeted micro-enterprise level, while the macro aspects of academic research is less, yet to emerge a
systematic theoretical framework. Looking at domestic and international research we found that too
much emphasis on sustainable development, environmental and social accounting, but did not refer to
the sustainable development of enterprises themselves, we believe that enterprises themselves is also
essential aspects of sustainable development, this article analysis this problem from the enterprise's own
trial and social two aspects.
II Problems Based on Their Own Accounting of Sustainable Development
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Independent enterprises as autonomous economic entities, we must first consider its own sustainable
development, while sustainable development of their own bottom line is to maintain the existing level of
production and management, and there are many issues to be discovered and resolved in traditional
accounting under the concept of self sustainable development.
1. The main problems in the traditional accounting under the concept of self sustainable
development
First, the basic assumptions of traditional accounting measurement assumptions were based on the
monetary stability of the currency with its assumptions,and economic development will inevitably bring
about the price increases. Consequently, the accounting in the choice of accounting methods and
procedures when it comes to price stability as the prerequisite, if not fully consider the factors that rising
prices will naturally lead to inflated corporate profits and assets, leading to distortion of accounting
information and affect sustainable development of enterprises.
Secondly, the traditional historical cost accounting measurement model’ status of the primary
importance Is hard to change. While measurement models are mainly "historical cost", "replacement
cost", "net realizable value," "present value" and "fair value" after corporate accounting standards
revised. But the historical cost measurement model which according to actual cost tcan prevent the
arbitrary, so that a true and reliable accounting information,also it’s easy to understand and compare the
presence of such obvious advantages.So the traditional historical cost accounting measurement model’
status of the primary importance Is hard to change. Various assets of enterprises valued according to the
acquisition or the acquisition or construction occurs when the actual cost, and even if price changes, do
not adjust generallys. This shows that the impact of historical cost accounting is obvious, as long as
economic growth, price increases, the historical cost measurement will inevitably lead to inflated assets
and corporate profits, cause the impact on their own sustainable development.
Thirdly, the traditional accounting rarely take into account the time value of money lead to the situation
of real business value out up down. The time value of money is the money going through a period of
time investment and reinvestment of the value added, that is, the same amount of money at different
times have different values, The time value of money is an objective reality, while the accounting
treatment of the traditional accounting course, few are related to the time value of money, and thus the
disclosure of accounting information is naturally not true, leading to real business value out up down,
affecting sustainable development of Enterprise.
2. Accounting model based on their own for sustainable development
First, the use of space for accounting existence of price changes,. For a variety of factors, although the
inflation accounting have yet to form a complete system in the West accounting profession. but, so far,
have also been dozens of countries according to their national characteristics and circumstances of
inflation, using the measures suited to their national conditions, in varying degrees on a trial basis of
inflation accounting. We believe that in the case of continuous price increases (if in order to provide
accurate accounting information and corporate sustainable development, as long as there price increases
can also be said this as a reference), People for the price changes of the situation on the different effects
of financial accounting data were selected the following three modes: constant currency accounting, the
current (replacement) cost accounting and current cost / constant currency mode. In order to eliminate or
reduce the prices of the impact of sustainable development of enterprises,we can also choose a simpler
approach to accounting treatment, such as the LIFO method of inventory, fixed assets, accelerated
depreciation, accelerated amortization of intangible assets, in order to eliminate price inflation on
accounting Information and, to avoid or reduce the prices of the impact of inflated assets and profits,
companies themselves can be sustainable development.
Second, the historical cost timely exit the stage of history. While the historical cost may have some
merits, but standing on the point of sustainable development of enterprises, you can withdraw from the
stage of history instead of historical cost with fair value. Fair value is defined as a fair deal, according to
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knowledgeable, willing parties in an asset or a liability settled, the amount of the exchange. With the fair
value measurement, the relative cost of enterprises in terms of historical cost, is more accurate, resulting
in that price rises will not inflate assets and profits, corporate sustainable development.
Third, promot the concept of time value of money in financial accounting .The new guidelines reflect
the time value of money in various concepts, mainly the "basic norms" in the accounting measurement
attributes, the accounting elements of the definition of "fixed assets", "Impairment of assets",
"non-monetary asset exchange", "or Matters "," income "and" lease "and other specific criteria have
been applied this accounting concept, we believe that can be extended to other specific criteria, and to
expand the scope of application of specific guidelines.
III Issues Based on Social Accounting for Sustainable Development
1. The main problems of traditional accounting under the concept of sustainable development.
First, accounting entity hypothetical question based on "rational economic man". As part of the
enterprise can not shirk responsibility of Sustainable social development. However, the establishment of
"rational economic man" hypothesis based on the traditional accounting subject to financial
responsibility as the center of its business purely for profit accounting objectives, which will certainly
enable enterprises to give up or indifferent to social responsibility, while the pairs of natural resources
predatory exploitation and consumption, making a considerable number of enterprises to meet the
immediate interests of individual or partially, abandon or sacrifice the majority of people's current
long-term interests or even seriously affected the economic and social sustainable development.
Secondly, Problems based on the concept of costs of "internal visualization" of the value of
compensation. The Department referred to the concept of the traditional accounting cost "internal
visualization" refers to the cost is limited to the visible part of the enterprise, corporate external social
spending of individual free has led to the enterprise do not want to consciously recognized, it can not
meet the sustainable development strategy consumption of natural resources and human resources used
in the cost of compensation claims, and the concept of sustainable development that the
"intergenerational equity" and "intra-generational equity" are contradictory.
Thirdly, problems based on a simple "can be measured in money" as the center of the costs of
accounting. The traditional accounting cost accounting is based on a "simple monetary unit" as the basis
of the so-called "simple monetary measures" means the companies can get the most direct revenue
associated with the company's internal costs, which does not include "enterprise found it difficult to
measure in monetary terms "enterprise external
Fourthly, problems based on incomplete disclosure of the financial report. Traditional financial reports
including balance sheet, profit and loss account, cash flow and its schedule, accounting statements and
financial statement notes and so on. The report focuses on the disclosure of accounting based on
economic responsibility, including financial information and non-financial information, but disclosure of
non-financial information content of corporate social responsibility and environmental protection or the
information content of environmental pollution are few.. Therefore itis difficult to meet the need of
information providing for government, business, employees, investors, public relations departments, and
is not able to meet the sustainable development and eco-economic development requirements, namely:
unable to meet the "Economic + Social + environment" Three-dimensional performance evaluation
system information needs.
2. Model based on social accounting for sustainable development of the enterprises
First, to establish "accountability of the main" assumption. "Accounting responsible subject" can be
broken down into subjects and the responsibility of the principal accounting two meanings. To let the
concept of sustainable development into the accounting system, it is necessary to rethink some
fundamental questions, it is necessary to "sustainable development" as the core of the scientific outlook
on development as guidance, breaking the old traditional concept of "rational economic man"
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hypothesis , Sustainable Development in the conventional accounon ting can change "accounting entity
assumption " to "accountability of the main" assumption on the basic of traditional accouting.,
emphasizing the main business is accounting, but also the main social responsibility.
Secondly, to increase the content of accounting. Under the accounting framework of sustainable
development, accounting’s content is not only economic issues, but also a large number of social and
human issues. Accounting need for a comprehensive accounting of enterprise "economy - society environment" sustained and coordinated development. Therefore, the actual accounting for corporate
has been the environmental and human resources matters, it could be in the existing method of
accounting theory and improved accounting, but also can increase the corresponding accounting
subjects accounted for separately. In the account settings, it can set two subjects to account for
environmental and social responsibility issues in the relevant existing chart of accounts, such as
enterprise purchased by the sewage facilities, can be "fixed assets" set under the "environmental
protection equipment" Detailed accounting; environment-related liabilities may be in the "contingent
liability" set under the "environmental costs" Detailed accounting; environmental management fee
may be in the "management costs" under the Settings "environmental management costs" Detailed
accounts; with the accounting treatment related to human resources , you can learn from Western
countries, the methods described in the report notes, etc.. For no real accounting for the transactions, we
can also increase the number of subjects, may be called "social responsibility fee" or "sustainable
development costs" generally, which shall be subject to accounting the difference between the
expenditure and income occurred in the Process to fulfill their social responsibility .
Thirdly, to establish a comprehensive multi-measurement assumptions. Multiple-round measurement
assumption that accounting for sustainable development should not only adopt the currency measure,
but also can not completely confined to monetary measures, it can be based on the actual need to
introduce physical indicators, labor indicators, technical indicators, willingness to pay and other
non-monetary forms, if necessary, it can be using the text description of the enterprise's production
operations in the form of environmental and social impact resulting from a full range of accounting and
oversight. At present, we confirm business environment, social responsibility and human resources,
which is considered "difficult to measure in monetary terms,"by enterprises and other accrued
expenses as the corporate responsibility under accrual basis, in accordance with methods which are not
limited to monetary measurement.
Fourthly, to increase the performance of accounting for sustainable development reporting and
evaluation system. In order to establish a comprehensive reporting and evaluation system of indicators,
reflecting the requirements of sustainable development, in addition to the daily accounting indicators,we
can add some new measure of reporting and evaluation. Including per capita GDP, the natural
population growth, the Gini coefficient and poverty index reflects the social and economic development
indicators and to reflect the right to a fair state of development indicators and the social total cost of
profitability, social investment, GDP, the proportion of the total amount of corporate environmental
investment the proportion of GDP, per capita coefficient of variation of renewable resources, sewage
treatment compliance rates reflect the socio-economic development and the natural environment
carrying capacity indicators.
IV The Major Obstacless to The Sustainable Development of The Accountancy
First, the business’ concept of time value of money is not strong. The time value of money has always
been one of the basis for the concept of modern financial management, it was called the Money's "first
principles", in practice, In corporate financial management activities, the time value of money has a
certain sense foundation. February 15, 2006 promulgation of the new accounting standards system is the
concept of change.In practical accounting,we have to consider the time value of money more. But to
adapt to the needs of sustainable development, time value of money concepts need to be strengthened.
Secondly, the sense of corporate social responsibility is not strong. Enterprise’ thoughts of "putting the
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economy on the environment", "light-weight enterprise communities" and "pollution first, treatment
later" is rampant,strong. companies often focus only on immediate and the concept of sustainable
development is weak, accounting for sustainable development arenot given sufficient attention,and there
is no Recognizing that sustainable development of accountancy in the establishment of a sound
information disclosure of our society's important role. Lack of a mandatory criteria for norms, the
majority of enterprises are unwilling to take the initiative to accounting and disclosure of information on
social responsibility.
Thirdly, immature accounting theory and practical operational difficulties of sustainable development,
Accounting Research for sustainable development at present is more environmental accounting,
environmental accounting for sustainable development is an integral part of accounting.From the
accounting practices of view, although there are"who benefits whom the burden of" basic management
principles, but the key point is that in the end which businesses benefited, how much and when benefits
are difficult to determine,and how Accounting for Sustainable Development allocate social costs in
different establishments, units, departments is difficult to operate in practice.
V Conclusion
Sustainable development is model of economic development to balance economic, social and
environmental, mainly including the enterprise's own sustainable development and social sustainable
development. Based on the enterprise's own sustainable development and sustainable social
development, accounting can select the corresponding processing mode, but because of the current
enterprise concept of time consciousness is not strong sense of social responsibility and sustainable
development in the theory of accounting itself is immature and practical operational difficulties and
other reasons, there are obstacles to development for Sustainable Development of Accouting.
Author in brief or Acknowledgment:
ZHAN Zhongcan, M, Hunan Yueyang, born in 1973, is currently the Hunan Institute of Science and
technology, Associate Professor of Economics and Management School, published nearly 40 papers in
journals at the provincial level or above professional. Main research directions: Accounting and Tax.
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