What is Corporate Social Disclosure (CSR) Disclosure in Perspective Accounting


Social Responsibility's company is not a new concept in society but progressively expand along with other concepts. Social responsibility's company which is referred as Corporate Social Responsibility theoretically still generated the contradiction. Corporate Social Responsibility started to become the big issue and studied by a lot of party since early year 1960 in United States and in the early 1970 in Europe.

In this time, Corporate Social Responsibility is become the important issue in business world and society and its discussion coverage even also immeasurable progressively along with progressively its excitement growth and business world. Progressively is wide coverage of discussion of this Corporate Social Responsibility, definition which is made by expert more immeasurable.

Beside that, terms which emerge along with growth of Corporate Social Responsibility even also increasing and varying. Definition about corporate social responsibility still is difficult found in literature accountancy. The definition need a lot of consideration and consensus about any kind of competent included into company responsibility. However, if we discuss about a company choice in disclosure social responsibility reporting, we will agree that a company take charge that must be expressed related to accountability, not


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According To World Business Council for Sustainable Development in its publicizing entitling Making Good Business Sense (2002) citing statement of Lord Holme and Richard Watts (2000) defining social responsibility company is:

"Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large." (www.mallenbaker.net)

For a while according to Elkington (1997) in Utomo (2000), company responsibility help the attainment focussed three company efficacy consisted of the "social efficacy, environmental, and financial". This concept is known as Triple Bottom Line Success of a Company. For more clear depicted is in following schema:

The Existing Of Triple Bottom line Success of a Company triggered by Corporate Financial Responsibility (CFR). After that company effort to minimize negative affect from environmental problem (CER), and strive the company for behave to matching with social environmental expectation (CSR). There are interconnected sliver and overall of the responsibility viewed as contribution of company and business world in general in realizing sustainable development (Suwardjono, 2005).

Another definition mention:

"Corporate Social Responsibility is the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life". (World Business Council for Sustainable Development, 2002)

Definition of Corporate Social Responsibility varied between definitions in one state with other state because what conceived of social responsibility form on the basis of awareness or initiative in one state just earn represent obligation in other state. For example, association of Corporate Social Responsibility in Ghana mentions:

"CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government (mallenbaker.net).

While association of Corporate Social Responsibility in Filipina have a notion that "CSR is about business giving back to society"(mallenbaker.net).

Organization Corporate Social Responsibility in Europe is CSR Europe (www.csreurope.com) have a notion that company have two responsibility type that is first commercial responsibility which run the business successfully and secondly is social responsibility that is company role in society, where in form of various activity done by company besides activity of attainment maximize profit. This activity for example environmental continuity, paying attention to employees prosperity, running business pursuant to existing ethics, and active participate in society environment in place where the company operate.

Griffin in Essential Business mention the social responsibility company with the term of Social Responsibility define:

"The attempt of business to balance it commitments to group and individuals in its environment, including customers, other business, employees and investors".

According to him, social responsibility represent effort to balance various commitment for responsible to all investor that is maximize the profit company. Beside that, company also take charge to its consumer which is market the good quality product - a commitment that possible trigger increase production cost and make the company have to settle for the lower profit. This matter then result a lot of irresponsible company to its consumer because enthusiastic to gratify the investor.

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From various definitions above, writer can conclude that social responsibility company is company continuation effort to balance the aspect of social-economy company in order to fulfilling obligation demand to all stakeholders fairly and proportional.

CSR Model

As long as bibliography research, there is three view or model depicting about company involvement in social activity. Third model that shall be as follows (Harahap, Sofyan Syafri, 2002):

Classic Model

This Opinion, expanding at 19th century, starting from perfect emulation concept, where economic perpetrator apart and differ from the other behavioral type and form. Company purposed to maximize profit. Criterion of company Efficacy measured by useful power and growth. According this opinion, effort that company done just to fulfill the market request and commercialize represent to capital owner. A Fundamentalist in this area, Milton Friedman, expressing:

There is one and only one company responsibility, that is use owned properties to increase profit as long as according to rule of the game going into effect in a free computation system without deception and insincerity" (Milton Friedman, Capitalism And Freedom, 1962).

Sharpness, company according to this opinion needn't think of social effect which generated its company and needn't think of effort to repair social disease

Management Model

This opinion arise about 1930, after emerging new challenge of company having the nature of differing from previous situation which colored by idea of classic model. According to this opinion, company considered to be instituting of permanent which life and have separate target. Manager as one who trusted by owner of capital run a business for the sake of not only owner of capital, but also they are direct in concerned with company life, like employees, customer, supplier, and existing other party that bearing with company which do not solely based to the existence of contract (Franc X Suttin et. al, 1956 in Harahap, Sofyan Syafri, 1993). Thereby manager as team which responsible to the continuity of company life performed to chosen policy which must consider social responsibility company remember its relation with other party which also have share in attainment of company target which do not only thinking of return owner of capital.

Social Environmental Model

This Model emphasize that company believe that power of owned politics and economics have relation with importance source of social environment and not merely from market as according to classic model or theory. Its consequence company has to share active in finishing social disease which reside in its environment, like education system which is not certifiable, unlabor, pollution, dirty housing, not regular transportation, security, and others. If classic model have a purpose especial to secure and prosperous owner of secure and prosperous management model and capital of management, in this model company have to extend target which must reach of that is which concerning prosperity of social in general (Ahmed Belkoui 1980 in Harahap, Sofyan Syafri, 1993). Thereby, in chose project to found, beside pay attention percentage of profit, also have to pay attention advantage and disadvantage which possibly will be suffered by society. Pursuant to perception cursorily, either due influence of society demand through governmental hand and also change of human being attitude in company in this time. These matters go into effect, either in capitalist state, socialist, more than in our state.

Pro and Contra about CSR

Problem do company requires to take charge of social or not, still become erudite debate. Each telling opinion and his support and claim that his idea is correct. Following the reason of supporter so that company has social responsibility and ethics that is (Harahap, Sofyan Syafri, 2002):

Involvement of social represents respond to society expectation and desire to role of company. On a long term, this matter very beneficial company.

Involvement of social possibly will influence repair of environment, society, what possibly will degrade production cost.

Improving company good name will generate customer sympathy, employee's sympathy, investor, and others.

Avoiding governmental interference in protecting society. So that if company has social responsibility possible can avoid demarcation of activity of company.

Show positive respond company to value and norm going into effect in society, so that get society sympathy.

As according to desire stockholder, in this case public.

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Lessening tension dislike of society to company which sometime hateful activity of society not possible to avoid.

Assisting importance of national, like natural conservation, conservancy of artistic and culture goods, increase of people education, labor, and others.

At others, reason of challenger which frowns on social responsibility concept of company shall be as follows:

Calling away the attention company from target of the core important in searching profit. This will generate extravagance.

Conducive involvement of company to politics game or power redundantly which in fact none its field.

Generate the business environment which is homogeneous, not pluralistic.

Social involvement need the big enough energy and fund which cannot be fulfilled by finite company fund, which can generate the bankruptcy or degrade the level of company growth.

Involvement of complex such social activity need the energy and all expert which not yet already owned by company (Ahmed Belkoui, SEA 1984 in Harahap, Sofyan Syafri, 1993).

Social Accounting

Definition of Accounting which is often met in literature is definition opened by American Institute of Certified Public Accountant (AICPA), that is as follows

"Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the result thereof."

Other definition according to American Accounting Association (AAA) which shall no longer touch the word "art" but rather affirm at word of " process" (in Suwardjono, 2005):

Accounting is "…… the process of identifying, measuring, and communicating information to permit informed judgements and decisions by users of the information."

Definition which is much the same that according to AICPA 1970 that is (in Suwardjono, 2005):

Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intented to be useful in making economic decision."

Paul Grady support the accountancy definition as science, representing definition completion from AICPA:

"Accounting is the body of knowledge and functions concerned with systematic ariginating, authenticating, recording, classifying, processing, summarizing, analyzing, interpreting, and supplying of dependable and significant information covering transactions and events which are, in part at least, of financial character, required for the management and operation of an entity and for reports that have to be submitted thereon to meet fiduciary and other responsibilities."

While for the congeniality of social accountancy, Ramanathan (1976) in Suwardjono (2005) defining as follows:

"Social accounting is the process of selecting firm-level social performance variables, measures, and measurement procedures; systematically developing information usefull for evaluating the firms social performance; and communicating such information to concerned social groups, both within and outside the firm".

For a while according to Freedman (1989) :

"Social accounting has been defined as the ordering, measuring and analysis of the social and economic consequences of governmental and entrepreneurial behavior".

From the congeniality above, if paid attention to that in general social accountancy congeniality in fact relate to accountancy congeniality. The different between conventional accountancy congeniality with the social accountancy is word of social itself. Social accountancy represents the conventional accountancy which deals with social transaction of company. While its accounting process basically is equal that is include the process of identifying, record-keeping, measurement, and disclosure. This matter is perceivable because social accountancy itself represents part of or the broader new scope conventional financial accounting

Category Classifications Include in Social Accounting

Social Accountancy can be told aim to measure and lay open entire expense and social benefit required by activity produce a company to yield the relevant information for interested parties for company. In line with the target, hence it is important to know scope from social accountancy before so that later can be identified the social benefit and type.

Social accountancy scope represents the area becoming company attention referring to social impact disclosure of corporate activity. This scope social accountancy is divisible some category which different each other according to all expert. The difference because there is not standard format yet concerning category which must be mentioned by company in social responsibility reporting, considering that application of social accountancy does not have its regulation standard. Moreover, the category coalescence between companies which is one with other might possibly differ; depend on its requirement of each company and stakeholders. Following are opinions from some expert concerning the classification's category which is come within the social accountancy's scope:

1) The National Association of Accountant's Committee on Accounting for Corporate Social Performance, classification the primarily scope which require to be paid attention by company concerning his following social performance (Tuanakotta, Theodorus M, 1986 in Utomo, 2000)

a) Society Involvement ( community involvement), covering activity most off all once will give the benefit to the society widely, for example development and house expenditure, philanthropy activity, planning and village repairing, and many more.

b) Human resources are activities that give benefits to the employees, for example the practice program and uplifting of skill, repairing the working circumstance and atmosphere, policy concerning with the promotion and respective everything with the compensation to the employees.

c) Physical Sources and environment contribution, that is hit the air quality and irrigate and also the voice pollution's controlling, and industrial garbage dismissal operation (continuation of environment)

d) The Product's Contribution / service, that is pay attention to the influence of product or service to the society by reckoning some consideration like product quality, product packer, product advertisement, rule of product warranty, and product security

2) Linowes in model of its social accountancy reporting classify three form categorize that is (in Freedman, 1989):

a) Deal with society.

b) Deal with environment.

c) Deal with consumer

3) Parker (1989: 178 - 180) in Utomo (2000) mentioning the category which different each other for the type of reporting with the approach which different each other, that is:

a) For the reporting model by Inventory Approach, consist of four categories: (1) labor, (2) community, (3) product, (4) environment.

b) For the reporting model by Outlay-Cost Approach, consist of four categories: (1) personnel, (2) customer, (3) environment, (4) community.

c) For the reporting model by the Cost Benefit Approach, consist of four categories: (1) employees, (2) consumer, (3) community, (4) environment.


Conceptually, disclosure represents the integral part from financial reporting. Technically, disclosure represents the final step in accountancy course that is information presentation in the form of a set full of the financial statement. Evans 2003, in Suwardjono, 2005) interpreting the disclosure as follow:

"Disclosure means supplying information in the financial statement, including the statements themselves, the notes to the statement, and the supplementary disclosures associated with the statement. It does not extend to public or private statements made by management or information provided outside the financial statement."

More specific, Wolk, Tearney, and Dodd (2001), in Suwardjono, (2005) interpret the disclosure's congeniality as follows:

"Broadly interpreted, disclosure is concerned with information in both the financial statement and supplementary communication including footless, post-statement events, managements discussion and analysis of operations for the forthcoming year, financial and operating forecasts, and additional financial statements covering segmental disclosure and extensions beyond historical cost."

Evans limits the disclosure's congeniality only at the things which is concerning with the financial reporting. The management statement in other; dissimilar mass media or newspaper and also information outside the financial reporting' scope do not include in disclosure congeniality. Meanwhile, Wolk, Tearney, and Dodd also include the segmental' financial statement and statement which reflected the price's change as part of disclosure.

Expression also often meant as ready information more than what communicable in the form of formal financial statement. This matter seems in line with idea FASB in its conceptual framework as following (SFAC No. 1, PRG. 5, in Suwardjono, 2005):

"Although financial reporting and financial statements have essentially the same objectives, some useful information is better provided by financial statement and some is better provided, or can only be provided, by means of financial reporting other than financial statements."

Disclosure's Target

In general, disclosure's target presents the information which is considered necessary to reach financial reporting target and to serve various party having importance different each other. While the special target is as follows (in Suwardjono, 2005):

1) The Protection target

The protection target based on the idea that do not all user sophisticated enough so that users which naïf require to be protected by laying open information which they not possible obtain or not possible to process information to catch the economic substations which base on a post of financial statement. In other word, disclosure intended to protect the management treatment which unjust possible and opened (unfair).

2) Informative Target

Informative target based on the idea that user which is gone to clear with the certain sophisticated level. Thereby, disclosure instructed to provide the information which can assist user in making effective decision.

3) Special Requirement Target

This Target represents the merger from the protection of public target and informative target. What have to be laid open to public limited by what considered necessary for user which is gone to, whereas for the purpose of observation, certain information have to be submitted to supervisor body pursuant to regulation through forms that claiming disclosure in detail.

Other disclosure target that is according to Securities Exchange Commission (SEC). According to SEC of disclosure target categorized to become two that is: 1) protective disclosure, that intended as protection effort to investor, and 2) informative disclosure, which aim to give the competent information to report consumer (Wolk, Francis, and Tearney in Zuhroh, Diana and I Putu Pande, 2003)

There is different idea in the case of how far the wide of disclosure of financial statement ought to be conducted and information requirement of consumer differ. There are three concept of concerning broadness of financial statement disclosure, (Eldon S Hendriksen, 1997 in Suwardjono 2005) that is Adequate, Fair, and Full Disclosure. The concept what most often practiced is Adequate Disclosure, which is minimum disclosure which must be fulfilled to make financial statement as a whole do not mislead for the sake of decision making. Fair disclosure containing ethical target by providing competent information to potential reader. While full disclosure representing disclosure for all relevant information.

Full disclosure owning impression of information presentation abundance, so that some parties exactly have a notion bad. Abundantly information will be productive contra because detail disclosure which not is important so exactly will close the significant information to cause the financial statement difficult to be interpreted. But competent disclosure about the significant information to all investor and other party shall be adequate, complete and fair. There is no a marked difference among this concepts if altogether utilized in competent context

Meanwhile there are two type of disclosure in its relation with the conditions specified by standard, first is mandatory disclosure, which is minimum disclosure, required by accountancy standard going into effect. And the second is voluntary disclosure that is disclosure of items done voluntarily by company without obliged by regulation, though all public company obliged to fulfill minimum disclosure, they differ by substantial in number information addition expressed to capital market.

Motivation and Reason of Doing Social Disclosure

According to Suwardjono (2005), some motivation which possible push the environmental and social performance information disclosure for example:

To maintain the legitimacy of company operation (Legitimacy Theory). According to Legitimacy Theory, company conduct the certain activity, included in matter of information disclosure, because in order to obtain the legitimacy from society where the company operate and also as a strategy to keep the good relation between the company with the outside party (especially stakeholders)

To manage or influence the certain group stakeholders who is looked having the strong influence.

In stakeholders' theory, company considers the existence of expectation, which different each other of group stakeholders that affect on operation and policy of information disclosure.

3) To increase properties of all stockholder and manager.

Positive Accounting Theory has the assumption that everyone does the activity because pushed by its private interest accomplishment. If everybody has activity to fulfill its private interest, hence it can be that manager set mind to disclosure the environmental and social information because they expect to get the make-up of properties from the disclosure activity. Make-up of this manager property possible got from profit improvement or assesses the company.

4) Manager confidence that company have the accountabilities or duty to provide the certain information.

Disclosure of social and environmental responsibility performance information can be pushed because manager believes that various group stakeholders entitled to know the operate implication for the company to environmental and social quality.

5) To hinder or preceding the effort recognition/making of disclosure regulation that more weighing.

Manager do the environmental and social performance information disclosure in order to hindering government depress the pertinent industry, very possibly will disturb because too much reporting requirement.

While the motivation and the reason why company conduct the social disclosure, which got from opinion ambit of all experts, for example:

1) To create the good impression about social value of company.

"Companies use social information to present themselves with a prosperous image and to show that they exhibit the same social norms and values as those of their society." (Parsons, 1956 in Parsa and Kouhy, 2000)

2) To support the continuity of company business.

"For companies to continue to survive and grow, they need to perform well and undertake various socially desirable actions, including distribution of economic, social or political benefits to the groups from whom they derive their power." (Shocker and Sethi, 1973 in Parsa and Kouhy, 2000)

3) To increase company legitimacy before stakeholders.

"The disclosure of social information is used as a means of legitimising corporate actions as well as projecting their values and ideas." (Dieckers and Voght, 2000 in Parsa and Kouhy, 2000)

"Companies disclose social information to legitimise their own existence." (Brown and Deegan, 1998 in Parsa and Kouhy, 2000)

4) As an effort for the minimization of Business Risk.

Pursuant to the result of research into the Trotman and Bradley (1981, in Utomo 2000), by conducting social disclosure hence company will own the high systematic risk (for a while controlling easier for systematic risk than non-systematic risk).

Social Disclosure in Annual Report

Disclosure defined as providing a number of information required for the optimally operation in an efficient capital market (Hendriksen, 1996, in Zuhroh, Diana And I Putu Pande, 2003). There is a mandatory disclosure that is information disclosure which is obliged to be done by company rely on a certain standard or regulation, and there is having the character of voluntary, representing information disclosure exceed the minimum conditions from regulation going into effect. Each unit/economic perpetrator trying for importance of stockholder and its concentration at profit attainment also take charge of social responsibility, and that matter require to be expressed in annual report, as expressed by FASB (in Suadilman, 2000 in Zuhroh, Diana And I Putu Pande, 2003) and AICPA:

"Financial Reporting include not only financial statement, but also other means of communicating information that relates, direct or indirect, to the information provided by the accounting system. New releases, management's forecasts or other descriptions of it plans or expectations, and descriptions of its plans or expectations and descriptions of an enterprise's social or environmental impact are examples or reports giving financial informations other than financial statements." (FASB, 1978 in Zuhroh, Diana and I Putu Pande, 2003)

An Objective of financial statements is to report on these activities of the enterprise affecting society which can be determined and described or measured and which are important to the role of enterprises in its social environment."(Trueblood Commite Report, AICPA, 1973, in Suwaldiman, 2006)

Annual Report

Definition of annual report is as follows :

"At the top every analyst's list (of financial reports used by analysts) is the annual report to share holders. It is the major reporting document and every other financial report is in some respect subsidiary or supplementary to it".

Annual report is obliged to be submitted by company enlisting in Stock Exchange as activity reporting during one previous year to interested parties (stakeholders). Overall of content from annual report is not arranged by profession authority in charge like Ikatan Akuntansi Indonesia (IAI), but arranged by Regulator of Stock Exchange that is Bapepam.

The objective of annual report is:

Useful to users of annual report in making investment, credit, and other decisions.

Providing comprehensive report about the company prospect in future of operation activity, finance, and other relevant information.

Providing information about the claims of company resources and also its change.

Industrial Type High-Profile

Company which is included in industrial type High-Profile according to Robert

( in Hackston and Milne, 1996 in Utomo, 2000) is company having high level sensitivities to environment, high politics risk or tight competition. While Diekers & Preston ( in Hacston and Milne, 1996 in Utomo, 2000) depicting industry which that High-Profile as follows :

"......companies whose economic activities modify the environment, such as extractive industries, are more likely to disclose information about their environmental impact than are companies in order industries".

Cowen Et.Al. ( in Hackston & Milne, 1996 in Utomo, 2000) enhancing as follows :

"Consumer-oriented companies can be expected to exhibit greater concern with demonstrating their social responsibility to the community, since this is likely to enhance corporate image and influence sales".

High-Profile Companies generally representing company that obtaining focus from society because its operation activity owns the potency for correlated with the wide importance. Generally, society more sensitive to high-profile company because they negligence in security of production process and their result can bring the fatal effect for society. High-Profile Company is more sensitive to desire of consumer or other party which have importance to its product (Zuhroh, Diana and I Putu Pande, 2003). We can say that high-profile Company has possibility to cause the damage of other social impact or environment. The example is mining company, management of forest resource, chemical industrial and industrial agro, representing industry claiming wise social impact management remember its operation have impact with society life. Real example, in life is the case of gas leakage at Lapindo Company has fatal impact to society. As for company which classified in industrial group of high-profile according to Robert ( in Hackston and Milne, 1996 in Utomo, 2000) for example other oiling company and mining, chemical, forest, paper, automotive, air transport, agribusiness, tobacco and smoke, food and beverage product, media and communications, energy (electrics), engineering, health, and also transportation and tourism.

Industrial Type Low-Profile

Low-Profile Company represent the company which don't obtaining wide focus from society if their operation fail or mistake at certain aspect in process and result. When compared to high-profile company, company categorized in industry low-profile more tolerance by society if they doing mistake (Zuhroh, Diana And I Putu Pande, 2003). We can say that low-profile industry represent the industry type owning level of social risk which lowers than high-profile industry. But industrial did not mean that low-profile didn't own social impact for its operation activity. Like Robert example's, industrial of low-profile also have the social impact potency. Example is producer of product personal having social impact potency in the form of environmental damage for its factory waste, but its social responsibility urgency don't extreme like experienced damage problem after mining process, safety of oil mineworker on the high seas or other extreme problem. As for company which classified in industrial group of low-profile according to Robert (Hackston and Milne, 1996 Utomo, 2000) for example building company, finance and banking, medical equipments suppliers, property, company retell, textile and textile product, product personal, and domestic product.


If paid attention to, there are same classification categorize as the expert's various opinion above. When joined as a whole, hence category which is come within in consisted of the CSR disclosure in accounting scope:

1) Employee's category

2) Consumer's category

3) Product's category

4) Social's category

5) Environmental category

Seems constituting the existence of the classification category's equity raised by all expert are for example because the companies have their own in glove related/relevant with each the category, amenity identify the activity generating expense and benefit from each category. But that way, the category classification not yet earned specified to become a standard and or compulsion for company in making social disclosure

Now there is not standard yet concerning to the category's coalescence in social report. In consequence, each company have their own freedom in determining category which wish mentioned in its social report adapted by pertinent company requirement. . The important matter which has to be remembered is the information yielded in social report has to can fulfill the requirement stakeholders as parties that have importance with the company, not merely the company importance