Social Accounting Disclosures in Annual Reports

This article throws light upon the three social accounting disclosures in annual reports. The disclosures are: 1. Cost Benefits Analysis 2. Preparation of Separate Schedules 3. Value Added Approach. 

Social Accounting: Annual Report Disclosure # 1.

Cost Benefits Analysis:

Under this system, the undertakings present social balance sheet and social income statement. The asset side of social balance sheet depicts social investment of capital nature viz. township, water supply, roads, buildings, hospital, ambulances, school, club and business etc. The liability side shows organisation equity and social equity in form of contribution by employees.

Social income statement comprises social benefits and costs to staff, community and general public. If social benefits exceed social costs the resultant is social income to staff, community and general public. This approach is followed by Steel Authority of India Ltd. (SAIL), Minerals and Metal Trading Company of India (MMTC), Oil India Ltd. (OIL), Madras Refineries Ltd. (MRL).

Social Accounting: Annual Report Disclosure # 2.

Preparation of Separate Schedules:

Under this method, the schedules represent­ing employees’ benefits and services, social overheads, townships maintenance etc. are prepared and shown as a part of annexure in the annual report. Employees benefit and services consist of salary and wages and various social security benefits.

Social overhead schedules include medical, educational, canteen and transportation facilities etc. Schedules of township maintenance contain expenditure on building, water, sewerage etc. Preparation of township schedules and social overhead has been made compulsory by Bureau of Public Enterprises as per OM. NO. 8(1)-67, 17 September 1967.

Hindustan Organic Chemicals Ltd. Project Development India Ltd., Artificial Limb Manufacturing Corporation Ltd., Hindustan Photo Films Ltd. and National Textile Corpora­tion Ltd. are presenting social overhead schedules, township maintenance schedule and employees benefits and services schedules in annexure of their final accounts.

Social Accounting: Annual Report Disclosure # 3.

Value Added Approach:

Under this method, the income accruing to the enterprise after external payments is taken into account. It represents the value added to goods and services, acquired by the enterprise, as the results of the efforts of management and employees. From the value of production, cost of direct materials and taxes are reduced to get the net income accruing to the enterprise.

This income is invested for the benefit of the employees and social welfare. This approach is followed by Steel Authority of India Ltd., Bharat Heavy Electricals Ltd., and Madras Refineries Ltd.

An Illustration: ONGC:

The Oil and Natural Gas Commission prepares social income statement and social balance sheet showing the following features of social accounting:

(1) Social Benefits and Social Cost to the Employees:

This shows ‘net social income’ to employees, such as—medical facilities, educational facilities, housing and township including water supply, concessional transport, training and career development, welfare facilities including clubs and canteens, and others etc. Social cost to employees includes extra hours put in by executives and other costs.

(2) Social Benefits and Costs to the Community:

Social benefits include local tax paid to municipality, environmental protection, generation of job potential to locals and generation of business opportunities. Social cost is represented by increase in the cost of living of local population and others etc. Excess of social benefits over social costs shows net social income to the community.

(3) Social benefits to the general public include difference between international price and price received for crude oil and natural gas, taxes and duties paid to central and state governments and electricity generated etc. Social cost to general public includes electricity consumed, and central services consumed etc. Net social benefit is depicted here.

(4) Social Balance Sheet depicts social assets and social liabilities. Social assets include township, land, residential building, electrification, water supply, furniture, fixtures, dispensary, school building, hospital and school equipment’s and human assets. Social liabilities consist of social equity in form of contribution by employees.

Conclusion:

On analysis, we find that ONGC alone is conscious and elaborative in social accounting approaches and shows investments in the area of environmental protection, ecological conservation and pollution control. The public undertakings, being the model employers, should be more responsive and take lead in social accounting practices.

, , , ,

shopify traffic stats