While in business school, all of you must take basic accounting courses. Accounting generally is associated with developing balance sheets and profit-and-loss statements, but it can also be used as a support system to provide information that can help managers do their jobs correctly. Enter managerial accounting, which involves the provision of accounting information for a company’s internal use. Managerial accounting is used within a company for planning, controlling, and decision making. Increasingly, managerial accounting is also being used to manage corporate reputations. To this end, more than 2,500 multinationals now release to the public large quantities of managerial accounting information.

Internal Reports Designed for External Scrutiny Some large companies refer to the managerial accounting information that they release to the public as their corporate sustainability reports. Dow Chemical Company, for example, issues its Global Reporting Initiative Sustainability Report annually. So does Waste Management, Inc., which calls its report “The Color of Our World.”

Other corporations call their published documents social responsibility reports. The antivirus software company Symantec Corporation issued its first corporate responsibility report in 2008. The report demonstrated the company’s focus on critical environmental, social, and governance issues. Among other things, Symantec pointed out that it had adopted the Calvert Women’s Principles, the first global code of corporate conduct designed to empower, advance, and invest in women worldwide.

A smaller number of multinationals provide what they call citizenship reports. For example, in 2011 General Electric (GE) released its Seventh Annual Citizenship Report, which it calls “Sustainable Growth.” GE’s emphasis is on energy and climate change, demographics, growth markets, and financial markets. It even has a Web site that provides detailed performance metrics (www.ge.com/citizenship).

The Hitachi Group releases an Annual Corporate Social Responsibility Report, which outlines its environmental strategy, including its attempts to reduce carbon dioxide emissions (socalled greenhouse gases). It typically discusses human rights policy and its commitment to human rights awareness.

Why Use Managerial

Accounting to Manage Reputations?

We live in an age of information. Any news, whether positive or negative, about a corporation will be known throughout the world almost immediately given the 24/7 cable and online news networks, social media, Internet bloggers, and smartphones. Consequently, corporations want to manage their reputations by preparing and releasing the news that the public, their shareholders, and government officials will receive.

In a world in which corporations are often blamed for anything bad that happens, corporations are finding that managerial accounting information can provide a useful counterweight. To this end, some corporations have combined their social responsibility reports with their traditional financial accounting information. When a corporation’s reputation is on the line, the future is at stake.

Critical Thinking

Valuable company resources are used to create and publish corporate social responsibility reports. Under what circumstances can a corporation justify such expenditures?