Independent Contractors – Tax Compliance
The Asian financial crisis of 1997/98 and the 2001 Enron shock were unforeseen events that brought accounting standards under scrutiny. Following these crises, many countries, including South Africa, embraced the International Financial Reporting Standards (IFRS) from the International Accounting Standards Board (IASB). Meanwhile, in the USA, the Financial Accounting Standards Board (FASB) continued to prescribe the US Generally Accepted Accounting Principles (GAAP) for American private sector companies. The collaboration between these bodies, known as the Norwalk Agreement, aimed to harmonize IFRS and GAAP into a global accounting framework, gaining momentum after the 2008 financial meltdown.
Now, the spotlight has shifted to sustainability accounting, a long-neglected aspect of corporate accountability. Recent surveys reveal that companies reporting on their sustainability impacts not only outperform their competitors in key financial indicators and share value but also identify new environmental cost savings and respond more swiftly to market trends.
Despite these findings, fund managers and analysts have traditionally overlooked sustainability factors. However, a seismic shift is occurring as climate change, both environmental and social, becomes an undeniable reality. Extreme weather events and environmental or social misbehavior can disrupt global supply chains or lead to the revocation of licenses to operate. Shareholders are increasingly demanding non-financial feedback in annual reports, compelling pension funds and institutional investors to take sustainability seriously.
The Global Reporting Initiative (GRI) is gaining international recognition as the preferred sustainability reporting standard, mirroring the earlier competition between IFRS and US GAAP. In the USA, the Sustainability Accounting Standards Board (SASB) emerged in 2012 to develop sustainability standards that are “useful, cost-effective, comparable, and auditable.” SASB focuses on material sustainability disclosures for the Securities and Exchange Commission (SEC) filings, providing a sector-specific approach.
While GRI offers a broad overview of company sustainability for all stakeholders, SASB standards take a detailed approach, addressing material risks and opportunities concerning investors. Interestingly, there is no longer a competition between the two; instead, the GRI and SASB standards complement each other, aligning sustainability accounting with harmonized financial accounting. We are now on the verge of achieving the ‘holy grail’ of global accounting standards for both financial and non-financial reporting, creating new opportunities for accountants in this evolving landscape.
- Growth through innovation/creativity:
Rather than be constrained by ideas for new products, services and new markets coming from just a few people, a Thinking Corporation can tap into the employees. - Increased profits:
The corporation will experience an increase in profits due to savings in operating costs as well as sales from new products, services and ventures.
- Higher business values:
The link between profits and business value means that the moment a corporation creates a new sustainable level of profit, the business value is adjusted accordingly. - Lower staff turnover:
This, combined with the culture that must exist for innovation and creativity to flourish, means that new employees will be attracted to the organization.
The Asian financial crisis of 1997/98 and the 2001 Enron shock were unforeseen events that brought accounting standards under scrutiny. Following these crises, many countries, including South Africa, embraced the International Financial Reporting Standards (IFRS) from the International Accounting Standards Board (IASB). Meanwhile, in the USA, the Financial Accounting Standards Board (FASB) continued to prescribe the US Generally Accepted Accounting Principles (GAAP) for American private sector companies. The collaboration between these bodies, known as the Norwalk Agreement, aimed to harmonize IFRS and GAAP into a global accounting framework, gaining momentum after the 2008 financial meltdown.
The Asian financial crisis of 1997/98 and the 2001 Enron shock were unforeseen events that brought accounting standards under scrutiny. Following these crises, many countries, including South Africa, embraced the International Financial Reporting Standards (IFRS) from the International Accounting Standards Board (IASB). Meanwhile, in the USA, the Financial Accounting Standards Board (FASB) continued to prescribe the US Generally Accepted Accounting Principles (GAAP) for American private sector companies. The collaboration between these bodies, known as the Norwalk Agreement, aimed to harmonize IFRS and GAAP into a global accounting framework, gaining momentum after the 2008 financial meltdown.