Nope, it’s not accounting with friends. Social accounting has to do with incorporating social and environmental impact into traditional financial accounting. It is related to the triple bottom line that has been espoused by many social entrepreneurs and socially innovative companies.In corporate culture, social accounting is closely connected to corporate social responsibility (CSR).Defining Social Accounting

Social accounting is first and foremost accounting. Similar to traditional accounting, it is a method of quantifying a company’s performance. Only with social accounting, performance is used broadly to include social and environment effects.

Here are definitions from around the web: defines the term:

“Social Accounting is the process of measuring, monitoring, and reporting to stakeholders the social and environmental effects of an organization’s actions.”

The Social Audit Network (SAN) outlines social accounting as:

“the process whereby the organisation collects, analyses and interprets descriptive, quantitative and qualitative information in order to produce an account of its performance.”

Information Systems Audit and Control Association (ISACA), which provides tools for global enterprise governance for information technology defines it as:

“Social accounting aims to assess the impact of an organisation or company on people-both the internal and external participant environments.”

Accounting Education defines the term on their website and gives an example of its use.
Wikipedia introduces social accounting as:

“the process of communicating the social and environmental effects of organizations’ economic actions to particular interest groups within society and to society at large.”

Wisegeek defines social accounting as:

“Social accounting is a type of accounting that a business performs to place a value on the influence its operations have on society. It requires that enterprises look closely at all that it does and what kind of impact its activities have on people, places, and the environment….[it also] stems from the demand from governments and the public that businesses be more transparent concerning activities and the implications of those activities.”

Beyond Definition

The challenge with social accounting comes at the stage beyond definition. How do you actually factor in environmental and social effect in a traditional accounting scheme? How do you make a particular method of social accounting widely accepted? How do you ensure that it won’t be ‘gamed’ so that companies can appear more socially responsible?

These are questions that will be explored, keep checking back for more.