1. SOCIAL COST
BENEFIT
ANALYSIS
Submitted by :-
Anshika

2. Social Responsibility
Being Socially Responsible means
that people and organisations must
behave ethically and with sensitivity
toward social, cultural, economic and
environmental issues. Striving for
social responsibility helps individuals,
organisations and governments have
a positive impact on development,
business and society with a positive
contribution to bottom-line results

3.  Profitmaximizationis no more the only aim of
the business.
 It is being felt that besides owners, the
business should evolve a balance in the interest
of employees, customers, suppliers,
government and the general public.
 After all, it is the society, consisting of workers
and consumers, which enables the business to
earn profits.
 Thus, no business could be allowed to exist if it
is detrimental to the interest of the society.

4. Social Responsibilities that Companies perform:-
Savings in Foreign Exchange
Philanthropy
Protecting Environment
Creating Employment
Increase in National Income
Social Education and Awareness
Community Development

5. Output per
unit of capital
Employment
potential
Value added
creation
Present value of
social cost and
benefits
Cost
benefit
ratio

6. Employment Potential: The project which is labour intensive and has higher
employment potential is preferredover the project having lower opportunities
to generate employment.
Output per unit of capital: As capital is also scarce in a developing country,
capital output ratio becomes an importantfactor in evaluating the social
desirability of a project. The project gives a higher outputper unit of capital
employed is givenpreference over a project whichgives lower output per unit of
capital employed.

7. Value Added Criterion:the termvalue added refers to the market price/ value
of the output of an enterprise less the cost/price of the goods or the services
acquiredor bought fromother firms.The valueadded criterionis similar to the
capital output ratio except that the estimated value added by a projectis
consideredin the place of the total value of the output.
Costbenefit ratio: this criteriontakes intoconsiderationthe total social benefits
and costs associatedproject. The termsocial benefits includes for this purpose
includes all benefits that the society is likely to receive fromthe project whether
economic, non economic, internal or external.

8.  Businessis a socio economicactivity and it draws
its inputs fromthe society, hence its objective
should be the welfare of the society.
 It should owe a responsibility towards solving
manyof the social problems.
 Social Accounting is concernedwith the study
and analysis of accounting practice of these
activities of an organisation.

10. Social Accounting aims to
measure and inform the general
public about the social welfare
activities undertaken by the
enterprise and their effects on
society.

11. Project is accepted if
Total benefits > Its total cost

12. Social Benefits – Social Cost = Social Contribution

13. Example:
An industrial project to manufacture paper
and process chemicals is being set up in a city
where the residents so far enjoyed pollution
free environment. The industry will pay for
its inputs like land, labour, capital, etc. and
will consider its cost on the basis of these
inputs . But what the economic evalution of
the project will not consider is the smoke,
release of injurious gasses, and pollution of
environment that the industry will cause
during its operation to the residents of the
city. On the other hand, the residents will
have to pay its cost in the form of poor health
leading to expenditure on medicines, etc.
Thus these external costs, which are not
considered. Similarly, there may be
externalities in return/ benefits also; viz ;
generation of employment, savings in foreign
exchange, increase in national income etc.

14. In April, Vodafone promised to cut down their carbon dioxide
emissions in half by 2020 through improving the energy efficiency
of its global mobile-phone networks. Additional points for Vodafone
on CSR because they are constantly updating us with the results of
the campaign; no matter whether it’s going well or not.
Future promises includes pledging to recycle 95% of network
equipment waste and plans to reduce work-related accidents that
cause lost time by 10%. On top of that, Vodafone is a leading
business in socially responsible products such as the text-to-speech
software for blind people and easy-to-use handsets for the elderly.
Vodafone

15. Tata Group operates more than 80 companies
ranging from software and automobiles to steel,
consumer goods and telecommunications. With
200,000 employees across India, it is the
nation's largest private employer.
After assuming the Chairmanship of the Group
in 1991, Ratan Tata proceeded to streamline the
sprawling Tata Group around seven core
business sectors. In corporate social
responsibility he has given new direction and
focus to the Tata Group's disparate activities
with the creation of the Tata Council for
Community Initiatives (TCCI) in 1996.

16. Mr Ratan Tata with world’s cheapest car
NANO

17. In spite of helping people retain optimal health and
vitality, he has also worked towards social causes.
He was recently in highlights for his non-violent
fight against corruption in India. He protested
against corruption through a peaceful fast
supporting the Lokpal bill. He also initiated a
movement called "Bharat Swabhiman" to maintain
and bring back the true pride of India. He believes
in vegetarianism and promotes it to his followers
for a healthy life
Swami Ramdev is a very popular Yoga guru
originating from India and spreading across the world
in a short time. His basic techniques of yoga and
especially pranayams have helped millions and have
made Baba Ramdev a household name.
Baba Ramdev

18. Objectives
of
Social
Accounting

19. OBJECTIVE OF SOCIAL
ACCOUNTING
To identifyand measure the net contribution of an
individual towards the society.
To determinewhether an individual firmstrategies
and practices are consistent withwidelysharedsocial
priorities.
To make available relevant informationabout
firm’sgoals, policies, programmes and performance
towards use and contribution to scarce resources and
social resource allocation.
To develop models of quantification and proper
presentation of socialcosts andbenefits of an
enterprise.
To meet information needs for information and
society.

20. •Product Or
service
Contribution
•Physical
Resources and
environment
stewardship
•Human
resource
stewardship
•Commodity
Involvement
Scope Of
AuditSocial

21. Social audit includeseverythingthat is concerned
withthe developmentandgrowthof thesocietyat
large. Theseactivitiesincludesproblemslike
energyconservation, industrial safety, illiteracy,
control of populationetc. Canadiannational
associationof accountants hasidentified4 major
components of social performance:

22. Community involvement: it includes community
services, philanthropic programmes and community
involvement by employees.
Human resource stewardship: it covers activities related
to the well being of the employees including job
enrichment and promotional policies

23. Physical resources and environmental stewardship: it includesconservationof
resources andprotecting environment, air andwater, qualitycontrol and
appropriate disposal of waste.
Product and service contribution: It dealswiththe impact of the company’s
productsor services on the society, advertising, packaging, product safety and
warranty policies. Six areasof corporate social performance are:
Environment
Energy
Fairbusinesspractices
Humanresources
Product
Community involvement

24. Benefits Of Social Accounting

25. Social
Commitment
Employee
Motivation
Counters
Adverse
Publicity
Formulation
of Policies
Informs its
users,
members

26. Confidence of
Shareholders
Abides to
social ethics
Helps in
Marketing
Welfare of
Society
Improves
Goodwill

27. Social Accounting Approaches

28. 1.Classical Approach
2. Descriptive Approach
3. Integral Welfare Theoretical Approach
4. Social Indicator Approach
5. Linowes Operating Statement Approach
6. Social Income Statement and Balance Sheet Approach
7. Multidimensional Statement Approach
8. Net Contribution Approach
Socia
l
Accounting
Approaches

29. • Deals with maximizing the profits within the
constraints of existing legal and ethical framework,
business corporations are acting in the best interests of
the society at large.
Classical
Approach
• According to this method the social activities of
business corporations are presented along with
financial statements in narrative form.
• Usually, only positive social aspects of a firm are
presented in a non-quantitative form.
Descriptive
Approach
• According to this approach the firm presents its social
benefits as well as the social costs along with the
corporate balance sheet and income statements .
• It includes tabulation of the firm’s voluntary
expenditure to benefits its users.
Linowes
Operating
Statement
Approach

30. Integral Welfare Theoretical Approach
Social Cost Social Benefits
I. Producer’ Surplus Approach
1. Labour Performance
2. Fixed Assets
3. Materials
4. Capital
5. Enterpreneurial
Performance
6. Performance paid in advance
II. Value Of Negative External Effect
on
1. Employees
2. Population
3. Companies
4. Public Entities
III. Net Social Benefits
I. Consumer’s Surplus For
1. Product A
2. Product B
3. Product C
4. Product D
II. Value of Positive External
Effect on
1. Population
2. Employees
3. Companies
4. Public Entities
III. Net Social Costs

31. Social Balance Sheet
Liability Prev. Yr Curr. Yr Assets Prev. Yr. Curr. Yr
Organisation Equity 2,590 2,112 Social Capital
Investment
(a) Building
Social Equity : (i) Residential
Contribution To 82,799 83,732 (ii) Hospital 50 48
Employees (iii) School 137 89
(iv) Welfare
Activities 85 81
(b) Equipment :
(i) Residential 283 168
(ii) Hospital 64 48
(iii) School 74 25
(iv) Welfare
Activities 49 27
(c)Electrification, 98 62
water
II. Human Assets 82,799 83,732
85,389 85,844 85,389 85,844

32. Social Income Statement
Approach
The emphasis is on Quantifying the values
contributed to the society and detriments
caused to the society and to present them in
a comparable to the staff, community and the
general public while the social balance sheet
includes human assets, social capital
investments in buildings, equipment and
other organizational assets.

33. Social Income Statement ( Amount)
Previous Year Current Year
I. Social Benefits & Cost to Staff
A. Social Benefits To Staff
1. Housing & Township Facilities 1665 1597
2. Medical & Hospital Facilities 760 515
3. Transport 150 157
4. Holiday Benefits 1129 752
5. Educational Facilities 110 97
6. Interest 337 675
7. Provident Fund, Gratuity 668 713
8. Productivity Incentive- Bonus- 515 514
Ex Gratia payments
9. Training To Staff 59 76
10. Welfare activities 339 256
11. Other Benefits 45 48
Total 5797 5400
B. Social Costs To Staff --- ---
Net Social Benefits To Staff (A-B) 5797 5400

34. III. Social Benefits & Costs to Community
A. Social Benefits To Community :
1. Local Taxes paid to Panchayat/ Municipality 1 1
2. Social Welfare To Community 515 343
3. Environmental Improvement 454 304
4. Generation Of Job Potential 8615 8458
5. Generation of Business 16564 16663
Total Social Benefits To Community 26149 25769
B. Social Costs To Community :
Increase in cost of living in the vicinity on
acccount of company’s operations 8512 6252
Net Social Benefits to Community (A –B) 17637 19606

35. Multidimensional
Statement
Approach
• This model has proposed to extend financial
statements into multidimensional statements with all
events related to each other via monetary measure of
their resources costs and benefits.
• This multidimensional nature of the social reports
creates problems in measurement and quantification.
Net Contribution
Approach
• This model report all direct benefits and costs of an
entity for which it is compensated as well as those
external economies for which no compensation is
received, and social costs include activities or serviced
for which compensation is made as well as external
dis-economics for which no compensation is paid.

36. Social Impact Statement
Social Benefits Social Cost
I. Products & Services Provided
II. Payments to Other Elements of
Society:
a) Employment provided
b) Payment for goods & other services
c) Taxes paid
d) Contributions
e) Dividend and Interest paid
f) Loans and other payments
g) Additional direct benefits to employees
h) Staff equipment and facilities
i) Services donated
j) Environment improvements
k) Other benefits
Total Social Benefits
Social Surplus/Deficit (Net Contribution)
i) Goods and material acquired
ii) Buildings and equipment
purchased
iii) Labour and services used
iv) Public services and facilities
used
v) Other sources used
vi) Environmental damage:
a) Water Pollution
b) Air pollution
c) Noise pollution
d) Solid Waste
e) Other environmental
damage
vii) Payments from other
elements of society
viii) Other costs
Total Social Cost

37. The concept of Social Accounting originated in different forms by
Adam Smith in 1776, Later on, Karl Marks and Engel also expressed
their views about social costs in 1844. Pigou in 1920 also
elaborated the divergence of Social and Private Costs. The concept
of social accounting was clearly introduced in the 1970’s and later
this concept received serious consideration from professional and
academic accounting bodies.
Social accounting as an approach began developing in the
UK in the early 1970s, when the Public Interest Research Group
established Social Audit Ltd. This has led to an increasing
awareness of CSR, and the “triple bottom-line” of business success
– measuring the business not only in its financial performance, but
by its social and environmental impact as well. Social accounting is
adopted mostly by developed nations but now developing nations
are also adopting this concept as their management practice.
Social Accounting Practices in India as a
Corporate Social Responsibility