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ECON-BUSINESS-EDUCATORS  November 2001

ECON-BUSINESS-EDUCATORS November 2001

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Subject:

Re: Company accounts and stakeholder accountability

From:

Duncan Williamson <[log in to unmask]>

Reply-To:

For teachers and lecturers interested in curriculum issues affecting the te <[log in to unmask]>

Date:

Wed, 21 Nov 2001 11:32:04 +0400

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (242 lines)

Richard,

The answer to your question is both yes and no.

Let me sign this message here otherwise I'll get lost in the detail!

I hope the following is on target and useful.


Duncan Williamson

The answer is yes in that Parliament (not the Government!) has passed many
Companies Acts and subsidiary legislation to govern who must report what vis
a vis accounting information. In addition, we can say that all accounting
information is useful and can be used by the community and civic society
stakeholders.

Briefly, the UK Companies Act 1989 amended many parts of the Companies Act
1985 which was, in turn, a watershed piece of legislation. What companies
HAVE to report includes is contained in the CAs and at the end of this
message I have included what I think to be the latest offering from HMG.

The answer is no in that I don't think there is any legislation in force
that MAKES companies report on environmental and social issues. However,
there is a vast amount of chit chat on the web concerning both of these
issues. Let me give you some idea of what I think you are asking about.

Take a look at

Environmental reporting and the medium sized company (Rachel Jackson and
David Owen 2000)
http://www.accaglobal.com/publications/technical_other/23230?session=fffffff
e00000000c28288ca3b7a42239e9478ddd558b07fa33d273f3cb92c2a

This gives a review of what it says in its title:

Early in this article, you will read:

"... it should be noted that environmental reporting has developed as
predominantly a large company phenomenon, with substantial reporting
initiatives from companies outside the FTSE top 300 being largely
conspicuous by their absence.

"The lack of response from 'second tier' companies to the lead given by key
market players must be of major concern in view of the growing encouragement
from government for companies to go down the environmental reporting route."

The article then talks about a survey carried out by the authors and what
they found.

In the US, only 12% of the top 100 of the Fortune 500 have been reported as
reporting on environmental issues in its annual reports and accounts. Go
here to get more detail:
http://www.cutter.com/envibusi/reports/benchmark.html

El Tone has been in on the act and you can read more about what our leader
said on 24 October 2000 here:

Environmental Reporting and the UK Government
http://www.icaew.co.uk/index.cfm?AUB=TB2I_25548&CFID=444600&CFTOKEN=25118099

There is a link here to Number 10, where you can find the full text of the
PM's speech.

The DEFRA has a very comprehensive "Green Guide" (my title not theirs) at
http://www.defra.gov.uk/environment/envrp/report.htm

*Social Reporting* has received a lot of press too and this seems to cover
the following issues:

Child Labour
Forced Labour
Health and Safety
Freedom of Association & Right to Collective Bargaining
Discrimination
Disciplinary Practices
Working Hours
Compensation
Management Systems

The ACCA (Association of Chartered Certified Accountants of the UK) has a
"Social reporting awards category", details of which begin at
http://www.accaglobal.com/social_environmental/sra?session=fffffffe00000000c
28288ca3b6aabc6ebc2203f994c27d3adda79e52fdef40f

There is also an organisation called The Institute of Social and Ethical
AccountAbility and you can find them at
http://www.accountability.org.uk/aa1000/default.asp?level1=series

Finally, take the following as a starting point for Shell's ethical and
social reporting practices and results
http://www.shell.com/royal-en/content/0,5028,31770-67726,00.html and the
following as a starting point for BP's version of the same
http://www.bp.com/corp_reporting/social_perf/relationships/global_soc_inv.as
p

From all of this you will see that environmental and social reporting are
both widely practised and poorly legislated for. The EC is about to pounce,
as far as I can tell, too.

Here's the extract from the Companies Acts I mentioned above:

What follows is taken from the CA1989 and the section references are the
section in the CA1985 that CA1989 amends; but I have deleted references to
what happens if companies don't comply with these requirements. Furthermore,
there are specific terms relating to SMEs that I have deleted since your
question seems aimed at larger companies.

221.-(1)  Every company shall keep accounting records which are sufficient
to show and explain the company's transactions and are such as to-

(a)  disclose with reasonable accuracy, at any time, the financial position
of the company at that time, and
(b)  enable the directors to ensure that any balance sheet and profit and
loss account prepared under this Part complies with the requirements of this
Act.

(2)  The accounting records shall in particular contain-

(a)  entries from day to day of all sums of money received and expended by
the company, and the matters in respect of which the receipt and expenditure
takes place, and
(b)  a record of the assets and liabilities of the company.

(3)  If the company's business involves dealing in goods, the accounting
records shall contain-

(a)  statements of stock held by the company at the end of each financial
year of the company,
(b)  all statements of stocktakings from which any such statement of stock
as is mentioned in paragraph (a) has been or is to be prepared, and
(c)  except in the case of goods sold by way of ordinary retail trade,
statements of all goods sold and purchased, showing the goods and the buyers
and sellers in sufficient detail to enable all these to be identified.

 226.-(1)  The directors of every company shall prepare for each financial
year of the company

(a)  a balance sheet as at the last day of the year, and
(b)  a profit and loss account.

Those accounts are referred to in this Part as the company's "individual
accounts".

(2)  The balance sheet shall give a true and fair view of the state of
affairs of the company as at the end of the financial year; and the profit
and loss account shall give a true and fair view of the profit or loss of
the company for the financial year.

(3)  A company's individual accounts shall comply with the provisions of
Schedule 4 as to the form and content of the balance sheet and profit and
loss account and additional information to be provided by way of notes to
the accounts.

232.-(1)  The information specified in Schedule 6 shall be given in notes to
a company's annual accounts.

(2)  In that Schedule-

Part I relates to the emoluments of directors (including emoluments waived),
pensions of directors and past directors, compensation for loss of office to
directors and past directors and sums paid to third parties in respect of
directors' services,

Part II relates to loans, quasi-loans and other dealings in favour of
directors and connected persons, and

Part III relates to transactions, arrangements and agreements made by the
company or a subsidiary undertaking for officers of the company other than
directors.

(3)  It is the duty of any director of a company, and any person who is or
has at any time in the preceding five years been an officer of the company,
to give notice to the company of such matters relating to himself as may be
necessary for the purposes of Part I of Schedule 6.

(4)  A person who makes default in complying with subsection (3) commits an
offence and is liable to a fine."

234.-(1)  The directors of a company shall for each financial year prepare a
report-

(a)  containing a fair review of the development of the business of the
company and its subsidiary undertakings during the financial year and of
their position at the end of it, and
(b)  stating the amount (if any) which they recommend should be paid as
dividend and the amount (if any) which they propose to carry to reserves.

(2)  The report shall state the names of the persons who, at any time during
the financial year, were directors of the company, and the principal
activities of the company and its subsidiary undertakings in the course of
the year and any significant change in those activities in the year.

(3)  The report shall also comply with Schedule 7 as regards the disclosure
of the matters mentioned there.

(4)  In Schedule 7-

Part I relates to matters of a general nature, including changes in asset
values, directors' shareholdings and other interests and contributions for
political and charitable purposes,
Part II relates to the acquisition by a company of its own shares or a
charge on them,
Part III relates to the employment, training and advancement of disabled
persons,
Part IV relates to the health, safety and welfare at work of the company's
employees, and
Part V relates to the involvement of employees in the affairs, policy and
performance of the company.




----- Original Message -----
From: "Richard Young" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Wednesday, November 21, 2001 12:25 AM
Subject: Company accounts and stakeholder accountability


> Ok you Accounts keenies.
>
> Are there government regulations which force ltds and or plcs to reveal
> information in accounts which can be used by community or civic society
> stakeholders?
>
>
> Regards
>
> Richard Young
> Business Studies, Economics & ICT Teacher
> Wood Green School
> Woodstock Road
> Witney OX28 1DX
>
> Tel 01993 702355
> Fax 01993 708662
>
> www.woodgreen.oxon.sch.uk
> BECTa/Guardian Secondary School Web Site of the Year 2001
> [log in to unmask]

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