Your Role As a Leader in Social and Ethical Accounting

A conceptual look at leadership and associated concepts.

Dr. Purushothaman
December 13, 2013

The top level managers in a corporate firm provide blue print about the kind of culture the institution advocates. Therefore leadership is vital. They help in influencing corporate culture and ethical climate. If in any case leaders fail to express desired behaviors and goals, a corporate culture will take shape on its own which may not reflect the goals and values of the company. An effective leader must have the skills to be able to balance profit-motivated entrepreneurial skills and corporate citizenship.

A leadership that will outlast and transcend an individual is the key behind the long-term success of an organization.

Leaders require fulfilling two main objectives. One is to stimulate and drive the organization so that it survives, prospers and achieves its goals in time. The other is to create the climate the culture and the conditions that enable people to contribute effectively and efficiently.


Social and ethical accounting is known to be the process that helps a company to address issues of accountability to stakeholders and to improve performance of all aspects i.e. social, environmental and economic.

The process is normally linked to a company's values and performance targets and to the assessment and communication of the same.

Social and ethical accounting has not come up with any standardized model yet. It rather implicitly concerns itself with issues such as economic performance, working conditions, environmental and animal protection, human rights, fair trade and ethical trade, human resource management and community development.


There is not just one reason for examining the state of a company's ethics. They include external societal pressures, risk management, stakeholder obligations and identifying a baseline to measure future improvements. An ethical profile will manage all the factors affecting a company's reputation by merely examining the way in which business is done.

Below are the some of the suggested steps in ethics audit:

1. An audit is conducted to secure the commitment of the firm's top Management.
2. To establish a committee or team to oversee the audit process.
3. To establish the scope of the audit.
4. To include a review of the firm's mission values, goals and policies.
5. To identify the tools or methods that can be employed to measure the firm's progress and then collect and analyze the relevant information.
6. To verify the report of data analysis by an independent party.
7. Finally to report the audit findings to the board of directors and top executives after being approved by the external stakeholders.

Note that the social and ethical accounting, auditing and reporting are still in the embryonic stage. Practices have been emerging and are expected to come up with new development and idea with the passage of time.

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