- 20 Marks
SCS – L3 – Q24 – Ethics and social responsibility
Question
(a) Corporate Social Responsibility represents a company’s voluntary commitment to address the ethical, social and environmental factors associated with its operations. Despite its potential for furthering social needs, there are cogent arguments against Corporate Social Responsibility and may come under severe pressure in terms of its financing.
Required:
Discuss FOUR limits of Corporate Social Responsibility.
(b) Professional accountants face many threats in the performance of their duties that may negatively affect accountants’ objectivity and independence. One of such threats is intimidation threat which may arise from close business relationships, family and personal relationships, and assurance staff members moving to employment with client as well as actual and threatened litigation.
Required:
Explain FOUR safeguards you will consider to deal with actual and threatened litigation as a professional accountant.
(c) Human Resource Management play an essential role in employee development activities. Employee development activities refer to initiatives taken by organization and employees to enhance their skills with time and keep themselves acquainted with the latest developments.
Required:
Explain TWO strategic importance of Human Resource Management and employee development.
Answer
(a) The limits of Corporate Social Responsibility can be argued along the following lines:
- If managers do this, they are generally speaking, spending the line managers’ money for purposes other than those they have authorized; sometimes it is the money of customers or suppliers that is spent and on occasion, the money of employees. By doing this, the manager is in effect, both raising taxes and deciding how they should be spent, which are functions of government, not of business. There are two objections to this:
- Managers have not been compromised to the integrity of their position to affect policy decisions.
- Employees lack the necessary expertise to make decisions that impact policy.
- Businesses do not have obligations, only people have responsibilities. Managers in charge are responsible to the owners of the business, by whom they are employed. These employers may have charity as their aim, but generally their aim will be to make as much money as possible while conforming to the basic rules of the society, both of those ethics and norms.
- Maximizing wealth has the effect of maximizing revenue available to the government to disburse on socially desirable outcomes.
- If the statement that a manager has social responsibilities is to have any meaning, it must mean that they are to act in some way that is not aligned with the interest of stakeholders. Many company shares are owned by pension funds, whose ultimate beneficiaries may not be wealthy anyway.
(b) The following safeguards could be considered:
- Disclosure to audit committee – disclosing information to ensure transparency.
- Exclusion from audit team – removing specific affected individuals from the engagement team.
- Additional reviewer – involving an additional professional to verify work done.
- Resignation from engagement – if the litigation is at all serious, it may be necessary to resign from engagement activities to avoid compromise.
(c) Strategic Importance of the two:
Effective human resource management and HRM development are strategically necessary for:
- To increase profitability: Developing employee skills might make employees’ work more profitable, hence the recent developments in organizational efficiency.
- To enhance group learning: Employees work more and more in effective teams. Each employee has to be competent at several tasks. Some employees have to be motivated to work together (i.e., team working skills).
- Uploader: Salamat Hamid