SOCIAL ACCOUNTING IN VIETNAM: A STUDY OF ITS IMPORTANT By VU THI MAI Student ID: E0700304 Graduaration Project Submiited to the Department of Business Studies, HELP University College, in Partial Fulfilment of the Requirements for the Degree of Bachelor of Business ( Accounting) Hons. OCTOBER 2011 2 DECLARATION OF ORIGINALITY AND WORD COUNT I hereby declare that the graduation project is based on my original work except for quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other course/degree at Help University College or other institutions. The word count is 11136 words. Vu Thi Mai October 2011 3 ACKNOWLEDGEMENT The project would not be done properly without the assistance, support and encouragement of many people. I wish to take this opportunity to thank all the people who have helped me during the time of completing this project. I would like to express my deep gratitude to my supervisor Dr Phan Thu Huong, Vietnam National University Hanoi. She has kindly helped me and supported me all the way through. I also would like to express my thank to Ms. Sumathi and Ms. Shenba, Help University College, who initiated the project and give so much instruction and support. Additionally, I also would like to extend my special thanks to managers, investors, my friends, and other people who have help me to carry out the survey. I want to thank them for all their support, interest and valuable hints. 4 Social accounting in Vietnam: A study of its importance By VU THI MAI October 2011 Supervisor: Dr PHAN THU HUONG ABSTRACT Over recent years, the role of business organizations within society has received increasing attention, and the expectations towards these organizations have increased accordingly. The term that has been coined for these expectations is corporate social responsibility (CSR) or social accounting (SA) (Schouten and Remme 2006). Nowadays, it is generally recognized that SA is of strategic importance to ensure long-term business competitiveness and success. Its potential is enormous in the areas of employee performance, cooperation among other stakeholders (business partners, investors, consumers, suppliers) and an engine of economic growth (Lamy 2002). So, the stakeholders‘ views on SA performance of business are enormous, and the key responsibility in this performance goes to the managers, consumers, investors. This paper examines the perception of manager, consumer and investor on SA performance of corporations in Viet Nam. The results of the study suggest that there is strong support for SA from managers and a growing awareness among consumers and investors. Nevertheless, the difference between the way people understand and their action caused they are not eager to support for SA 5 issues such as lack of SA system from firm, some relevant barriers (living expenses, low CSR communication tools). However, with highly positive attitude toward SA and the willingness to learn about SA of people, SA concept and practice will be popular and developed further in the future. 6 CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT 1 ACKNOWLEDGEMENT 3 ABSTRACT 4 CONTENTS 6 LIST OF FIGURES 8 CHAPTER 1: INTRODUCTION 9 1.1. Overview 10 1.2 The reason for conduct this research 12 1.3 Scope 12 1.4 Structure of theory 13 CHAPTER 2: LITERATURE REVIEW 14 2.1 Conceptualization of Social Accounting 15 2.1.1 Social accounting thesis 18 2.1.2 Sustainability accounting 19 2.2 Legitimacy theory 20 2.3 Social Reporting 20 2.4 Assumption of the theory 22 2.4.1 Manager‘s behavior on SA conceptualization 22 2.4.2 Consumer‘s attitude on SA conceptualization 24 2.4.3 Investor‘s perception on SA conceptualization 25 CHAPTER 3: RESEARCH METHODOLOGY 27 3.1 Research objective and scope 28 3.2 Sampling 28 3.2.1 Sample population 28 3.2.2 Sample frame 28 3.3.3 Sample size 28 3.3.4 Sample techniques 29 7 3.3 Questionnaire 29 3.4 Data collection 29 3.4.1 Secondary data 29 3.4.2 Primary data 30 CHATER 4: ANALYSIS 31 4.1 Overview of results 32 4.2 Result analysis 36 4.2.1 Management survey 36 4.2.1.1. Result of manager‘s questionnaire survey 36 4.2.1.2 Discussion 39 4.2.2 Consumers survey 40 4.2.3 Investor survey 44 4.2.3.1 Result of questionnaire survey 44 4.2.3.2 Discussion 46 CHAPTER 5: CONCLUSION 48 5.1 Conclusion 49 5.1.1 Management survey 49 5.1.2 Consumer survey 50 5.1.3 Investor survey 51 5.2 Limitation of study 53 5.3 Recommendations 53 REFERENCE 54 APPENDIX: QUESTIONNAIRE 58 CONSUMER SURVEY 60 INVESTOR SURVEY 62 8 LIST OF FIGURES Figure 1: Branches of social accounting 17 Figure 4.1. Response rate 33 Figure 4.2. Distribution of manager‘s response from questionnaire survey 36 Figure 4.3. Representation of consumer‘s responses from questionnaire survey 40 Figure 4.4. Distribution of investor‘s responses from questionnaire survey 44 9 CHAPTER 1: INTRODUCTION 1.1 Overview 1.2 The reason for conduct this research 1.3 Scope 1.4 Structure of the study 10 1.1. Overview ―Social accounting is best understood as a reaction against conventional accounting principles and practices. It posits other goals as well as, or instead of, financial profitability. Moreover, social accounting attempts to embrace not only economic and monetary variables but also – as its name suggests – social ones, including some which may not be amenable to quantification in monetary terms.‖ (Geddes, 1992) In 1970s, there were a number of activities in the new accounting domain. Because corporations often cause negative effects on the environment, health and safety of employees, customers and nearby neighborhoods, as well as communities, the corporations and accounting firms experimented with reporting formats and included sections in their annual reports on social performance. Social accounting is a way of representing how an organization is meeting its social or ethical goals. Social accounting may be classified and recorded business activities regarding social responsibility. It may be considered as an approach toward constructing accountability. The vital activities of social accountability include enhancing corporate governance, increasing the development effectiveness, and empowerment. Social responsibility is key word of this concept which includes perception of businesses with environment and their treatments for employees also. Social responsibility concept is also an important concept of management. It is the duty of enterprise to do some social activities for completing their social responsibility. Therefore, social accounting is a very important measure of the company‘s performance. Company has to make social responsibility income statement and balance sheet. But it is not compulsory to make these statements. Moreover, businesses have some obligations to the society, as they created some problems in their revenue and these problems need addressing properly. So, [...]... Accounting Standards relating to the guidance for financial accounting We have no any Vietnamese accounting standard or any documentary to guide social accounting application; whereas most multinational companies use social accounting system and reports at the same time with financial accounting system and reports However, in recent year, Vietnamese citizen as well as business managers‘ attitude and awareness... consequences of governmental and entrepreneurial behavior So defined, social accounting is seen as encompassing and extending present accounting. ‖ In recent times, medium and large, private or public firms voluntarily started to show interest in establishing their social As the result, SA is expanded in a larger scale Quarter, Mook and Richmond( 2003 ) defined social accounting as ― a systematic 15 analysis of. .. only aware of those initiatives, but also aware of social issues that firms is engaging in According to above discussion, there is reasonable to assume that behavior of consumer toward company‗s SA practices is confident Assumption 2: consumer’s perception toward social accounting is positive 2.4.3 Investor’s perception on SA conceptualization Social accounting is analyzing the limitations of financial... environmental and animal testing performance: social or ethical auditing while the Co-op is at the forefront of social corporate awareness and they regularly publish financial data relating to the various stakeholder groups as they have an impact on social activities In many instances the reports are produced in (partial or full) compliance with the sustainability reporting guidelines set by the Global Reporting... approach suggests sustainability can be better ‗managed‘ with the use of sustainability tools that could be adopted to increase the return on financial capital Last, sustainability accounting may exist to highlight organizational practices and to provide a catalyst for change initiated within (for example, Bebbington, 2007b) or outside the organizational boundary (for example, O‘Dwyer, 200 4a) Sustainability... accounting system, reporting and auditing – reporting back to your stakeholders and responding to the findings‖ (Pearce et al 2005) 2.1.1 Social accounting thesis In 2002, Gray presents a critical analysis of the literature published in social accounting over the last twenty-five years, with a particular focus on publications in the Accounting, Organization and Society Journal (AOS) He presents an historical... (Wilmshurst and Frost, 2000), and to change the companies‘ ideas of benefit over cost In response, many companies have developed environmental management and accounting systems and have increased their social and environmental disclosure practices (Larrinaga et al., 2001; Gray et al., 199 5a; Guthrie and Parker, 1989) The ultimate purpose of social accounting is producing accountability of the social, environmental... Ethical accounting refers to ethical information, to the organization‘s ethical values, and comprises data regarding behavior in terms of consumer and community protection, monetary or service sponsorships granted to sports centers or non-profit organizations, policies and public relations Environmental Accounting Social Accounting Human Resource Accounting Ethical Accounting Figure 1: Branches of social. .. environmental and economic effects of an organization‘s actions and therefore improving the social impact (Quarter, Mook and Richmond 2003) In other word, sight of the primary purpose of social accounting seems as a means for community, organizations and enterprises to track for them how they are going The traditional accounting is only concerned actions and transactions within the organization itself As a. .. effect of an organization on its communities of interest or stakeholder, with stakeholder input as part of the data that are analyze for the accounting statement‖ The number of social and environmental questions has been increased rapidly in the community These are considered as the whistle blowing for companies to be more socially responsible and to manage their environmental impact in a better way (Wilmshurst . (26) Vietnamese Accounting Standards relating to the guidance for financial accounting. We have no any Vietnamese accounting standard or any documentary. guide social accounting application; whereas most multinational companies use social accounting system and reports at the same time with financial accounting