SOCIAL ACCOUNTING: A METHOD OF ASSESSING THE IMPACT OF NIGERIAN ENTERPRISES DEVELOPMENT ACTIVITIES

CHAPTER ONE
INTRODUCTION
1.0     BACKGROUND OF THE STUDY
Social accounting as an approach began developing in the U.K in the early 1970s, when the Public Interest Research Group established Social Audit Limited. This organization carried out, and publicized investigations into the operations of large public companies, without necessarily gaining their permission or co-operation. Whilst lending support to consumer pressure, there is an argument that this had a negative effect on accountability, as organizations sought to ensure that sensitive information was hidden from such investigations.
Globalization has brought with it a wide realization that companies do not operate in isolation, but can have marked impacts on the environment and people at local, national and global levels, (Chris, 2006:1). This has led to an increasing awareness of Corporate Social Responsibility (CSR) and the “triple bottom-line” of business success measuring the business not only in the financial performance, but by its social and environmental impact as well. Traidcraft and the New Economics Foundation (NEF) pioneered a form of social accounting in the early 1990s that is voluntary in nature and rooted in engagement with stakeholders. This can assist organizations, both commercial and NGO, in understanding and improving their social impact.
The concepts of Social accounting is growing in recognition and sophistication, as it becomes one of the foundations of good practice in corporate social responsibility (CSR), interest is growing within large corporations, consultancies and voluntary organization alike. If large companies are using a social accounting methodology to assess their social impact, the question sensibly arises as to whether this is something that can be usefully adopted by those seeking to assess the impact of enterprise development activities. Most of the organizations that adopt this concept are concerned with poverty reduction and enterprise development.
Social accounting is a way of demonstrating the extent to which an organization is meeting its stated social or ethical goals, whilst independently verified the organization itself on the process of data collection and analysis and the process is driven by indicators, the organization sets in consultation with stakeholders as opposed to being based on standards or criteria determined externally. This is balance by the principle of benchmarking which whilst still developing, should enable organizations where possible, (Chris, 2006:2).
Technically, the term “social accounting or social audit” refer to specific parts of a process now bestowed with the much more unwieldy title of “Social and Ethical Accounting, Auditing and Reporting” (SEAAR). In practice, the shorter titles tend to be used interchangeably to refer to the entire process. Whichever title that is used, the process should involve the following three steps:

• Internal data collection and analysis procedures,

(accounting)

• An independent audit of the result (auditing).
• A mechanism for disseminating the outcome more

widely (reporting).
One of the leading voices in the world of social accounting is ISEA, which is the institute of social and ethical accountability. This leading voice was founded in the UK in 1996. ISEA is an international professional body committed to strengthening social responsibility and ethical behaviour of the business community and non-profit organizations. ISEA promotes best practice in SEAAR and develops standards and accreditation procedures for professionals in the field. It was ISEA that further developed the social accounting methodology first employed by Traidcraft in 1993 and launched the Accountability 1000 (AA1000) standard in 1999.
Rose (1997:163), observed that social accounting is a system of record keeping that reports transaction between the principle sectors of the economy, such as: households, financial institutions, corporations and units of government. As more organizations got involved in the field of enterprise development with social accounting, auditing and reporting, the question that will arises is as to how this relates to our traditional understanding of impact assessment? The question provides the answer that Social accounting “provides a comprehensive and systematic framework for accounting, auditing and reporting against an organizational social objective.
Social accounting development process within an organization involves commitment to on-going stakeholders’ dialogue and the development of a management information system based on indicators of social impact. It is important to note that social accounting has an organizational impact, rather than project impact. However, one of the issues of social accounting as with impact assessment is the level of which stakeholders’ dialogue can be carried out by the enterprises development activities to involve chain/series of inter-related interventions. It is unreasonable to expect parties that do not have direct relationship with the enterprise to be involved in making a regular assessment of how it has performed against social indicators.
 
 
 
1.1     STATEMENT OF THE PROBLEM
Over the decade, many Public limited liabilities companies across the globe failed to recognize the need of social accounting techniques as a suitable tool for estimating the distribution of enterprise earnings/profits. In Nigeria the use of the technique is not popular among the business enterprises in the country because stakeholders are not adequately informed on the effectiveness and efficiency of reporting audit and accounting information.
In view of this research project work, other problems confronting the researcher in the course of embarking on this work include: lack of integrating management information systems with the organizational plans, bewildering proliferation of ethical standard and guidelines to corporate social responsibility (CSR), none commitment of stakeholders dialoguing regularly with the management, inadequate estimation of the pattern of income and expenditure of the enterprises or business group within the environment.
Above all, these problems have not only emanated in the Public limited liability enterprises but has transcended to both private companies and NGOs.
 
 
 
 
1.2     RESEARCH QUESTIONS
This study shall seek to answer the following questions:
What are the factors responsible for social accounting problems in Nigeria enterprises?
What is the useful of social accounting in assessing corporate social responsibility on stakeholders?
What are the various techniques of social accounting used for estimating enterprises income?
What are the benefits of social accounting on organizational information systems?
Has social accounting any impact on corporate image of the organization and the environment?
Why is a social accounting method neither an essential nor a reliable method for assessing the impact of enterprises development activities?
Why is the use of social accounting techniques not popular among the Nigerian enterprises?
 
 
 
 
 
1.3     OBJECTIVES OF THE STUDY
Specifically, the objectives of the study are as follows:

1. To help determine why the use of social accounting is not popular among enterprises in Nigeria.
2. To evaluate various techniques of using social accounting to estimate enterprises income/earnings.

• To find out the impact of financial measurement on stakeholders of social accounting enterprises.

1. To determine how to solve organizational conflicts between shareholding interest and social consideration.
2. To evaluate some of the problems encountered in assessing social accounting activities in Nigeria enterprises.
3. To ascertain the input/effects of social accounting in enterprise development activities in Nigeria.

 
 
 
 
 
1.4     HYPOTHESES
A research hypothesis is a generalized and verifiable statement about a state of phenomena which may be true or false.
According to Onu (1996:13), the validity of a hypothetical statement is subject to verification which must be based on adequate information on which decisions could be objectively based for either to accept or reject such a hypothesis. Thus, a research hypothesis is defined further as a rule of accepting or rejecting the validity of a statement on the basis of random sample from the chosen population.
Therefore, to further to test the relevance of the information on some of research question s put –up, the following hypothesis will be empirically tested in this research work.
Social Accounting Techniques (SAT) is neither an essential nor a reliable method for assessing the impact of enterprises development activities.
Social Accounting Techniques (SAT) are not popular among the Nigerian business enterprises.
Effective use of social accounting approach does not improve transparency, accountability and compliance in the organization.
Social accounting method of assessment has no impact on the Nigerian enterprises development activities.
Social accounting has no significant relationship between the corporate image of the organization and the environment.
 
1.5     SIGNIFICANCE OF THE STUDY
This study has a number of significant dimensions to it. The result of this study should provide information to the public, private and NGOs organizations.
The finding of the study will enable the enterprises to discover the expenditure habits of the various departments or units that make up the enterprises. Armed with the knowledge, the enterprise patterns their productive activities to suit the various departments of the enterprise and the members of the public.
More importantly, if organizations in Nigeria properly embrace social accounting techniques as enterprise development activities will help boost their financial performance or profit earnings. This will in turn lead to an improvement in the enterprises which will equally benefit the government, the stakeholders in the business enterprise and voluntary organizations.
This study will equally assist organizations to know how to apply social accounting techniques to make future development plan of the business enterprises. More so, it will be of immense help to those in marketing business, consultancy firm, audit, management firm, production to forecast profit plan by the way of adopting strategic plan of action.
The recommendations of the study should serve as important palliatives for the various economic and structural ills.
 
1.6     SCOPE AND LIMITATIONS OF THE STUDY
The subject matter is very deep and broad topic. The depth lies in the secrecy of the real account of what actual happens at the management and stakeholders. The scope proper covers reporting of accounting information to parties involve in the enterprise and relating the information to the external environment within Enugu business enterprise which include public, private organizations and NGOs.
Social accounting techniques in Nigeria is  a contemporary issue because most Nigeria organizations have not embraces social accounting patterns in their organizations and much has not been written about the topic. Source of relevant literatures (books) was as onerous task.
More thorough analysis of the subject matter will be requiring the ability of undiluted financial/audit and non financial details about the industry. Therefore total reliance on the published facts may limit the chances of optimum result of the research work.
Research such as this, is very cost intensive and requires good time for diligent study of the subject matter. Time constraints and financial bottleneck were important limiting factors to this research.
 
1.7     DEFINITION OF TERMS
          The major terms that relate to this work are listed and defined as follows:
i         ISEA:    The Institute of Social and Ethical Accounting. This is an international professional body committed to strengthening social responsibility and ethical behavior of the business community and non-profit organizations.
ii        PRINCIPLES OF AA1000 AND SA8000:    These are the principles or process of continuous improvement through iteration over time and setting performance standard in an organization/enterprise.
iii       SIGMA:    This is a project that aims to help organization, irrespective of their size or sector to address sustainability issues in a strategic and integrated fashion.