Abstract
This chapter was based on one of the largest Spanish cooperative groups, which is part of the social economy sector (SES). Added value is a useful concept; however, after analyzing this case, the authors found that social accounting provides additional information about the social value that companies generate. Then, by applying social accounting complemented by a value-added statement, these companies belonging to the SES can quantify, monetize, and compare their social value and added value, and demonstrate their contribution to society. Social accounting is necessary to demonstrate and understand the value of social economy companies, since their value is not always fundamentally centered on commercial activity; at least not only. They can monitor their effort in terms of specific social values that are not part of the market. Because of this, their value is not reflected in traditional financial statements.
TopBackground
From a classical perspective, several accounting paradigms exist (Belkaoui, 2004). In terms of selecting the social value analysis model, highlight that social accounting is based on the economy-information and the utility-decision paradigms. Beyond these characteristics, the connection of social accounting with stakeholder theory (Freeman, 1984) allows us to expand the scope of usefulness of social value measurement from the framework of agency theory (Jensen and Meckling, 1976) to a framework of fiduciary responsibility for stakeholders, where all stakeholders in the organization are interested in identifying the value that they perceive (Boatright, 2008). Social accounting is a new method capable of visualizing the value generated by companies and organizations in society. Social accounting is relevant for both type of companies: for those companies oriented toward social entrepreneurship, and for social economy (Yunus et al., 2010; Velamuri et al., 2015). Social accounting is a tool that can be used to address the Jensen paradox in the governance problem (Jensen, 2002) because social accounting could be the instrument for managing organizations that are oriented toward multiple stakeholders (Freeman et al., 2010).
With social accounting (Gray, 2002; Retolaza et al., 2016), it is possible to identify and quantify the distribution of value between the various stakeholders of an organization. Thus, the entities with an explicit social purpose may benefit from this type of accounting because it can be used to visualize the value of the non-market, which is ignored in the accounting techniques exclusively dedicated to market transactions. The aim of this study was to compare social accounting, which incorporates specific social value for stakeholders, with accounting based on economic and financial data using a group of social companies. A broad comparison between commercial and social companies, using the gap between economic and financial information and social accounting as an instrument, would be beneficial; however, this would require a significant number of companies of both types to implement social accounting. Although this may be feasible in the short-term, the data currently available (Retolaza & San-Jose, 2018) do not allow for the comparison.
Key Terms in this Chapter
Monetization of Social Value: It is the process that estimated in monetary units the utility of the whole social assets (those that provides well-being or discomfort to some group of members of society) generated by an organization.
Social Plus Value Index (SPVI): It is difference between social value and the amount of business (invoices) without considering the effect of income in the social value. SPVI is the social value generated by an entity in terms of market value apart from their turnover. (SVI –Amount of Business)/Amount of Business or Turnover.
Social Accounting: It is a systematic process that provides information about the creation or destruction of social value to stakeholders, using accounting principles and monetary units. It is complementary to financial statements and it collects and shows non-financial information based on social aspects.
Social Value: Utility provided by the set of social assets generated by an organization for the stakeholders or interest groups related to the organization.
Social Value Integrated (SVI): Set of social value generated and distributed, both through market and non-market.
Market Social Value: It is the value that an organization generates or distributes to the whole of the company through its business activity. It basically consists of the net salaries, social security contributions, personal taxes, corporate taxes and taxes, and VAT. It is reflected in the accounting of the company.
Social Equilibrium-Market Index (SEMI): It is an index of equilibrium between the social and the commercial or market value. SEMI includes the social dimension of different organizations, but the index is not monetized due to the non-market value of their activities. SEMI provides a value that it is not included in invoice and is calculated as SPVI/Integrated Social Value/Amount of Business or Turnover.
Socio-Emotional Value: It is the result of multiplying the Integrated Social Value (SVI), by the emotional corrector index (ratio). It reflects the total market value, non-market and emotional that an organization generates for the Company. It corresponds to the sum of the integrated social value and the emotional value.
Non-Market Social Value: It is the social value distributed outside the market, and therefore free of Price, or at least with a price that does not respond to the market. It is the value that an organization distributes to some of its stakeholders but in the absence of a monetary transaction, it is not reflected in the financial statements. Usually this value is only collected (when done), qualitatively. The main contribution of Social Accounting is to incorporate this value (hidden) to the social value integrated.