The Extent of Social Responsibility Accounting Application in the Qualified Industrial Zones in Jordan

By Rahahleh, Muhammad Yassein; Sharairi, Jamal Adel | International Management Review, April 1, 2008 | Go to article overview

The Extent of Social Responsibility Accounting Application in the Qualified Industrial Zones in Jordan


Rahahleh, Muhammad Yassein, Sharairi, Jamal Adel, International Management Review


[Abstract]

The study aims at defining the extent to which the companies investing in the qualified industrial zones (QIZ) in Jordan recognize and apply the concept of social responsibility accounting. The study showed that there was no full recognition of the concept of social responsibility accounting except in some aspects and that there was no full application, but some features. The study recommends that policies adopted in Jordan should be reconsidered to feature a higher weight of the social performance of industrial enterprises. It also recommends conducting training courses, seminars, and workshops for workers in social accounting. Attention should also be given to the measurement of social costs and benefits of enterprises and disclosure of such costs in the financial statements. Finally, it recommends the enactment of laws to oblige industrial establishments to recognize and apply social accounting.

[Keywords] Social responsibility; industrial zone; Jordan

Introduction

Due to the significance of social responsibility in achieving sustainable development, some attempts have been made to formulate covenants and standards to determine its ethical and social specifications. In an advanced step to enhance the concept of social responsibility of the private sector institutions, many conferences have been held in the Arab region, including the one held by the Business Ethics Center at the Dubai Chamber of Commerce on drafting the Social Responsibility Report (CSR) in January 2008. However, the Davos Forum focused also on corporate social responsibility instead of profit generation and transformed attention to the issues of health, AIDS, and development.

Theoretical Framework

To assume their social responsibilities, companies need to work in a legislative environment that defines and outlines corporate duties for the communities where they work. Based on this, it would be necessary to expedite the enactment of laws to oblige industrial enterprises to assume their responsibility and to issue accounting standards to this effect (Jarbou, 2006). The accounting disclosure of social-environmental performance has not been satisfactory and is still in need of more development (Al-Khouli, 2004). It is necessary to develop the principles of disclosure and transparency to include the disclosure of the costs of environmental pollution reduction as one of the main elements of the concept of social accounting (Bamzahim, 2003). Some of the possible solutions shed light on the concept of social responsibility accounting and environmental accounting. They determine the concept and characteristics of the social cost of pollution and state the components of this cost. Additionally, they establish a measurement of cost items borne by the economic unit to minimize pollution, protect human beings, as well as livestock, and determine the agricultural wealth of the society (Swaity, 2004).

Amman Stock Exchange companies contribute to social responsibility by practicing community service activities and providing fringe benefits to their workers; they do so without having a clear philosophy, but neither do they have a supporting or opposing philosophy to the concept of social responsibility (Olayan, 1994). Italian companies have obvious weaknesses in handling environmental accounting, which only includes some aspects of disclosure of the environmental effect caused by the industrial enterprises to the surrounding environment (Bartolomeo, 1997).

There has been an attempt to reach an appropriate method of environmental accounting application for industrial enterprises through the following steps, called the "environmental footprint," concerned with the materials and energy in the production and operation processes. Output includes materials, energy, residuals, and determination and understanding of the environmental costs of the enterprise; tracking and separating nonfinancial data from the raw materials and energy; tracking and recording the environmental costs; a review of the proposed decisions, taking into account the extent to which they incorporate environmental costs; a non-financial measurement of environmental performance; and advanced techniques to transform environmental costs into products and operations by using an activity-based cost (ABC) system and an activity-based management (ABM) system (Stone, 1997). …

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