Incorporating Sustainability Issues into the Financial Accounting

Question: Discuss about the Incorporating Sustainability Issues into the Financial Accounting Curriculum. Answer: Introduction This report intends to provide a critical analysis of the article Incorporating Sustainability Issues into the Financial Accounting Curriculum written by Daniel L. Haskin and Megan M. Burke accessed from American Journal of Business Education. In this context, the report includes summary of article, discussion about its strengths and weakness, its implications in the accounting profession and relevance of the article in the financial accounting theory. At last, the report provides recommendations of the given financial accounting issue in the article and summarizes all the key points of the critique in the conclusion section. Summary of Article The article has discussed and emphasized the importance of sustainability reporting in the financial accounting field. The increasing significance of CSR (Corporate Social Responsibility) and sustainability in the accounting settings is discussed in detail in the article. This is done through discussing the history of CSR and the importance of sustainability accounting. This is followed by discussing the development of Sustainability Accounting Standards Board (SASB) that has lead to the development of a conceptual framework that has lead to the development of standard guidelines for business entities to adopt sustainability reporting (Haskin and Burke, 2016). Critical Analysis of Article: Strengths of Published Article The article is highly relevant in the sense that it has helped in providing an understanding of the necessity of incorporating sustainability reporting in financial accounting for promoting long-term growth and development of business entities. The article has depicted that the introduction of the concept of Sustainability Accounting for disclosing non-financial information related to society, environment and economic performance of a business entity to its stakeholders. The article has depicted that adoption of sustainability accounting practices are highly necessary for a business entity to promote its sustainable development and growth. The concept of financial accounting only focuses on providing information related to the profitability of a business entity and ignores completely its non-financial objectives (Bebbington et al., 2014). Thus, the article has reflected that the main aim of incorporating sustainability accounting is to provide recognition to the non-financial objecti ves of a business entity. The article has also illustrated the role of Sustainability Accounting Standards Board (SASB) for integrating sustainability reporting practices within the financial accounting settings. Thus, the article has incorporated all the necessary information that is relevant for providing an understanding of the significance of sustainability accounting for business entities. Therefore, the main strength of the article is enriched qualitative information relating to the accounting concept of Sustainability Accounting for depicting its relevance in contemporary accounting. Also, the article is easy to understand with providing precise and relevant information relating to the research topic (Haskin and Burke, 2016). Weaknesses of the published article The article though proves to be quite advantageous in providing an insight into the contemporary accounting concept of sustainability reporting is also associated with some weaknesses. The major weakness of the selected research article is that it is purely subjective in nature and thus lacks objectivity. The research study lacks the collection of quantitative information and thus lacks practical evidence in support of theoretical arguments presented. The article relies only on the collection of theoretical information gathered through the secondary data analysis. The secondary data is collected from peer reviewed journals and article s but it has not emphasized on gathering practical data for providing a valid conclusion. Therefore, the research article lacks credibility and validity in the eyes of readers and thus its applicability in future accounting researches is limited. Also, the research article is not well-structured and thus lacks sequential flow of information. The researc h article lacks a proper format that can cause the lack of interests in readers. Thus, all these limitations have impacted the usefulness of the selected research article in future context (Haskin and Burke, 2016). Implications to the Accounting Profession The accounting profession is associated with undergoing continuous changes due to ongoing developments in the regulatory environment of accounting. The accounting profession needs to respond immediately to changes in the market situations for meeting the needs and demands of stakeholders of a business entity (Hopwood et al., 2010). As such, the introduction of the concept of sustainability accounting into the accounting field is associated with major implications for the accounting profession. The professional accounting bodies such as IASB (International Accounting Standards Board) have pointed about the trend of sustainability accounting that accountants need to possess adequate knowledge for promoting sustainable growth of a business enterprise (Sustainability: The Role of Accountants, 2004). The published research article is highly relevant in this regard as it has provided adequate knowledge to the accounts about the concept and increasing importance of Sustainability Accounting in accounting profession. This is necessary for accountants to abide by the mandatory rules and standards developed by international accounting bodies such as SASB relating to sustainability accounting and reporting. The accountants can gain pertinent information relating to the reporting of sustainability, its importance and its benefits for promoting societal and environmental development of a business entity. The changing expectations of a business entity stakeholders relating to the responsible attitude towards society and environment is important for accountants to meet their needs and demands effectively (Herz, 2016). Thus, in this regard, the selected research article has high significance for the accounting profession for gaining knowledge about the wide-range of sustainability related issues and develops financial reports as per the standard guidelines provided by conceptual framework of SASB (Haskin and Burke, 2016). Relevance to Financial Accounting Theory Financial accounting theory refers to the standard set of principles and conventions used in preparation and development of financial reports. The financial accounting theories are developed on the standard assumptions and guidelines provided by the conceptual framework of accounting. The main purpose of financial accounting theory is to disclose useful information to the end-users for critical business and economic decisions. The financial accounting theory states that information disclosed by a business entity must be relevant, reliable, comparable and consistent for meeting the stakeholders needs appropriately (Jones, 2015). As such, the published article is highly relevant for matching the standards principles of financial accounting theory. The article has emphasized that the main objective of financial accounting should not be limited only to maximize value for its shareholders but promote the overall development of all its stakeholders including its customers and community. Th erefore, in order to achieve reliability and transparency in financial reporting, the accounting field must incorporate the concept of sustainability that discloses all the facts and information related to the economic, social and environmental performance of businesses (Eccles, 2016). The financial accounting theories must incorporate the concept of sustainability so that financial reports are developed and presented as per the conceptual framework published by SASB (Sustainability Accounting Standards Board). The article has stated that the main objective of adopting sustainability in accounting is to help business entities for disclosing material, decision-useful information to the end-users. Therefore, the article is highly relevant to meet the standard principle and guidelines advocated by the financial accounting theory as the incorporation of sustainability will help in providing materialistic and useful information to the stakeholders (Haskin and Burke, 2016). Recommendations On the basis of the main arguments presented in the research article, it is recommended to businesses worldwide to adopt the principle of sustainability accounting during financial reporting. This is required to achieve transparency and authenticity in business operations by promoting stakeholder engagement. The incorporation of the concept of sustainability accounting will state the societal and environment development practices adopted by a business entity and thus strengthen its brand image on an international level. The developments of goodwill in the eys of stakeholders will increase the profitability and performance of a business entity leading to its sustainable growth and development (Freedman and Jaggi, 2010). It is recommended to business entities to integrate CSR and the sustainability issues in financial accounting as per the conceptual framework of SASB. The SASB works in co-operation with other international accounting bodies such as FASB (Financial Accounting Standards Board) and SEC (Securities Exchange Commission). Thus, abiding by the standards assumptions and conventions of SASB is essential for business entities worldwide for ensuring their long-term growth and successes as illustrated in the selected research article (Haskin and Burke, 2016). Conclusion It is concluded from the critical analysis of the research article that it has explored and examined a relatively new concept in accountings settings of sustainability reporting. The overall analysis of the article has inferred that sustainability reporting is now becoming an integral part of financial reporting in business entities to achieve sustainability through effective stakeholder engagement. The disclosure of important information about the impacts of business operations of society ad environment is essential for corporations to promote transparency. The stakeholders including customers and government can gain all the financial and non-financial information about a business entity performance. This will help a business entity to achieve customer satisfaction and support of government thus ensuring is long-term survival. References Bebbington, J., Unerman, J. and O'Dwyer, B. 2014. Sustainability Accounting and Accountability. Routledge. Eccles, B. 2016. What The World Needs Now: Sustainability Accounting Standards. [Online]. Available at: https://www.forbes.com/sites/bobeccles/2016/05/03/what-the-world-needs-now-sustainability-accounting-standards/#4bda039074d8 [Accessed on: 7 May 2017]. Freedman, M. and Jaggi, B. 2010. Sustainability, Environmental Performance and Disclosures. Emerald Group Publishing. Haskin, D.L. and Burke, M.M. 2016. Incorporating Sustainability Issues into the Financial Accounting Curriculum. American Journal of Business Education 9(2), pp.49-56. Herz, R. 2016. More Accounting Changes: Financial Reporting through the Age of Crisis and Globalization. Emerald Group Publishing. Hopwood, J. et al. 2010. Accounting for Sustainability: Practical Insights. Earthscan. Jones, S. 2015. The Routledge Companion to Financial Accounting Theory. Routledge. Sustainability: The Role of Accountants. 2004. [Online]. Available at: https://www.icaew.com/-/media/corporate/files/technical/sustainability/sustainability-the-role-of-accountants-2004.ashx?la=en [Accessed on: 7 May 2017].