Mandatory or Supererogatory: Human Rights on Accounting In 21st Century

September 2021

In the 21st century, global citizens are most likely to be awakened by the current human rights matter. It has shaped our noteworthy factors as a measurement to put the trust we’ve had in businesses or any industries that provide services. According to the IPSOS census in 2021, 78% of global citizens agree that it is vital to have certainty that protects human rights in their country. 

Back in March 2015 our CEO, Mr. James Kallman, has written his key takeaways regarding business and human rights for the International Accounting Bulletin website. Cited from his perspective through the article, human rights are not just about complying with specific laws but rather acting responsibly – the judgment of which is particularly well suited to an audit approach, as are the issues of consistency and comparability. Businesses must, therefore, have in place robust human rights policies that enable them to determine their particular areas of human rights susceptibility while being aware of the wider picture. Included in these policies must be a system of due diligence, a system of remediation for any human rights impacts with which the company may be involved, and a system for reporting its human rights record.

Apart from that, accounting is also viewed as a technology for implementing the second pillar: corporate responsibility to respect rights and outline implications for national and international standard-setting. These principles present a potentially significant challenge and perspective to the way we think about the responsibility of corporations. Indeed, Muchlinski (2012) suggests that an evolving understanding of the human rights duties in corporate law has the potential to challenge the established enlightened shareholder self-interest models and move us towards a new understanding of the contemporary role of business in society. 

Triple Bottom Line Accounting, Human Rights and Sustainability– A Match Made On The 21st Century[MH1] 

   There have been significant regulatory developments within the field in the five years since their endorsement and we anticipate that the field will continue to grow. This momentum is evidenced, in part by the growing engagement at the Forum on Business and Human Rights, an annual policy and practice forum, set up by the UN to aid the implementation of the guiding principles. It has become a certain fact if existing business strategies and corporate plans should be reviewed to identify any human rights risk that may adversely impact stakeholders. Embedding human rights considerations into the business is an opportunity to faster progress through well-maintained risk mitigations. 

            Triple Bottom Line (TBL) accounting laid the foundations for more recent innovations. It is built on the methodology of ‘full cost accounting: Elkington (1996) an accounting method used to determine the complete end-to-end cost of producing products or services…[whereby] all direct costs, fixed, and variable overhead costs are assigned to the end product.” TBL accounting seeks to measure the direct and indirect social and environmental, as well as economic, costs of business activity or project. In consequence, Moores Rowland Indonesia has utilized sustainability reporting on the economic, environmental, and social policies, impacts in the context of sustainable development. Commonly referred to as Triple Bottom Line Reporting.

The key to progress is enabling relevant and material information to be incorporated into management decision-making, analysis, and reporting. Professional accountants globally should take up the mantle and consider human rights in their role. Accounting and human rights are true to related topics and match made in the 21st century. 

How About MRI Practice of Business? 

Moores Rowland Indonesia believes that creating jobs and welfare, provide products and services, support community development, and become a source of tax income of a country, which in turn can be used for the people’s welfare.

Without commitment towards human rights, however, business activity can have negative effects, for instance when employees are paid below the minimum wage, or community land is forcibly taken over for business activities. Albeit of that, we believed that it would be able to assist the various sectoral companies, both on a national and multinational scale to conduct a Human Rights Impact Assessment and develop a human rights system within their business.

On 8 March 2012, Moores Rowland Indonesia (then trading under the name of Mazars Indonesia) received the inaugural IAB “Audit Innovation of the Year” award for its Human Rights Audit Practice. In its human rights audit, Moores Rowland Indonesia used the MIHRSC indicators it had developed that covered forced labor, child labor, and young workers, conditions of employment and work, non-discrimination, freedom of association, workplace health and safety, community and environmental impact, and supply chain management. In making the award, the judges suggested that these indicators could set a benchmark for global best practices.

To help obtain the extensive international input necessary to further develop these indicators, Moores Rowland then joined with the non-profit business and human rights center, Shift, to found the Reporting and Assurance Framework Initiative (RAFI). It was later to withdraw its participation due to fears of possible conflict of interest due to the Moores Rowland certification business.

            Moores Rowland is also a promoter of the whole concept of sustainability reporting and provides consultancy as well as training to both business executives and government officials on what responsible sustainability reporting actually entails. We carry out our operations with responsibilities to the environment and society as large as well as to its own shareholders. Here are the following Assurance Standards :

• International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

Meanwhile, the criteria used are:

• GRI Standards;
• International Standard on Assurance Engagements (ISAE) 3000, “Assurance Engagements other than Audits or Reviews of Historical Financial Information”

What we do:

• We provide assistance and consultation to fisheries companies in the preparation of their human rights management system in accordance with Minister of Marine Affairs and Fisheries  Regulation No.35/PERMEN-KP/2015.
• We carry out gap assessment on fisheries companies’ compliance with the Minister of Marine Affairs and Fisheries Regulation No.35/PERMEN-KP/2015.
• We assist companies across all business sectors to carry out assessments of human rights impacts and implement adequate procedures to prevent and mitigate companies’ human rights impacts
• We provide training for company Human Rights Coordinators/Managers and officers
• We provide training on business and human rights for government officials.

Eager to know more about our human rights and business policy? Don’t hesitate to contact us for further information.