Development Of Triple Bottom Line Reporting And How This Will Impact Financial Reporting And The Conceptual Framework

2681 words - 11 pages

Profit seeking firms will not spend any dollar for non-value adding processing. (Smith, Thorne and Hilton, 2006) However, even with the lack of regulation, many organisations voluntary publicly release information about their social and environmental performance. (Deegan, 2009) According to Richard (1993) finding, investors intent to choose the company investing whether it demonstrates that is a market leadership or offer above average growth or bring in strong management. However, there are few companies in Europe that can fulfill those criteria at that time. I believe that it is relatively hard to be a market leader or keeping an offer above average return for the investors. Yet companies ...view middle of the document...

Triple bottom line reporting is provides information enable the report readers to assess how sustainable an organization’s operation. It evaluates the performance of a narrow focus on the single bottom line of financial profit to an evaluation of the three bottom lines of economic, social and environmental performance. (Deegan, 2009)

European Union (EU) released a document suggests that accounting profession to take a role in implementing costing systems that internalize many environmental costs. According to European Commission (1992) the redefinition of accounting concepts, rules, conventions and methodology to ensure that the consumption and use of environmental resources are accounted for as part of the full cost of production and reflected in market prices. However, accounting professions generally ignored the issue made by the EU in 1992, because the lack of regulation requirement. (Deegan, 2009)

Global Reporting Initiative (GRI) illustrate the Sustainability Reporting Guidelines which developed by a broad range of organisations. (Deegan, 2009) According to Baumgartner and Ebner (2009), the sustainability report guidelines develop by popular example. Scientific effort is recognizable regarding the establishment of specific sustainability strategies. Now a day, accounting professions adopt the popular example in order to guild for providing relevance information to the public even lack of regulation requirement. It helps to an accuracy and accountability, but without losing the feasibility of the report.

Generally, organisation is sought for profit, any dollar it spends that desires adding value. (Smith, Thorne and Hilton, 2006) The objectives driving organisation to undertake triple bottom line reporting can range from an ethically motivated desire to ensure that the organisation benefit. (Deegan, 2009) Adopting triple bottom line reporting, organisation can minimize legitimacy gap; fulfilling the requirement of powerful shareholders; harmonizing the report of similar characteristics and norms of institutional and satisfy the self-interest motivated.

Hogner (1982) sought that legitimacy theory associated notion of a social. Deegan and Rankin (1996) used legitimacy theory to explain the systematic changes in organisation annual report on disclosure environmental performance affect by policies around the time of proven environmental prosecutions. Adopting this perspective, organization would undertake certain social activities and provide an account thereof which the management perceived the communities were expected the organization will perform. It associated notion of a social contract. (Deegan, 2009) In relation to Islam and Deegan (2008) discovery that failure to undertake the social contract may result in the entity no longer being considered legitimate and impact on the support it receives from the community. (Deegan, 2009) Organisation is more willing to minimize the legitimacy gap from the community and political...

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