September 18, 2013

Address (Assume any)

Dear Mr. XYZ (Partner name)

As per our agreement regarding the submission of the report on the implementation of sustainable accounting practices in your reputable firm, I am here by submitting the draft report titled “Report on Implementation of Sustainable Accounting Practices”.

 

I am hopeful that this report serves the purpose as it has raised all the relevant issues pertaining to sustainability in an organized and lucid manner. I would like to thank you for the opportunity this report gave me to familiarize my expertise on the field of sustainability.

Sincerely,

Mr. Alan Tiet

Sustainability Expert & Advisor

 

 

 

Report on Implementation of Sustainable Accounting Practical.

 

An integrative approach

 

Submitted by: Alan Tiet

Date: 18^th September 2013

 

 

 

 

 

Table of Contents

i.Executive Summary 4

ii.Introduction 5

ii(a) Background 5

ii(b) Purpose 5

ii(c) Scope 5

iii. Research Methodology 6

iv. Discussion 6

iv(a) Vision for Sustainability 6

iv(b) Element of a Sustainability Program 8

iv(c) Ways to engage employees in the Program 9

iv(d) Exemplifying best sustainable practices 10

v. Signifcant Findings 10

vi. Conclusion 11

vii Recommendations 11

viii References 8

 

i. Executive Summary

 

This report is based on a research study of the prevailing sustainability issue for the accounting profession that has indeed become one of the biggest challenges for continual survival keeping in view the current cut-throat competition in highly developed economies such as Australia.

It also investigates the motives of the accounting firms towards sustainability and the concerns of the major stakeholders involved therein. The report also elaborates the possible opportunities it can provide along with challenging risk implications. A detailed research study has been performed by review of the firm’s processes and systems and interviews of various stakeholders. In addition, this report fully provides guidance on the need to set a vision based strategy for sustainability along with evaluation criteria against each identified factor. Furthermore, it also provides information on the elements of the sustainability program that needs to be implemented by the firm along with ways to induce employees towards the program. Accordingly, the study revealed that the firm needs to adopt a comprehensive sustainable policy integrated to its key business areas of services and continual professional development of professional staff through training programs and performance evaluation techniques along with emphasis towards compliance with environmental, political and legal regulations and its overall contribution towards its major stakeholders for long-term success. Lastly, conclusions have also been drawn on the basis of arguments for and against in introducing a sustainability program and necessary remedial measures in the implementation of such a strategy.

 

 

 

 

ii. Introduction

ii(a) Background

Accounting for sustainability has a big impact on the firms’ future operating capability and is duly emphasized by the professional bodies such as media release and journals published by the Institute of Chartered Accountants of Australia (ICAA) and on timely basis. It simultaneously offers both opportunities and significant challenges and thus requires consistent evaluation of the firms’ integrated view of the activities that eventually impact the social, economical, ecological, political and legal factors.

The report has been drafted on the request of partners of a large Australian accounting practice to provide them with the information necessary to determine whether they should implement sustainable business practices.

ii(b) Purpose

The purpose of this report is to advise the partners through research study regarding proper understanding and meaning of sustainability in the firms’ business context along with suitable recommendations through analysis of the arguments for and against in introducing a comprehensive sustainability program that is in line with core business areas particularly assurance and advisory services which they can discuss at their next Board meeting.

ii(c) Scope

This report provides an insight to the partners of the firm on a vision for sustainability, elements of a sustainability program and ways to engage employees in the program and to provide them with examples of best practices.

 

 

 

iii. Research Methodology

The key methods that have been adopted for the research include;

1. Reviewed and obtained an understanding of the policies, procedures, processes, controls and systems of the accounting firm use to take into account environmental, economical, social, and governance considerations for identification of any loopholes.

2. Reviewed the process of risk management embedded in the firm’s operating system and assessing its automated auditing and reporting capabilities to mitigate sustainability risks.

3. Meetings with the chief compliance officer of the firm to ensure whether the firm is compliant with applicable laws and regulations including environmental, legal, political and social obligations and whether there are adequate controls in place to implement transparency.

4. Industry wide inquiries of major stakeholders involved in the accounting practices including employees, clients, investors, professional bodies and regulatory authorities on their possible concerns and expectations from the accounting firm regarding sustainability.

5. Interviews have been conducted of those partners and managers who are knowledgeable about the sustainability issues of the accounting firm and strongly believe that incorporation of such a strategy would give them a competitive advantage and make a positive contribution to the global community.

6. Detailed study of cases pertaining to successful sustainability activities of few big corporate entities such as World Vision Australia and Blackmores.

iv. Discussion

iv(a) Vision for Sustainability

The vision for sustainability includes incorporation of such a viable business strategy of the firm entailing prosperity and continual growth of the firm’s business in the long run that is streamlined with all environmental determinants in a complete outfit. The word ‘vision’ is quite often used for future course of action and hence it is regarded as intended planned strategies which are formulated by strategic planners that include the partners of the firm. Therefore, in order to implement a robust vision for mitigating sustainability risks, the partners need to set a vision statement by building a sustainable strategy and evaluate it against the following criteria as follows;

Factor	Evaluation Criteria
1. Understanding industry externalities and stakeholders’ expectations	Is the firm exposed to industry-specific regulatory changes? Are there any political, economical, social, technological, environmental factors that that might impact the firm’s operating environment? Does the firm’s business strategy incorporate changing stakeholder expectations?
2. Mapping business risks and opportunities	What industry challenges and growth constraints is most material to the firm? Is there a process in place to review changes and assess the impact of these issues on strategy? How can these changes be leveraged to create a competitive advantage?
3. Assessing competition and defining positioning	How the firms’ competitors define and implement sustainability? Do the sustainability initiatives place the firm as an industry leader? How can the firm be differentiated to gain competitive advantage?
4. Integrating sustainability into strategy and strategic objectives	Is the sustainable strategy linked to core business objectives? What potential intangible benefits could investment in sustainability deliver? Does the firm have resilience to sustainability shocks?
5. Developing the business case	Is there any opportunity to reduce long-term operating costs through implementing sustainability measures? Is there any threat to brand equity beyond the control of the firm which could be minimized through sustainability investment

 

 

iv(b) Elements of a Sustainability Program

Elements	Application
1. Adequately designed policies for performance evaluation of the firms key staff	Continual evaluation whether the firm professional’s staff possess adequate skills, training and expertise required of performing their duties in a competent and diligent manner.
2. Policies and procedures for impact on environmental, economical and political climate	A comprehensive policy need to be drafted which inculcate special emphasis on the firm’s contribution to environment including reducing carbon emissions by eliminating paper based environment, use of recycling techniques and compete in a challenging environment without monopolizing by complying legal and regulatory requirements.
3. Incorporate sustainability within the risk management framework	The outputs of stakeholder engagement should be considered in the risk management process and the impacts of sustainability related risks need to be understood and quantified.
4. Involvement of major external stakeholders	Key external stakeholders can provide valuable inputs to the firm’s sustainability position within different perspectives.
5. Understanding clients’ attitudes and behaviors	Adequate research need to be undertaken to understand current and future trends and their implications and identification of factors that can drive changes in the accounting industry.
6. Measuring performance	Incentive schemes need to be aligned with the sustainable business goals
7. Ongoing monitoring of externalities	Adequate tools must be in place to keep the firm informed of major developments n the profession and legal and regulatory requirements.
8.Determination of audience primary objectives	Relevant issues need to be informed to the stakeholders regarding sustainability data.
9. Development of adequate reporting principles and guidelines that should be integrated	The reporting guidelines should address key issues to stakeholders and should identify any strengths and weaknesses
10 Identification of assurance needs of the firm.	Evaluation that which elements need to ensure credibility and whether does the internal audit have the capability to assess sustainability related issues.

 

iv(c) Ways to engage Employees in the Program

In order to implement the successful sustainable strategy inside the accounting firm, there is a need to incorporate following as follows;

Factor	Procedure
1. Leading from the top	The Board and senior management should be actively involved in communicating the value of sustainability to the firm and the drivers and outcomes of this approach should be relevant and clear to all employees and other stakeholders
2. Building internal awareness and knowledge	All the employees of the firm should be aware of their roles in the implementation and ongoing success of sustainability as a core business function. Enhance communication and support for employee awareness
3. Developing a cultural change process	Timely evaluate whether the difference between current culture and desired culture is understood by the employees and cultural diversity should be managed properly.
4. Training of employees	Regular trainings and workshops should be conducted in the firm to improve the competency and professional skills of the staff.

 

iv(d) Exemplifying best sustainability practices

World Vision Australia is a not-for-profit company limited by guarantee operating in international development and relief advocacy and Blackmores a public listed company operating in healthcare equipment and services have achieved transparency awards through consistent best sustainable practices by streamlining their;

·        Governance and strategy

• Leadership and employee engagement
• Resources mobilization and alliance management
• Accounting and integrated reporting

v. Significant Findings

• The firm has not developed a clear and forward –looking policy framework for sustainability reporting.
• There is no mechanism in place for continued professional development of accountants keeping in view the best industry practices in terms of development in accounting and legal and regulatory framework.
• There is a major role of accounting profession of in promotion of sustainability by giving an insight to the clients of the sustainability issues and communicate to internal and external stakeholders to demonstrate the business value of their sustainability strategies because it affects all businesses and challenges organization’s continual operating capability.

vi. Conclusion

 

Benefits	Challenging Implications
1. Incorporation of new sustainable policies and procedures can result in streamlined and robust operations	Implementing new policies would result in extensive readjustment to the firm’s operations and thus is a highly risk prone in terms of the achievability.
2. Use resources more efficiently thus result in cost minimization Enhance productivity and commitment of employees through continuous professional development	Resistance against the new approach and better procedures.
3. Although less paper consumption can be a sustainable position for low carbon in the economy.	The paper less environment can be risky because if the computer systems malfunction or are stolen or damaged it can result in significant loss of records.

vii. Recommendations

 

• There is a need to for the development of sustainability policies and service lines through need analysis, benchmarking, compliance regulation, forward improvement in order to gain competitive advantage.
• All the partners and managers engaged in sustainability services within accounting firms are need to be actively involved in a variety of sustainable consulting groups and committees organized by government and non-governmental organizations.
• The demands of the stakeholders are in divergent perspective and should be managed accordingly for example, government wants compliance with regulations, employees care about work environment and equitable compensation etc.
• There should not be exploitation of competition by monopolizing the clients inhibiting growth for the overall economy at the demise of small firms. In order to gain competitive advantage focus should be on quality of service, global capability and promotion of sustainability to its existing clients.

 

viii. References

 

 

1. http://www.charteredaccountants.com.au/News-Media/Media-centre/2011/Sustainability-fundamental-to-business-risk.aspx

2. http://www.charteredaccountants.com.au/NewsMedia/Charter/Charter-articles/Sustainability/2011-04-Accounting-for-Sustainability.aspx

3. KPMG International Corporate Responsibility Reporting Survey 2011

4. Business Briefing Series 20 issues on building a sustainable business

5. http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/corporate-sustainability-v2.pdf

http://www.icaew.com/~/media/Files/Technical/Sustainability/tecpln10671-cbp-briefing-csr-service-lines.pdf