Corporate sustainability: accounting standards vs tax by design
Abstract
Purpose
The purpose of this paper is to examine the contradiction between sustainability and accounting practices, underpinned by reporting standards and question whether financial statements prepared in this way represent a true and fair view? The paper highlights the disregard for externalities as a fundamental obstacle to sustainable reporting and proposes taxation designs to recognise the costs associated with externalities as the basis for equitable reporting, pricing and sustainable business practices.
Design/methodology/approach
The approach taken uses Smith’s (1776) tenets of a good tax, to consider characteristics of taxation that may be harnessed for financial reporting, valuation, economic substance and legal form.
Findings
The findings reveal a case for further examination of the efficacy of taxation, alongside a full-cost accounting approach, to benefit sustainable reporting.
Research limitations/implications
The implications of the research are a possible whole reappraisal of costs and prices to recognise the sustainability dimension and place it at the heart of the corporate agenda. The limitations arise from contestable valuation of sustainable matters, arising from a lack of an agreed theoretical framework.
Originality/value
The paper proposes a realignment of costs and prices to correct market imperfection through the innovative application of taxation, but without a fundamental reappraisal of the economic status quo upon which Western-style capitalism is underpinned.
Keywords
Citation
Russell, D. (2014), "Corporate sustainability: accounting standards vs tax by design", Social Responsibility Journal, Vol. 10 No. 3, pp. 386-398. https://doi.org/10.1108/SRJ-10-2012-0122
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited