Social and Environmental Accounting: A Reflection of Indonesian Firms’ Involvement

Abstract

The economic crisis in Indonesia prolonged since 1997 has boosted the nation in the position of multi-dimensional crisis in almost all aspects of life. The increasing number of victims of layoffs, high unemployment, declining per capita income and purchasing power and ultimately it leads to the increase number of society that is below the poverty line. The Government efforts to convince the international investor should be focused on the social and political stability, and security that may assure investors. The economic crisis and social crisis in Indonesia are still into two sides that cannot be separated, and the effect on the business world is very significant, so that companies that want to run business operations in Indonesia cannot escape from social problems faced by this nation. Social problems for companies is not the main target, because many other factors such as investment, financing, production, marketing directly related to the normal activity of a company, but a consequence of the interaction between the company and the environment which is undergoing a social crisis becomes unavoidable. Social Accounting is still the pros and cons in the accounting world Indonesia, until now given the presence of pros and cons about the extent to which the company should be accountable to their social environment. The practice of social disclosure firms in Indonesia is still very low because the company allegedly oriented to the Shareholder and debt holders only. The role and application of social accounting need to be developed in Indonesia in order to encourage the creation of corporate social responsibility that are expected to minimize the social problems faced by business entities in Indonesia, so that the healthy investment climate and enduring economic stability.