Integrating ASD Into Financial Accounting

The purpose of this study was to assess the feasibility of integrating the concept of sustainable development generally and ASD more specifically into financial accounting analyzes used by commercial banks in the decision-making process for the extension of business loans. The ultimate objective of this study was the validation of an effective mechanism for linking accountability and corporate responsibility for the protection of the physical environment through typical business processes involving commercial bank business lending that are both routine and crucial to the productive functioning of corporations.

Sustainable development is defined as meeting the needs of the present, without compromising the ability of future generations to meet their own needs (Feltmate, 1997).

Externalities are defined as the positive and negative consequences associated with the production or consumption of a good or service imparted to a third, external party (Feltmate 1997).

Full cost accounting is defined as the integration of three processes. These processes are (1) the valuation of non-market factors in market terms (values), (2) the internalization of external costs, and (3) the replacement of fixed with variable costs ("Full cost accounting principles," 1998).

The scope of this study focused on the full cost accounting approach to ASD. The application of ASD in managerial accounting was not addressed in this study.

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y a sole focus on economic values. Buchholz (1991) observed that, although not everyone accepted the notion that business was solely an economic institution with only economic responsibilities, "it does seem that this view of the corporation has been the prevailing view in our society. And as long as the system worked well enough for most people, there were not likely to be any serious questions raised about the social performance of business outside the marketplace context. It was the concern with social responsibilities that began to raise serious questions about this view of the corporation and its responsibilities to society. The problems that social-responsibility advocates addressed, such as pollution and unsafe workplaces, were in large part created by the drive for efficiency in the marketplace. Thus it began to be argued that there was a divergence between the performance of business in the marketplace and the social aspects of business behavior" (p. 21). Many people began to believe that cleaning up pollution, providing safer workplaces, producing products that were safe to use, promoting equal opportunity, and attempting to eliminate poverty in our society had something to do with promoting human welfare and creat

Category: Economics - I