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The North American Free Trade Agreement NAFTA and Full Disclosure Accounting for Stakeholders

The North American Free Trade Agreement NAFTA and Full Disclosure Accounting for Stakeholders The accounting profession has been charged by Supreme Court Chief Justice Warren Burger with a public responsibility to fulfill a public watchdog function. This function demands that the accountant maintains total independence from the client at all times and requires complete fidelity to the public trust Briloff, 1990. The accounting profession also fulfills a monitoring and enforcing role in society in that the monitoring of contracts is considered a necessary cost of contracting Jensen & Meckling, 1976. The North American Free Trade Agreement is viewed as a coalition of participants who interact through a system of contracts and agreements regarding trade between Canada, Mexico, and the United States. Explicit in the agreement is the recognition of the individual rights of the labor sector. This article discusses the rights of labor acknowledged by NAFTA, and the role accounting should play as a response to these agreements. Previous papers have called for the creation of a value theory in accounting that is socially conscious Tinker, Merino, and Neimark, 1982 and for the development of a political economy of accounting which explicitly considers the relationships between accounting and the institutional structure of the economy Cooper & Sherer, 1984. The Economist 4994, p.14 calls for social disclosure as a means of advancing the cause of human rights in the third world. Following this literature, which calls on the accounting profession to become actively involved in setting accounting policy that is socially conscious, this article recommends making changes to the existing U.S. and North American accounting systems to facilitate fair economic growth and resource allocation between the North American countries. Recommendations include encouraging accounting standard setters and governmental bodies to require publicly traded companies doing business under NAFTA to provide additional disclosures concerning labor and other NAFTA agreements, such as environmental disclosures, in order to provide socially relevant information to stakeholders in all three countries. Additionally, an international group of auditors should be formed and funded by the NAFTA countries to monitor and publish compliance with the NAFTA agreements on labor and other issues, and to provide credibility to the required disclosures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

The North American Free Trade Agreement NAFTA and Full Disclosure Accounting for Stakeholders

Brokie Leonard, Barbara
Managerial Finance , Volume 22 (4): 15 – Apr 1, 1996
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References (15)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0307-4358
DOI
10.1108/eb018558
Publisher site
See Article on Publisher Site

Abstract

The accounting profession has been charged by Supreme Court Chief Justice Warren Burger with a public responsibility to fulfill a public watchdog function. This function demands that the accountant maintains total independence from the client at all times and requires complete fidelity to the public trust Briloff, 1990. The accounting profession also fulfills a monitoring and enforcing role in society in that the monitoring of contracts is considered a necessary cost of contracting Jensen & Meckling, 1976. The North American Free Trade Agreement is viewed as a coalition of participants who interact through a system of contracts and agreements regarding trade between Canada, Mexico, and the United States. Explicit in the agreement is the recognition of the individual rights of the labor sector. This article discusses the rights of labor acknowledged by NAFTA, and the role accounting should play as a response to these agreements. Previous papers have called for the creation of a value theory in accounting that is socially conscious Tinker, Merino, and Neimark, 1982 and for the development of a political economy of accounting which explicitly considers the relationships between accounting and the institutional structure of the economy Cooper & Sherer, 1984. The Economist 4994, p.14 calls for social disclosure as a means of advancing the cause of human rights in the third world. Following this literature, which calls on the accounting profession to become actively involved in setting accounting policy that is socially conscious, this article recommends making changes to the existing U.S. and North American accounting systems to facilitate fair economic growth and resource allocation between the North American countries. Recommendations include encouraging accounting standard setters and governmental bodies to require publicly traded companies doing business under NAFTA to provide additional disclosures concerning labor and other NAFTA agreements, such as environmental disclosures, in order to provide socially relevant information to stakeholders in all three countries. Additionally, an international group of auditors should be formed and funded by the NAFTA countries to monitor and publish compliance with the NAFTA agreements on labor and other issues, and to provide credibility to the required disclosures.

Journal

Managerial Finance – Emerald Publishing

Published: Apr 1, 1996

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