The Social Value Accounting Group

Jon Griffin and Alfons Fiorindo are the founders of the Social Value Accounting group. They have applied over 50 years of accounting and finance experience with for profit and NFP entities.

The Social Value Accounting group provides informational support to organisations looking to demonstrate the true value and impact their activities have on their communities. Jon and Alfons created Social Value Accounting because that information isn’t measured by traditional accounting practices. We want businesses to see the whole picture and truly understand their intended or unintended Impacts.

Social Value Accounting group completes the knowledge base missing in today’s decision making. They price your NFP’s social value through financial proxy wellbeing and valuation techniques, in addition to traditional financial reporting.

They bring evidence-based practises to report on the Social Impact your organisation creates in mainstream financial reporting they call Social Value Accounting.

Social Value Accounting is a streamlined recording and reporting process that finally ensures that an NFPs value is recognised.

JON Griffin

ALFONS FIORINDO

Social Value Accounting will change the way your organisation views the value you provide to your community and help show potential funders that value in dollar terms.

Mission

The Social Value Accounting Group provides informational support to organisations looking to demonstrate the true value and impact their activities have on their communities and constituents that isn’t measures by traditional accounting practices.

Social Value Accounting is perfect for Not For Profit organisations whose services and support to constituents are often unaccounted for in traditional reporting. Or if your business is looking to understand your impact on society and make environmentally sustainable decisions, Social Value Accounting can help you do this.

A History of Social Value Accounting

We’re not the first group to want to take stock of the way we account for value in business and to find a better way to accurately measure the true impact of an oragnisations activity. The economist John Maynard Keynes wrote about the limitation of the current calculation of economic growth as a measure of nation’s wealth. Many have considered better reporting methods to measure an organisations value and we’re simply looking to build on past work.

For the last couple of hundred years businesses, communities, societies and countries have run on the financial numbers and financial stories told by accountants. But more often than not these reports tell an incomplete financial story, which means decisions made based on these reports will, at best, be second rate.

The standard financial reports for an organisation tell the reader the financial position at the beginning of a period, what happened during the period and the financial position at the end of the period. The problem with this system is that it only accounts for the risk directly incurred by an organisation and ignores any risk or cost that is external. It also ignores any external benefits from an organisations activity.

Anyone looking into Social Value Accounting is looking for a better way to value their organisation and their activity.

What do you think of social value?

NFP Value goes unreported

Standard accounting practices distort the financial recording and reporting of NFPs. Standard financial recording and reporting is based on sales. Revenue equals the price of the goods sold by the quantity sold.

However, NFPs provide goods and services to their community free of charge or at less than market price. The sale price of goods and services does not equal the true value provided by those goods and services.

Without taking this value into consideration, the financial statements prepared are incomplete at best, and misleading at worst.

THE FOR-PROFIT MODEL DOESN’T WORK FOR NFPS

The standard financial management framework works well for organisations whose sole purpose is to generate a profit. It is inadequate for not-for-profits.

In most Not for Profit organisations the reporting framework is based around the standard financial management framework. The standard financial statements might work well for organisations whose sole purpose is to generate a profit, but it’s not always the case when it comes to for purpose organisations.

Not for profit organisations have a dual purpose with the first purpose being to be financially stable and to be able to pay its debts as and when they fall due. The second purpose is to maximise the provision of goods and services to their community given the organisation has limited resources.

The current management reports, financial statements and audited reports prepared addresses the first purpose but not the second purpose.

PRICE = OR ≠ VALUE

These leads to the question of meaning between price and value and whether they are interchangeable.

AASB 101 in Paragraph 118 states “It is important for an entity to inform users of the measurement basis or bases used in the financial statements (for example, historical cost, current cost, net realizable value, fair value or recoverable amount)”.

Google and the Oxford dictionary define value when used as a noun as; something of importance, merit, usefulness, desirable whereas when value is used as a verb it is defined as estimate of monetary worth. Google and the Oxford dictionary therefore allow for the interchange of the word value and price. This is very confusing because for the public, value and price have completely different meanings.

For example, the saying that a person “knows the price of everything and the value of nothing” makes no sense if value and price have the same meaning.

So even though paragraph 118 above talks about value in “net realizable value” and “fair value” it is in fact talking about price.

Most accountants are probably thinking we do not need to be concerned with semantics. However, let’s look at a company like British and American Tobacco and their financial statements. In short, the more cigarettes they sell the greater the profit the greater their net assets and the greater the number of deaths from lung cancer in the future.

Where is the value in that?

The same analogies can be drawn for proliferation of advertising for sporting betting apps or the larger than usual COVID 19 consumption alcohol.

The current management reports, financial statements and audited reports fail to address the real value of the provision of goods and services to the NFP’s community.

NFP VALUE IS UNDERVALUED

To measure how effectively a not-for-profit organisation provides goods and services to its community, the NFP needs a structure which looks at the value of all activities undertaken by the organisation. Not simply the revenue from these goods and services.

A new accounting model is required.

The first step is to define the activities provided by the organisation. The second step is a process which tracks the quantity and the quality of the activities being provided to the NFP’s community.

VALUE CAN NOW BE PRICED

NFPs need to record and report not only the price of their output but also the value of the outcomes which result from the provision of goods and services to their community.

An extra step in the financial reporting process is required to record and report outcomes and to place a financial proxy on the outcomes.

The result is a reporting system which shows the dollar value of each project. When this is done, an organisation can compare projects and allocate more funds to projects which provide greater value.