Question

Provide a well detailed answer. Do not copy and paste .

Currently IASB doesn’t have any standards for corporate social and environmental reporting. What are the implications of this on the preparation of financial report?

Answer 1

Currently IASB doesn't have any standards for Corporate Social and Environmental Reporting.

Implication of the above point on preparation of financial statements.

Corporate social and environmental reporting being a social concept is considered irrelevant for preparation of financial reports and therefore does not enjoy a prominent space in the financial reports. Financial reporting normally tends to ignore qualitative and intangible resources contributing to the success of a business entity. Not having enough corporate social and environmental reporting standards can have the following implication.

• Compromising with idea of broader reporting - Broader financial reporting means including almost everything quantifiable in the financial reports. By omitting the social and environmental reports we are basically not meeting the very concept of broader reporting.
• Making social responsibility a minor issue to deal - Even the profit is primary motive of every business undertaking, when businesses are involving people and society at large directly or indirectly, it should be made a point that businesses have a responsibility towards its society and environment. By reducing the standards with regard to social and environment reporting the responsibility towards society and environment is seen as a lighter issue.
• Subjective and area specific concept – The very idea of society and environment is different to each and every business firms. Therefore it is in itself a challenge to design common standards for such topics.