Influence of Non-Conventional Reporting on Sustainability Accounting in the Tea Sector in Mount Kenya Region

Abstract

Conventional Accounting has continued to dominate the field of accounting among theorists, ideologists and practitioners for as long as the age of accounting. Emphasis has been laid in reporting of high profits that befit suppliers of capital and the shareholders of the organization. The focus on high profit means more scarce resources are drawn from the environment without due regard on social and environmental aspect of accounting except on economical aspect alone. Sustainable Development Goals and Kenya’s Vision 2030 advocate for concern to the environment. Some researchers have endeavored to demonstrate how accountancy need to respond to the social and environmental concerns beyond its traditional goal of profit maximization that singles out shareholders from the many stakeholders. However, these studies have been deficient in addressing the sustainability accounting from the point of stakeholder interests on social and environmental accounting and reporting supported by going concern concept and IAS1, 8, 16, 36 and 37. This study therefore aimed at establishing the influence of social reporting and environmental reporting on sustainability accounting in the tea sector in Kenya. Study objectives included establishing the relationship between methods of reporting; stakeholder interests in social accounting; stakeholder interests in environmental accounting; on sustainability accounting as moderated by the stakeholder knowledge on social and environmental accounting and reporting. These objectives built a conceptual model that was guided by shareholder theory, stakeholder theory and legitimacy theory on sustainable borrow-use-return model. The study adopted Mixed Methods Research of survey design. The target population comprised of the factory unit managers and accountants as the key informants, drawn from tea factories of Mount Kenya region. The sample was obtained by simple random and stratified sampling techniques. Questionnaire was the main data collection instrument which was tested in pilot study for reliability using Cronbach’s alpha and for validity using adjusted Kappa index. Other research instruments included interview schedule and observation list. Data analysis entailed simple binary and hierarchical multiple logistic regression analysis using SPSS. Study results was presented in frequencies, percentages and skewness for descriptive and binomial regression output for inferential statistic. The study found out that tea factories practice social activities and environmental activities that they incur costs which were treated as overhead costs and benefits were derived by tea factory in terms long term financial gains and by stakeholder in terms of social and environmental gains. The study also found that there was a statistically significant influence of methods of reporting, social reporting and environmental reporting, both individually and simultaneously, on sustainability accounting; but which was insignificantly moderated by stakeholder knowledge. The study findings were of significance to organizations’ strategies to respond to externalities which in accounting terms affect the organizations profits in the long run; also, expanding knowledge of social and environmental accounting. The study recommends tea factories adopt an integration of social reporting, environmental reporting and financial reporting with minimal focus on stakeholder knowledge while the academic field incorporate such reporting in scholarly research in order to strengthen sustainability accounting.