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NextGen Magazine

 
 

Guest Blog: Our Three Dimensional Future

By:
Michael Kraten, Ph.D.
Published Date:
May 25, 2015
mkraten 2
Michael Kraten, Ph.D.

We CPAs tend to work in two dimensions, don’t we? Debits and credits. Assets and liabilities. Revenues and expenses. Earnings and cash flows.

It’s been that way since Luca Pacioli first published the principles of our “modern” accounting model over five centuries ago. So isn’t it time that we added a new dimension?

Well, don’t look now, but it’s already on its way—get ready for the triple bottom line.

If that phrase sounds vaguely familiar, it may be because a management consultant named John Elkington coined it more than 30 years ago. He used it to describe our need to measure the economic, environmental and social impacts of our activities on our world, a concept that’s come to be known as sustainability accounting. 

But Elkington isn’t a public accountant, per se. He earned a masters degree in urban and regional planning and a bachelor’s degree in sociology and social psychology. Thus, it has taken a little while for the concept of sustainability accounting to permeate the accounting profession.

Just four years ago, for instance, the Sustainability Accounting Standards Board (SASB) was incorporated to develop industry-based standards. It joined the International Integrated Reporting Council (IIRC)—a coalition of, among others, regulators, standard setters, companies, and the accounting profession created in 2010. Today, the IIRC is collaborating with the International Accounting Standards Board. And, of course, multinational corporations in the United States and elsewhere continue to issue audited reports that refer to standards from sustainability-minded organizations, such as the Global Reporting Initiative and the Global Impact Investing Network.

Would you like more information about the three-dimensional future of sustainability accounting and, perhaps, an opportunity to contribute to its development?

You’re welcome to start by reviewing The CPA Journal’s recent pair of issues that focus on this topic: the March 2014 issue, which takes a look at the evolution of sustainability reporting, as well as growth opportunities, and the April 2015 issue, which includes stories like “SASB: A Pathway To Sustainability Reporting in the U.S.” and “Sustainability: What Is It and Why Should Accountants Care?”

You can also check out
SaveTheBlueFrog.wordpress.com, a training case I developed with John Formica of PricewaterhouseCoopers. Enter your email address in the lower right corner of that web page to be kept apprised of the ongoing development of the case.

Most importantly, if you’re now establishing a career in public accounting, and you’re harboring the mistaken impression that the accounting model hasn’t changed in half a millennium, think again! A transformation is beginning to take shape before our eyes, and you are indeed welcome to contribute to it.

Michael Kraten, Ph.D., is an associate professor in the accountancy program at the Providence College School of Business in Providence, R.I.