social accounting in vietnam a study of its importance

SOCIAL ACCOUNTING IN VIETNAM:
A STUDY OF ITS IMPORTANT





By
VU THI MAI
Student ID: E0700304









Graduaration Project Submiited to the Department of Business Studies, HELP
University College, in Partial Fulfilment of the Requirements for the Degree of
Bachelor of Business ( Accounting) Hons.




OCTOBER 2011


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DECLARATION OF ORIGINALITY AND WORD COUNT

I hereby declare that the graduation project is based on my original work except for
quotations and citations which have been duly acknowledged. I also declare that it
has not been previously or concurrently submitted for any other course/degree at
Help University College or other institutions. The word count is 11136 words.











Vu Thi Mai
October 2011




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ACKNOWLEDGEMENT

The project would not be done properly without the assistance, support and
encouragement of many people. I wish to take this opportunity to thank all the people
who have helped me during the time of completing this project.
I would like to express my deep gratitude to my supervisor Dr Phan Thu Huong,
Vietnam National University Hanoi. She has kindly helped me and supported me all

the way through. I also would like to express my thank to Ms. Sumathi and Ms.
Shenba, Help University College, who initiated the project and give so much
instruction and support.
Additionally, I also would like to extend my special thanks to managers, investors,
my friends, and other people who have help me to carry out the survey. I want to
thank them for all their support, interest and valuable hints.









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Social accounting in Vietnam:
A study of its importance


By
VU THI MAI
October 2011
Supervisor: Dr PHAN THU HUONG

ABSTRACT
Over recent years, the role of business organizations within society has received
increasing attention, and the expectations towards these organizations have increased
accordingly. The term that has been coined for these expectations is corporate social
responsibility (CSR) or social accounting (SA) (Schouten and Remme 2006).

Nowadays, it is generally recognized that SA is of strategic importance to ensure
long-term business competitiveness and success.
Its potential is enormous in the areas of employee performance, cooperation among
other stakeholders (business partners, investors, consumers, suppliers) and an engine
of economic growth (Lamy 2002). So, the stakeholders‘ views on SA performance of
business are enormous, and the key responsibility in this performance goes to the
managers, consumers, investors. This paper examines the perception of manager,
consumer and investor on SA performance of corporations in Viet Nam. The results
of the study suggest that there is strong support for SA from managers and a growing
awareness among consumers and investors. Nevertheless, the difference between the
way people understand and their action caused they are not eager to support for SA


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issues such as lack of SA system from firm, some relevant barriers (living expenses,
low CSR communication tools). However, with highly positive attitude toward SA
and the willingness to learn about SA of people, SA concept and practice will be
popular and developed further in the future.



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CONTENTS
DECLARATION OF ORIGINALITY AND WORD COUNT 1
ACKNOWLEDGEMENT 3
ABSTRACT 4
CONTENTS 6
LIST OF FIGURES 8
CHAPTER 1: INTRODUCTION 9
1.1. Overview 10

1.2 The reason for conduct this research 12
1.3 Scope 12
1.4 Structure of theory 13
CHAPTER 2: LITERATURE REVIEW 14
2.1 Conceptualization of Social Accounting 15
2.1.1 Social accounting thesis 18
2.1.2 Sustainability accounting 19
2.2 Legitimacy theory 20
2.3 Social Reporting 20
2.4 Assumption of the theory 22
2.4.1 Manager‘s behavior on SA conceptualization 22
2.4.2 Consumer‘s attitude on SA conceptualization 24
2.4.3 Investor‘s perception on SA conceptualization 25
CHAPTER 3: RESEARCH METHODOLOGY 27
3.1 Research objective and scope 28
3.2 Sampling 28
3.2.1 Sample population 28
3.2.2 Sample frame 28
3.3.3 Sample size 28
3.3.4 Sample techniques 29


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3.3 Questionnaire 29
3.4 Data collection 29
3.4.1 Secondary data 29
3.4.2 Primary data 30
CHATER 4: ANALYSIS 31
4.1 Overview of results 32
4.2 Result analysis 36

4.2.1 Management survey 36
4.2.1.1. Result of manager‘s questionnaire survey 36
4.2.1.2 Discussion 39
4.2.2 Consumers survey 40
4.2.3 Investor survey 44
4.2.3.1 Result of questionnaire survey 44
4.2.3.2 Discussion 46
CHAPTER 5: CONCLUSION 48
5.1 Conclusion 49
5.1.1 Management survey 49
5.1.2 Consumer survey 50
5.1.3 Investor survey 51
5.2 Limitation of study 53
5.3 Recommendations 53
REFERENCE 54
APPENDIX: QUESTIONNAIRE 58
CONSUMER SURVEY 60
INVESTOR SURVEY 62




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LIST OF FIGURES

Figure 1: Branches of social accounting 17
Figure 4.1. Response rate 33
Figure 4.2. Distribution of manager‘s response from questionnaire survey 36
Figure 4.3. Representation of consumer‘s responses from questionnaire survey 40
Figure 4.4. Distribution of investor‘s responses from questionnaire survey 44

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CHAPTER 1: INTRODUCTION

1.1 Overview
1.2 The reason for conduct this research
1.3 Scope
1.4 Structure of the study

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1.1. Overview
―Social accounting is best understood as a reaction against conventional accounting
principles and practices. It posits other goals as well as, or instead of, financial
profitability. Moreover, social accounting attempts to embrace not only economic
and monetary variables but also – as its name suggests – social ones, including some
which may not be amenable to quantification in monetary terms.‖ (Geddes, 1992)
In 1970s, there were a number of activities in the new accounting domain. Because
corporations often cause negative effects on the environment, health and safety of
employees, customers and nearby neighborhoods, as well as communities, the
corporations and accounting firms experimented with reporting formats and included
sections in their annual reports on social performance.
Social accounting is a way of representing how an organization is meeting its social
or ethical goals. Social accounting may be classified and recorded business activities
regarding social responsibility. It may be considered as an approach toward
constructing accountability. The vital activities of social accountability include
enhancing corporate governance, increasing the development effectiveness, and
empowerment. Social responsibility is key word of this concept which includes
perception of businesses with environment and their treatments for employees also.
Social responsibility concept is also an important concept of management. It is the

duty of enterprise to do some social activities for completing their social
responsibility. Therefore, social accounting is a very important measure of the
company‘s performance. Company has to make social responsibility income
statement and balance sheet. But it is not compulsory to make these statements.
Moreover, businesses have some obligations to the society, as they created some
problems in their revenue and these problems need addressing properly. So,


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stakeholders expect organizations to be engaged in some social issues such as
offering reasonable price and quality living of consumer and employee, fair wage,
employee safety, fair advertisement, proper fund management, etc. ―Business
organizations can contribute to sustainable development by managing their
operations in such a way as to enhance economic growth, increase competitiveness
and ensuring at the same time environmental protection and promoting social rights.
Thus social accounting is a concept whereby companies integrate social and
environmental concerns on their business activities‖ (Julie 2002).
In Vietnam, some Vietnamese citizen and enterprise do not know the concept of
social accounting although it is quite popular. In additions, we have only twenty six
(26) Vietnamese Accounting Standards relating to the guidance for financial
accounting. We have no any Vietnamese accounting standard or any documentary to
guide social accounting application; whereas most multinational companies use
social accounting system and reports at the same time with financial accounting
system and reports. However, in recent year, Vietnamese citizen as well as business
managers‘ attitude and awareness toward social accounting has been changed in the
positive way, since Vietnamese government has taken some significant steps like that
CSR forum establishment, CSR award annually, CSR short-term courses to tailor
businesses acting in sociality‘s perspective. Vietnamese Government commit that
both of Vietnamese firms and international firms operating in Vietnam have to
follow these strictly.

Moreover, Vietnam‘s authority issued some of SA awards to improve business
corporations‘ responsibilities toward society. However, there are some problems and
challenges in developing concept of social accounting in Viet. SA is only familiar
with managers and accountants, and the other stakeholders still have limited


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understandings. Long- term plan and strategy to conduct the programs of SA in
practice are not identified by concerned people. On the contrary, the companies are
in shortage of management ability and professional knowledge in SA practices. Now,
Vietnam government and Vietnamese relevant parties need raise the SA knowledge
and perception, as well as suggest some possible solutions for happened SA dilemma
that contribute to strategies for sustainable development.

1.2 The reason for conduct this research
After, Vietnam has joined World Trade Organization (WTO), Vietnamese economy
had developed rapidly, and globally. As consequently, it requires Vietnam need to
pursue strategies for sustainable developments. Social responsibility of business has
been practiced by most of the business organizations in those countries and also in
their partners. But in case of Viet Nam business organizations, the experience of
social responsibility resulted from application is not enough. Manager‘s vision,
consumer‘s perceptions, as well as investor‘s on SA performance have been
considered important in this situation. Thus, the paper aims to investigate the
following issues: to understand contemporary SA views established in global
perspective; to examine the attitude of manager, consumer, investor of the industries
on SA contemporary issues.

1.3 Scope
The study is examining the managers‘ attitude on social accounting performances in
both public and private sector enterprises in Viet Nam. The industries selected are

banking, consumer manufacturing goods, and construction. The scope of the study
was limited to participants of the industries of Ha Noi City, Ho Chi Minh City which


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are two top of the biggest city of the country. The study concentrated on the
industries where there are a number of large well-established enterprises for data
availability.

1.4 Structure of theory
The theory involves five chapters. Each chapter does independent and discussing
about social accounting. First chapter introduces overview definition of social
accounting, the reason of conducting this theory, scope and structure of theory.
Second chapter explains more detail about conceptualization of social accounting, as
well as well-done thesis relating this issue, discussing in social reporting. Besides
that, the main part of this chapter is to provide assumption of survey participant‘s
perception toward SA. Third chapter shows how the theory collects data,
information, and theory‘s participant, as well as sampling, questionnaire. Next
chapter provides result‘s analysis basing on participants‘ choices in collected survey.
From this analysis, we can give conclusion for these assumptions in chapter two.
Last chapter provides general conclusion for this theory, limitation and
recommendation

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CHAPTER 2: LITERATURE REVIEW

2.1 Conceptualization of Social Accounting
2.1.1 Social accounting thesis
2.1.2 Sustainability accounting
2.2 Legitimacy theory
2.3 Social Reporting

2.4 Assumption of the study
2.4.1 Manager’s behavior on SA conceptualization
2.4.2 Consumer’s attitude on SA conceptualization
2.4.3 Investor’s perception on SA conceptualization








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2.1 Conceptualization of Social Accounting
Accountability represents the direct of the social system and its objective is to

conceive this system to measure, analyze, form and control it. It is not easy to
approach the social reality without correlating it to the financial, economic and
administrative reality because of clear-cut connection between the two. The social
accounting purposes at balancing the society and the accountability practice as the
former appears as a branch of the accountability within the context of scientific
knowledge which offers answers to social problems, to their causes, projections
within a dynamic environment.
Over a decade, the economic, political and social environment has gone through
profound changes which result a higher level of globalization and a harsher rivalry.
The business organizations have become stronger and stronger and one the issue of
taking responsibility was posted they have started to attach more and more
importance to the corporate social responsibility. Consumer‘ expectations in term of
quality product or services and environment protection, social responsibility or
ethical values are promoted by the companies. The result of the stakeholders‘
pressures to encourage the large corporations to behave ethically and socially
constructively was the concept of the social accountability emerged in Great Britain
in the 70‘s. Mobley (1970) defined that: ―social accounting refers to the ordering,
measuring and analysis of the social and economic consequences of governmental
and entrepreneurial behavior. So defined, social accounting is seen as encompassing
and extending present accounting.‖
In recent times, medium and large, private or public firms voluntarily started to show
interest in establishing their social. As the result, SA is expanded in a larger scale.
Quarter, Mook and Richmond( 2003 ) defined social accounting as ― a systematic


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analysis of the effect of an organization on its communities of interest or stakeholder,
with stakeholder input as part of the data that are analyze for the accounting
statement‖.
The number of social and environmental questions has been increased rapidly in the

community. These are considered as the whistle blowing for companies to be more
socially responsible and to manage their environmental impact in a better way
(Wilmshurst and Frost, 2000), and to change the companies‘ ideas of benefit over
cost. In response, many companies have developed environmental management and
accounting systems and have increased their social and environmental disclosure
practices (Larrinaga et al., 2001; Gray et al., 1995a; Guthrie and Parker, 1989).
The ultimate purpose of social accounting is producing accountability of the social,
environmental and economic effects of an organization‘s actions and therefore
improving the social impact (Quarter, Mook and Richmond 2003). In other word,
sight of the primary purpose of social accounting seems as a means for community,
organizations and enterprises to track for them how they are going.
The traditional accounting is only concerned actions and transactions within the
organization itself. As a result, organizations take significant activities to record
while other nonmaterial activities are seemed as irrelevant and ignored. However, the
traditional accounting needs to change and a consequence of these new requirements.
Each and every these new information helps us identify other branches of social
accounting. They are environmental accounting, human resources accounting, ethical
accounting. In which, the environmental accounting targets to quantify all natural
capital resources destroyed or compromised in the production process or to assess the
way good and services are utilized. Human resources accounting must be includes in
the financial reports due to their value, at an internal level or a management level in


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making decisions by potential users such as in making management decisions
regarding personnel. Ethical accounting refers to ethical information, to the
organization‘s ethical values, and comprises data regarding behavior in terms of
consumer and community protection, monetary or service sponsorships granted to
sports centers or non-profit organizations, policies and public relations.

Figure 1: Branches of social accounting

Furthermore, there are some benefits of social accounting. It will provide business
organizations with an ongoing record of how these organizations or enterprises has
developed and changed over time. Secondly, they will get feedback on how things
are going from the range of people involved in these organizations or enterprises.
Third, firm‘s managers can be able to identify which areas are well managed and not
so — and they can use this information to improve what they are doing well and
make adjustments to change what are not. They also will know how well they are
achieving their aims and values. Lastly, firm‘s managers will have a record of what
their organization or enterprise is doing and the sorts of impacts it is having —
information they can use when applying for grants and funding, for reporting on
grants, and for promoting what they do.
Environmental Accounting

Human Resource Accounting
Ethical Accounting

Social Accounting



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SA is perhaps most developed in the UK, where initiatives such as the Social Audit Network
provide training and support in social accounting (www.socialauditnetwork.org.uk). It is

based on three overall steps including scoping: ―identifying key elements of your
organization or enterprise, accounting – deciding on the scope and setting up the social
accounting system, reporting and auditing – reporting back to your stakeholders and
responding to the findings‖ (Pearce et al 2005).

2.1.1 Social accounting thesis
In 2002, Gray presents a critical analysis of the literature published in social
accounting over the last twenty-five years, with a particular focus on publications in
the Accounting, Organization and Society Journal (AOS). He presents an historical
retrospective of this subject, reflects on the dimensions of social accounting and
identifies the most important publications in this area.
Medawar (1976) claims that it is very important to the social environmental
accounting area. Gray (2002) said that ―it is written from (and about) the agony,
frustration, success and essential necessity of one of the deepest and most influential
processes of engagement in the history of social accounting. It is informed, neither
by any love for capitalism nor by any subscription to terrorism or revolution but by a
deep rooted sense of justice, decently, need for change, personal commitment and
reasonableness outraged by unreasonableness‖.
The social accounting project has been broadly described as the universe of all
possible accountings (Evans and Zadek, 1997); it seeks engagement with the desire
to change current accounting practice to include a broader set of users, new
technologies, and events not usually included in mainstream accounting practice


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(Dillard, 2007). The motivation for change is predicated on the ―refusal to accept that
we live in the best of all possible worlds‖ (Gray, 2002).

2.1.2 Sustainability accounting
Social accounting consists of a number of sub-sets, one of which is sustainability

accounting (Bebbington, 1999), and can be further considered under several broad
approaches (Bebbington and Gray, 2001). First, sustainability accounting should not
exist (at least in its current forms) simply because the process of accounting for
sustainability is likely to be socially and environmentally damaging (for example,
Maunders and Burritt, 1991). The second approach suggests sustainability can be
better ‗managed‘ with the use of sustainability tools that could be adopted to increase
the return on financial capital. Last, sustainability accounting may exist to highlight
organizational practices and to provide a catalyst for change initiated within (for
example, Bebbington, 2007b) or outside the organizational boundary (for example,
O‘Dwyer, 2004a).
Sustainability accounting, according to Bebbington (2007b), is based on the premise
that a sustainable society requires those making decisions to be informed about the
impact of their actions and of those around them, in particular those controlling vast
resources, as in large organizations. Bebbington‘s (2007b) internally focused
description does not exclude the possibility for influencing policy or various
stakeholders, but does infer that such catalysts for change congregate within the
organisational boundary.



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2.2 Legitimacy theory
Suchman (1995) defined that ―Legitimacy is a generalized perception or assumption
that the actions of an entity are desirable, proper, or appropriate within some socially
constructed system of norms, values, beliefs, and definitions‖.
Legitimacy theory has been cited most frequently in the social and environmental
accounting area (Islam & Deegan, 2008; Deegan et al., 2002). Legitimacy theory
provides the explanation and guideline of voluntary social and environmental
disclosures made by corporations. Legitimacy theory is about disclosing information
in the annual reports of the firm (Gray et al. 1995a).

Legitimacy theory is divided into two major categories. The macro-theory of
legitimation is known as Institutional Legitimacy Theory that deals with how
organizational structures as a whole (such as capitalism, government) have gained
acceptance from society at large. The second layer is called the ―Organizational
Level‖ (sometimes referred to as Strategic Legitimacy Theory) which is a process,
legitimation, by which an organization seeks approval (or avoidance of sanction)
from groups in society.

2.3 Social Reporting
Social reporting can be analyzed with different purposes: to understand the
disclosure of a specific country; to analyze the disclosure practices pertaining to a
particular category of information; to analyze some of the specific aspects connected
with environmental or social matters such as liabilities, as well as trying to validate
some theory and comparing disclosures practices from different countries and others.
Reporting or disclosure is the end result, but the initial part would be getting
corporations involved in social activities, social concerns and social responsibilities.


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The disclosure part is only in giving information but what the intention of the
corporation is very important. The key features of SA are the measurement and
communication of information concerning the effect of business and its activity
towards society and environment (Belkaoui, 2000). In essence, stakeholders will get
the firm‘s social and environmental impacts information from SA activities. Social
Reporting is one of the branches of SA and companies will utilize communication
media such as annual reports, social reports, promotional material, and web sites, to
announce and publish their social activities. These reports are not solely important to
financial analysts and fund managers but most users such as employees, consumers,
community, government and NGOs.
The number of large organizations in the world such as Royal Dutch Shell, Diageo,

BP, British Telecom, The Co-operative Bank, The Body Shop, and United Utilities
are practicing SA activities. For example, the Body Shop undertakes an audit of its
social, environmental and animal testing performance: social or ethical auditing
while the Co-op is at the forefront of social corporate awareness and they regularly
publish financial data relating to the various stakeholder groups as they have an
impact on social activities. In many instances the reports are produced in (partial or
full) compliance with the sustainability reporting guidelines set by the Global
Reporting Initiative (GRI).
SA reporting benefits overall operations of the firm. Firstly, this report help enhance
closed relationship between stakeholder and credibility. Secondly, SA contributes to
protect from dismissing possible negative campaign and upgrading the company
image, and raise the brand image of each company. The last one is SA is considered
as the most effective tool to help educate and motivate employees. This is important
because of growing demand for socially responsible investment.


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There are three different types of SA reporting known as mandatory, solicited, and
voluntary reporting (argumed by Van der Laan, 2004 and Wooward et al., 1996).
Mandatory reporting is issued by state (Doane, 2002). The purpose of this report is to
protect citizens and make sure that all appropriate information is provided. Solicited
reporting is issued by a particular stakeholder group. However, this type of report
gains slowly social acceptance then it is still underdeveloped form (Van der Laan,
2004). Voluntary reporting is the most accepted reporting form.
Nevertheless, the most relevant standard on social accounting is SA8000 developed
by CEPAA (Council of Economic Priorities Accreditation Agency – USA) currently
known as Social Accountability International (SAI). The SA 8000 standard is an
internationally auditable performance standard relying on International Labor
Organization Conventions, on the Human Rights Declaration and the UNO
Convention on child‘s rights. The management system of social accounting also links

to the other related management systems like quality (ISO 9001:2000), environment
(ISO 14001:2004), and health, workforce security (OHSAS 18001:1999).

2.4 Assumption of the theory
2.4.1 Manager’s behavior on SA conceptualization
Corporate manager is one type of stakeholder, but corporate manager play a unique
role in business organization. The binding relationship between the managers and
companies is through contract. Or in other words, ―Managers are the only group of
stakeholders who enter into a contractual relationship with all other stakeholders.
Managers are also the only group of stakeholders with direct control over the
decision making process of the firm‖ (Hill and Jones, 1992). Therefore, corporate
managers do not play the similar role like other stake-holder.


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In other view, the management of firms preferred operating on the profit
maximization basis realizes the positive correlation between social responsibility and
financial performance. They also comprehend some facts of fulfilling SA objectives
of government‘s involvement into business, and ethical customers nowadays choose
to consume the products and services soured from socially responsible enterprises.
All stakeholders‘ expectations are changing, and responsibility swiftly emerges on
business organization.
Each manager will chose the most appropriate decision and plans for SA programs.
However, social responsibilities are based on human actor, rather than based on
some abstract organizational actor. This means that all the companies have to define
social activities toward the benefit of society, not only focus on company‘s benefit.
Wood (1991) states that: ―A company‘s social responsibilities are not met by some
abstract organizational actor; they are met by human actors, who constantly make
decisions and choices, some big and some small, some minor and others of great
consequence‖.

Besides that, behavior of managers on SA is effected by general thought and feelings
toward society. Perfectly, society often expect positive attitude from managers.
Therefore, we can confident to assume that manager‘s behavior toward SA is
positive influence on SA practice of organizations. The following hypothesis is
developed:
Assumption 1: Managers think that social accounting effect positively on firm’s
development.


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2.4.2 Consumer’s attitude on SA conceptualization
The growing interest in social accounting comes from both business-to-business
customers and consumers. There is a considerable shift by many companies,
governments, universities and other institutions in purchasing decisions to the firms
that care about human rights and environment. Numerous studies correlate
consumer-purchasing preferences with ethical and socially responsible business
conduct although there is no clear-cut proves of the changes. In this regard the
findings of some study revealed that consumers had actually avoided the products of
companies they perceived as not being socially responsible. It is because consumers
are being in the economic relation with members of a community. They assess the
consistence and compliance of the company to the society welfare. There are a
growing number of organizations that help consumers and businesses rate companies
and products or publish lists of products based on social criteria, such as a company's
environmental performance, labor practices or community-involvement record (BSR
2001). Consequently, they can be willing to offer their support for socially
responsible companies (Bhattacharya, Rao and Glynn, 1995). Hence, Consumer
knowledge of a firm's SA initiatives may lead to a higher evaluation of the company
and a more positive evaluation of the company's product (Brown & Dacin, 1997).
Moreover, consumer will support to business if they also do so (Dawkins
2003).Therefore, according to McWilliams and Siegel, (2001), Hoeffler and Keller,

(2002), Bhattacharya and Sen, (2003) customer loyalty and other positive post-
purchase outcomes are leaded by pro-social marketing initiatives as SA claims. And
consumer knowledge and commitment of a firm's SA initiatives may cause some
effects for company‘s product strategies (Brown and Dacin, 1997).


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Maignan (2001) dedicated that before consumers make their purchasing decisions,
they must be not only aware of those initiatives, but also aware of social issues that
firms is engaging in. According to above discussion, there is reasonable to assume
that behavior of consumer toward company‗s SA practices is confident.
Assumption 2: consumer’s perception toward social accounting is positive.

2.4.3 Investor’s perception on SA conceptualization
Social accounting is analyzing the limitations of financial accounting and
concentrating on the shareholders and other financing providers without considering
other stakeholders—employees, users or consumers, society, government,
volunteers, and investors. Then, social responsibilities can the firm‘s competitive
advantage in attracting investors and offering excellent risk management strategies.
The investors‘ decisions are approved y the transparent accounting information, thus.
A new INSEAD study, carried out in cooperation with the Investor Relations
Society, indicate that the interest in social and environmental issues is more and
more important and that investors are beginning to ask more informed and detailed
questions about companies‘ corporate social responsibility performance.
The research called ―Corporate social responsibility and the role of investor relations
– from switchboard to catalyst‖ interviewing investor relations and corporate social
responsibility experts from 20 leading European companies revealed that the
awareness of social and environmental issues among investor relations professionals
(IROs) is much higher than previously thought. Europe‘s SRI Coordinator Adeline
Hinderer said that ―these companies are actively demonstrating to investors that

social responsibility makes good business sense, and the firms are already seeing the
benefits it can bring them in terms of risk management and attracting investment‖.