Social accounting system in India is classified into

A. Assets, liabilities and debt position

B. Public sector, Private sector and Joint sector

C. Income, product and expenditure

D. Enterprise, households and government

Ans. (C) Income, product and expenditure

Explanation:

Social accounting is a method by which a firm seeks to place a value on the impact on society of its operations. It is a systematic analysis of the effects of the organisation on its shareholders, with stakeholder input as part of the data that are analysed for the accounting statement. It provides tools and guidelines to collect, analyse and monitor financial, social and environment data. The concept of 'social accounting' relates to the manner in which an organisation interacts with its social surroundings.

Background of Social Accounting:

Three methodologies - One system primarily attempts to measure National Income, final product, consumption and accumulation of capital. The second system is largely devoted to the presentation of the inter-industrial process of production and movement of commodities. And the main role of the third system is to show how production process, consumption and investment are currently financed. These methodologies sets of accounts became commonly known as ‘Social Accounting Systems’ a term originally suggested by Prof Hicks.

Social Accounting in India:

The Sachan Committee in its report in 1978 recognized the need for social disclosures. The concept was relatively new for India and is yet to gain momentum. Tata Iron Steel was the first in India which conducted social accounting with the sole aim to examine and report to what extent company has been able to fulfil its objectives regarding its social and local community. 

India may become the world’s first country to make corporate social responsibility mandatory. Paths have been cleared for reintroduction of the Companies Bill, 2011, in the monsoon session. If the bill is passed after endorsing all the propositions made by the Parliamentary Standing Committee on Finance, corporate social responsibility (CSR) would become mandatory for the first time in the world in any country. 

In August 2012 the parliament has panelled CSR to be mandatory. The statement advocates that those companies with net worth above Rs. 500 crore, or an annual turnover of over Rs. 1,000 crore, shall earmark 2 percent of average net profits of three years towards CSR. In the draft Companies Bill, 2009, the CSR clause was voluntary, though it was mandatory for companies to disclose their CSR spending to shareholders. It also suggested that company boards should have at least one female member. (Times of India dated 16/10/12) There is a growing realisation among organisations that it is not merely sufficient to provide funds to support causes initiated by non-profits, and when employees volunteer for a cause, it’s a win-win situation for both the organisation and the employee as it helps improving managerial skill and enhancing profit.

Source: SOCIAL ACCOUNTING IN INDIA

Dr Masooma Zaidi

Associate Professor, Institute of Environment & Management, Lucknow