Accounting is no longer about merely crunching numbers. As the world continues to change and we all have a responsibility towards the environment and the social impact that we make, the way accounting firms operate has undergone a massive change. The practice of quantifying how companies’ operations impact the environment, people, and overall economy, began as early as the 1970s. Over the past decade, it has taken center stage, and today, most investors and stakeholders ensure that SVA or Social Value Accounting is maintained.
It is not just the evolution of accounting professionals. The businesses, as a whole, have to evolve. It is not enough to be responsible internally, the display of ethics at a broader level is imperative. SVA measures and analyzes the social and environmental impact of the organizations. The purpose of SVA is to provide a more comprehensive picture of how an Accounting firm is doing. The contribution to the social and environmental implications is a major consideration factor. Today, stakeholders want to invest in and employees want to work for a socially-aware firm. This means that firms have to report their performance while maintaining complete transparency.
In this article, Finsmart Accounting – trusted globally for offshore bookkeeping services – will share everything about social value in accounting practice. Let’s start by understanding how to follow the path of SVA in today’s context.
How do you follow the path to SVA in today’s context?
Unlike other social responsibilities, accounting firms cannot use SVA as a yearly thing. It is a shift in the mindset, which needs to be meticulously ingrained in the firm’s DNA. The route to achieving SVA in your accounting firm includes:
– Identify key stakeholders:
To be socially responsible, the first step is to identify who your actions impact. From employees and clients to suppliers and other vendors, local communities – who is it that needs to be taken into consideration?
– Set the KPIs:
Just like any other aspect of your accounting firm, you should assess and measure the indicators. Some of these KPIs include job creation, impact on the environment, community development, social inclusion, and health and well-being. These are the reflectors of the overall performance.
– Data collection:
Everything, today, revolves around data. The use of data can help quantify the social and environmental impact of an accounting firm’s activities. This can include gaining new information from different sources, including surveys, interviews, financial records, and environmental assessments.
– Valuation:
Social and environmental impacts are mostly intangible. Hence, it is difficult to give them a monetary value. However, assigning a number to them is important. Market-based, preference and cost-based approaches are common techniques to provide value to these impacts.
– Reporting:
After the data is collected and the valuation is complete, accounting firms can prepare social value reports. These reports can help provide a summary of the social value generated or destroyed by firms, offering insights into its overall impact on society.
Benefits of incorporating Social Value into your accounting practice:
Adapting social value to your firm isn’t just another organizational practice you have to do for the sake of it. They come with several benefits for your accounting firm. These include:
– Better reputation:
Being a socially responsible firm, allows investors, potential clients, and employees to see you for the good work you put out. Giving back to the community is one of the greatest aspects key stakeholders look for. SVA enables you to pose as an ethical and responsible business. The reputation not only attracts customers who align with your firm’s values but also helps establish a differentiator. Most people are inclined to work with someone who makes a true difference and believes in giving back and this works in your favor in the long-term. Word of mouth is a great way to enhance your business and being socially responsible gives you an edge.
– Customer loyalty and trust:
Clients are drawn towards accounting firms that prioritize social responsibility and let their thoughts percolate in their practice. Modern-day customers are aware and they want to associate with businesses with the same thought. By displaying your commitment towards social value, accounting firms can help build a loyal customer base, the ones who align with your ideology and advocate your brand. Customers are more likely to trust and remain loyal to firms that prioritize and abide by their social responsibility.
– Better relationships with stakeholders:
Stakeholders like trustees, investors, etc, want to be a part of a better business. When you integrate social value into your business operations, the relationships from the top to the grassroots level in the organization become better. When stakeholders see accounting firms make a positive impact and contribute to society, they have more faith in the system and are likely to support their businesses and collaborate with them.
– Improved employee engagement:
When employees feel that they are making a positive impact, they are motivated, and engaged and have a better zeal to stay connected with the accounting firm. It also makes them empowered. By incorporating social values, firm leaders can build a sense of purpose and meaning for their employees, leading to more job satisfaction and productivity. When employees are motivated, it sets the firm up for growth and success.
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– Access to better opportunities:
Firms want to be associated with businesses that showcase social responsibility as an ongoing thing, rather than a one-time one. By including social value in your organizational system, you can tap into new customer segments who are aligned in this aspect and expand the customer base. This might allow time and space to unlock new business opportunities and partnerships with like-minded organizations.
– Resilience and long-term sustainability:
Accounting firms that prioritize social values can navigate the challenges and uncertainties better. Abiding by SVA helps lay the foundation of ethical and responsible practices and create a resilient business that can adapt to the changing needs in the market and integrate emerging trends.
Incorporating social value into your accounting practice – End Note
Social value accounting is not devoid of challenges. This is a relatively newer integration into the businesses. While accounting firms are bound to take some time to understand the holistic implications of SVA, the far-reaching positive impact is most certainly convincing. One of the biggest challenges that firms face is handling and managing data. The growing interest of the stakeholders firms the need for the accounting firm to maintain transparency. Accounting firms must establish principles for accounting and monitor the performance based on the KPIs.
Understanding and abiding by SVA is a task that needs your constant attention and dedicated time. By outsourcing your accounting practice, you can make time for strategies like this that can help you improve your business. Need more information on outsourcing? Write to us at connect@finsmartaccounting.com.
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Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
