Question

Select three profitable businesses in Oman which apply Corporate Social Responsibility and explain what the activities that are provided by those businesses and how important they are from managerial accounting perspective.

Answer 1

Corporate Social Responsibility

Definitions of Corporate Social Responsibility, It is generally understood to be a mechanism whereby companies take responsibility for the impact of decisions and practices by holding themselves to a set of ethical, social and ecological standards with the aim of contributing towards the health, welfare and sustainable developement of society.

CSR requires business organizations to take initiatives to advance some social good beyond their own interests and compliance with applicable regulations. Simply put, CSR means enhancing corporations’ positive impacts and minimizing their negative effects on society, minimizing harm to society and the environment and creating positive impacts on the community, environment, employees, customers, and suppliers. The true measure of success for corporations should be determined not only by reported earnings, but also by their governance, social responsibility, ethical behavior, and environmental initiatives. Organizations are required not only to maximize profit and economic output but also to include all environmental aspects and social services. Therefore, all socially responsible organizations must fulfill four types of social responsibilities:

The Three Profitable Business in Oman which apply corporate social responisibility

1) Sohar Power Company

2)Sohar Aluminium Company

3) Oman Oil Refineries and Petroleum Industries Company

This three profitable company activities

1) Sohar Power Company

Sohar power company SAOG owns and operates the largest power generation and water desalination plant in the sultanate of oman.

Sohar was established in 2004.The company has built and owns the 585 MW electricity generation and 33MIGD seawater desalination plant in sohar. This plant is located in the sohar industrial port area in the Al Batinah region of the Sultanate.

Key Figures

In 2012

Revenues = $121.1 illions

Earning Before Tax = 8.6 Millions

2)Sohar Aluminium Company

Sohar Aluminium was formed in September 2004 to undertake a landmark greenfield aluminium smelter project in the sultanate of oman and is jointly owned by OQ Group Abu Dhabi National Energy Company PJSC - TAQA and RIO Tinto Alcan.

There vision is maximize shareholder and social value by responsible and sustainable operation.

3) Oman Oil Refineries and Petroleum Industries Company (Orpic)

Orpic is one of oman's largest companies and one of the most rapidly growing business in the middle east oil industry.Its vision is to become a globally competitive, downstream business that oman is proud of. As one of the key steps towards achieving this vision.

Orpic is established in 1982. Orpic was commissioned with a refining capacity of 50000 barrels per day to cater for the oman's local strategic demand of refined products. They are mostly into energy sector, gas processing & transmission, refinery, petrochems & speciality products, logistic and marketing.

Role of management accounting perspective

Management accounts need to demonstrate multi dimension performance, specially in non financial performance measures, Modern academics and practioners have also demonstrated that measuring or managing non financial performance in service organisation is more challenging than in manufacturing organisations, However, not a single study of the role of managment accounting in measuring corporate social responsibility in the financial services industry has yet been reported. Although CSR is an important element of non financial performance. Corporate Social responsibility is considered important in some banks but management accounting plays a relatively small role in the measurement of these elements.

Management should have social accounting is the communication of social and enviromental effects of a company's economic actions to particular interest groups within society and to large scale. Social accounting emphasizes the notion of corporate accountability. Management accounting also look into social ethics, integrity, competency , credibility.