Social Accounting Obligations As Per Mr. Howe’s Assertions

Question: Mr. Howe, a Junior Partner of the CPA firm Dewey, Cheatem, Howe (DCH), has publicly asserted that the business of business is business and that social welfare issues like jobs and equity and environmental issues like air quality and global warming should be left to governments. Mr. Tu Dewey has asked you to review Mr. Howes assertions and to comment as whether his ideas are a good way to run a modern businessinclude notions such as: Legitimacy, Social Contract and Stakeholder Theory. Answer: This memo is indicated in analyzing the public assertions of Mr. Howe about the avoidance of the social welfare issues and environmental issues in context of business operations. According to Stout (2013) stakeholder theory states that the business should organize its operations keeping in mind the needs of the concerned stakeholders. The concerned stakeholders of DCH accounting firm are the clients seeking financial help, the investors and the three partners of the firm, the employees and the government. Hence the firm will be able to create goodwill among the stakeholders by satisfying the job needs of the community (Scott, 2012) . Moreover Mr. Howe asserted that environmental issues are a concern of the government however the Environmental Protection laws, Workplace safety acts and sustainability accounting rules states that the businesses should be environmentally sustainable and should avoid carbon emissions and use of degrading materials for business purpose (Miles, 2012). However Mr. Howe is not completely wrong in his assertion because excess wastage of time on the CSR activities and sustainability accounting may hamper the financial position of the company. Moreover sustainability accounting involves financial expenses which may be a loss for the company. However since the Legitimacy theory states that business are legally bound by social obligations to perform social welfare functions to make beneficial activities for the community hence the DCH firm is also legally bound to follow the terms (Devine, 2012). Hence the company should prioritize the main business activities keeping the environmental and social activities as secondary. References Devine, C. (2012). Accounting theory. Routledge. Miles, J. (2012). Management and organization theory. San Francisco, Calif.: Jossey-Bass. Scott, W. (2012). Financial accounting theory. Toronto: Pearson Prentice Hall. Stout, M. (2013). Logics of legitimacy. Boca Raton, FL: CRC Press/Taylor Francis.