Relevance Of The Un Of The Principles For Responsible Management Education

RELEVANCE OF THE UN OF THE PRINCIPLES FOR RESPONSIBLE

MANAGEMENT EDUCATION

The United Nations advocates that firms spread out around the globe should take the initiative to

give back to the communities in which they operate, as well as take care of the environment

mainly where the firms work. The UN has therefore set out policies that companies in the world

should adopt to ensure that they in one way or the other, participate towards the activities in their

nearby communities to help them improve their standards of living, under a program called

corporate social responsibility (CSR). The UN principles also encourage the social,

environmental reporting (SER).The UN principles for management education is to promote

achievement of the sustainable development goals, SDGs.

Financial reporting is a broad subject that seeks to give the financial statements of the fiscal year

in which a firm has been in operation. Many companies especially those in the manufacturing

industries may pollute the environment and hence affect the ecosystem or the lives of the people

in a particular area. For instance, firms that emit their effluents into the rivers or harmful gases in

the environment in which they operate. Apart from causing destructive activities, the

communities surrounding the business may need to benefit from the firm's operations in the form

of employment, food relief and other needs that may be of help in the community.

When the management of a firm decides to embrace the UN principles for Responsible

management education, then it means that it will use a portion of its revenue which is generated

from its operations, to finance non-revenue generating activities which contribute to the welfare

of the society. In financial reporting, every transaction involving money should be incorporated

into the books of accounts for purposes of transparency. A firm uses its reserves to contribute to

the welfare of the society, i.e., the funds retained, after the company after the corporation deducts

its costs of operations as well as finance costs.

The directors or the management of a firm should feel responsible enough towards their

firms' participation in the activities that improve the welfare of the society within which the firm

operates. By doing so, improves its public image and also earns public goodwill at large. When

the firm gains public goodwill, it is likely to gain more profit from the same society that it had

assisted. In such a case the costs incurred to participate in the CSR and the SER, can be taken by

the firm as 'invisible or intangible costs of production', which the firm will later gain back in the

long term when the society continues to consume the products of the company due to the positive

image created by the company in the community.

Financial reporting by firms is guided by the international financial reporting standards

(IFRS) and the international standards of accounting, (IAS), as well as other accounting and

financial reporting frameworks that the international accounting standards board may come up

with after their annual conference. For purposes of auditing, every business transaction should be

accounted for, in the books of accounts and hence there is need to incorporate in the financial

reports of a company the funds of the company spent in improving the welfare of the

community. After all, the money spent in CSR and SER will be gained back indirectly by the

firm.

One of the current trends in the financial reporting of companies is the use of the “Global

Reporting Initiative, (GRI) reporting framework”. The GRI framework provides all businesses

and organizations with a comprehensive sustainability for purposes of reporting on

environmental, economic and social responsibility. Many approach social and ecological

reporting on a voluntary basis. In as much accounting is a technical field, the reporting using the

GRI framework, incorporates the technicality of accounting in the social and environmental

reporting. Accordingly, the embracement of the UN Principles for Responsible Management

Education is relevant in financial reporting as a technical subject.

When auditors are independently examining the books of account, they have to report

whether the financial reports presented by the firm for auditing are in compliance with the books

regulatory financial reporting framework and give an independent report thereof. Where a

company engages in social and environmental activities, it has to follow a particular regulatory

framework that will enable the auditor to give an opinion. Adoption of a GRI framework will

allow a firm to report such transactions in a clear and concise manner for which the auditor can

establish an audit trail, if need be, to enable him or her, arrive, at the auditor's opinion concerning

the financial reports prepared by the firm. A firm embracing the UN principles will, therefore, be

in line with the financial reporting principles of accounting.

The inclusion of the CSR and the SER activities of a firm in the audit plan will enable the

auditor to acquire adequate knowledge of the firm's operations to know happenings, transactions,

and practices that may have a important effect on the financial statements. The results of some of

the social and environmental activities may be adjusting activities while others are non-adjusting

activities. For instance, auditors may use the CSR and the SER activities of the firm to determine

how the company is complying with the environmental laws, and what noncompliance could

mean to the business financially. In many countries, the noncompliance with the set laws may

attract fines, and in turn, affect the financial statements of the firm. The effect of social and

environmental activities could be measured qualitatively, but on the other hand, they could be

quantitative regarding the impact they may have on the financial reports. Costs such as those for

litigation, damages paid for the destruction of lives, and the losses that may be incurred when the

firm is temporarily closed for noncompliance would affect the financial statements. The UN

Principles for Responsible Management education are therefore relevant in financial reporting.

Social reporting as one of the principles of the UN for responsible Management offers an

independent approach for an organization to showcase its commitment to improving strategic

planning. It also enables the firm to be socially accountable and show its commitment to

monitoring and assessing social issues. For the business to come up with a strategic plan, it needs

to consider how its strategic plan will the environment and the society in large, and how the

effects will be mitigated if they are harmful. Strategic plans are drawn by the firm with a

financial budget featuring in almost every aspect of the program. A company in its long-term

strategic plan will also need to set aside the funds that may be used to mitigate the adverse

effects its productive it may have. Also, as part of social activities, the firm may set a monitoring

and evaluation department to determine how the company is affecting the community in which it

is operating. Provision of aids and other forms of donations, calls for financial resources,

therefore, changing the financial reports. In this case, the UN principles for Management

Education becomes relevant.

Many firms in the world as a result of have been shut down either temporarily or

permanently due to the engaging in activities that destroy the lives of the societies in which they

operate. When a firm prepares its financial reports, and it incorporates the social and

environmental expenditures, then the government may be convinced that the company is doing

enough to protect the citizens of the country. Moreover, the government will be able to see the

firm's commitment to assisting the government in solving the local problems. The social and

environmental reports if embraced by a business could also prove helpful to the corporation

where the tax authorities of the jurisdiction of operation may require proof that the firm is tax

compliant and how the company arrives at its profits from which it gets the money to finance its

social and environmental activities. In as much as the CSR and the SER, reports may look

qualitative; they may have a tangible effect on the financial reports that an organization prepares,

which may either be positive or negative.

Social auditors may use some of the CSR and the SER prepared by the firm to highlight on the

social responsibilities and the accomplishments that are associated with environmental impacts,

and maintainable development. The social audit report also indicates the welfare of the

consumers, the fair and just treatment of the employees, fair trade, and the general treatment of

the other stakeholders of the organization. The social audit report can then be used to improve

the welfare of the stakeholders as well as encourage constructive feedback.

In my view, the statement ” the UN Principles for Responsible Management Education and

issues such as CSR and SER have no relevance to the accounting profession – especially a

technical subject like financial reporting," does not hold any threshold to disqualify the fact that

the UN Principles for Responsible Management Education as irrelevant in accounting. It can be

concluded that the UN principles are relevant because:

The impact the CSR and the environmental activities that a firm has in the company affects the

finances of the corporation either negatively or positively.

Auditors of the firm may require an understanding of the firm's responsiveness to social and

environmental issues, and the financial risks that such items may pose to the company.

The preparation of the CSR and the SER expenditure reports are useful to the auditor in arriving

at the auditor’s report.

The CSR and the SER reports can be useful in improving the relations between the firm and the

government of its jurisdiction as well as other government agencies.

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Relevance of the un of the principles for responsible management education

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