Social Accounting for Social Economy Organizations

Introduction

Social accounting was born from a concern about the limitations of conventional financial accounting. Not only does conventional accounting fail to include environmental and social costs, but through a peculiar logic, it may even treat such costs as income-generating activities, as for example, when certain firms earn money by cleaning up oil spills. Similarly, when a large corporation lays off employees, there are social costs in income support programs (unemployment insurance, social assistance) and retraining, as well as increased health care bills. In financial accounting terms, these social costs are externalities, and except for insurance and severance costs, they do not appear in the corporation’s financial statement. American singer, Tom Lehrer, satirized this frame of mind in his 1970s ballad on Werner von Braun, the US rocket scientist. One verse summarizes the limitations of ignoring broader social impacts: “Once the rockets are up, who cares where they come...