The Principles of Responsible Management (PRME) have values that are accepted internationally. They are aimed at establishing continuous improvement processes and programs for institutions offering management education. This is designed to create a generation of business managers who can manage the emerging business hardships. The six Principles of Responsible Management include purpose, values, method, research, partnership and dialogue. Financial decisions contribute in promoting positive social change. Positive social change is defined as the process through which transformation is impacted on the individual’s patterns of thinking, behavior and social relationships aimed at bringing beneficial outcomes (Amann, 2015).
Role of Finance and Accounting in Ethics and Positive Social Change
The main role of finance and accounting in promoting positive social change is providing unbiased and adequate information that can be used for decision making by individuals concerned about social issues and improvement. Finance and accounting involve collection, analysis and communication of economic or financial information to its relevant users. For a society to run effectively, there is need for communication among its different segments that include social, organizational, political as well as economic divisions. Financial and accounting information plays a major role in facilitating this communication (Britton and Waterston, 2013).
Financial accounting information has several significant purposes such as helping the users in coming up with informed financial decisions that enable them allocate their scarce resources effectively. This financial information is therefore potentially influential in promoting positive change in the society that is believed to have an effect on everyone. Finance and accounting is a social construction since it is carried out by people for other people. It is therefore viewed as more of an art than a science (McLaney and Atrill, 2013). Finance and accounting is not governed by a theoretical framework or knowledge in making decisions like in the other professions. Instead, it has few rules and little or no theoretical knowledge regulating its practice as well as function.
Finance and accounting play a stewardship role in recording and keeping financial information about business organizations. This is mainly aimed at safeguarding the assets of the business on behalf of the owners or shareholders. This leads to realization of higher profits and returns from which the company management sets aside a proportion for social corporate responsibility. Engagement in social corporate responsibility activities increases and promotes the welfare of the society, hence promoting positive social change (Amann, 2015).
Most businesses are subjected to frauds and thefts. Finance and accounting play a major role in unearthing these activities and promoting accuracy in financial reporting. This profession invests a lot of money and time in incorporating theory into accounting practice, as well as conducting both internal and external audits meant for monitoring financial assets and recovering lost amounts. This improves financial performance of the business hence making it more profitable and increasing its ability to promote positive social change in communities (Albanese and Manning, 2015).
How Accounting and Finance is Used to Support this Role
Accounting and finance has been used to support and promote positive social change by attempting to minimize loopholes in businesses. This is achieved by developing a conceptual framework that enhances transparency and full disclosure in financial reporting. Transparency and full disclosure of all material facts in financial reports of an organization’s financial performance helps investors and other key decision makers in arriving at informed financial decisions for choosing viable business investments and projects. These projects, when implemented, promote and enhance positive social change in the society (Albanese and Manning, 2015).
Accounting and finance has been viewed as a political practice and ideology. It is perceived not just as a mere solution for technical financial problems, but also as a cultural phenomenon. It is considered a product of social relationships, interests as well as frictions. It is also involved in actively and simultaneously creating this social phenomenon. Finance and accounting is therefore regarded an institutional and social practice. Accounting policies are important in political contexts since they are derived from political struggles in the whole society. The outcomes of these policies are also political in nature because they can be designed to favor and benefit the society, hence promoting positive social change (Britton and Waterston, 2013).
Considering accounting and finance as both economic and political, it has fundamental socio-political and economic impacts on the society. This is depicted mainly in the activities that its protagonists regard as issues that relate significantly to fairness of relations, social order as well as distribution within the society. In addition, accounting is attached to social development paradigms and ethical issues that lead it into engaging in corporate social responsibility which promotes positive social change (Albanese and Manning, 2015).
Many organizations are using the principle of impact investing in harnessing the ability of capital markets and providing financial as well as returns to society. Finance and accounting acts as a partisan practice that distributes and transfers wealth among social classes, hence shaping political and social economies in the society.
Albanese, J., & Manning, B. (2015). Revive: How to transform traditional businesses into digital leaders. Old Tappan, NJ: Pearson Education, Inc.
Amann, W., & Principles for Responsible Management Education (Initiative). (2015). Anti-corruption: Implementing curriculum change in management education.
Britton, A., & Waterston, C. (2013). Financial accounting. Harlow: Financial Times Prentice Hall.
McLaney, E., & Atrill, P. (2013). Accounting. Pearson Education U