Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICSLarge companies, in their reports, tend to focus on ‘eco-efficiency.’ The conceptof ‘eco-efficiency’ refers to the reduction of resource and energy utilizationand waste production per unit of product or service. It has to be acknowledgedthat a complete picture may not be available to account for all inputs, wastesand outputs of an organisation or company. It is convenient for companies todemonstrate tremendous success in ‘eco-efficiency,’ but their ecologicalfootprint which is an estimate of total environmental remediation may move,following changes in production, independently.12.3.1 Corporate Social AuditA social audit is the process of taking measurements of socialresponsibility to assess organisational performance in this area. It issometimes used to describe the systematic appraisal of all thecompany’s activities that have an impact on wider community. The basicsteps in conducting a social audit are monitoring, measuring, andappraising all aspects of an organisation’s socially responsibleperformance. Probably no two organisations conduct and present theresults of a social audit in exactly the same way. The social audit is theprocess of measuring the socially responsible activities of anorganisation. It monitors, measures, and appraises socially responsibleperformance.An audit needs to cover all the main operations and functions of thefirm, plus its relationship with national and local government and allstakeholders.In Canada, ethics audits tend to have six major components: “values-basedstandard setting, document review, benchmarking, an environmentalscan, multi-stakeholder surveys, and action-enabling recommendations.”(a)Values-based standard d settingReviews whether the corporation is taking into account the valuesof all its stakeholders, including the corporation itself, employees,retirees, shareholders, host communities, international ethicaltrading and human rights organisations, and industry institutions.If one stakeholder sector is being ignored, then these values andneeds should be addressed in corporate policy.(b)Document ReviewRefers to “an in-depth review of the manual of administration,the corporate code of ethics, board minutes and corporate policies,and other policies in terms of business practices, conflict ofinterest, harassment, privacy and the like” (The Corporate EthicsMonitor, Volume 13, Issue 5, page 77). Essentially, this reviewasks, “does the corporation reflect its public statements on252