An Ethical Trend in Income Measurement; a Critical Review of The Theoretical Foundations of Income Measurement

Abdel Rahman Elbakri Mansour


This paper aims to critically evaluate the theoretical foundations of income measurement on the basis of corporate social responsibility (CSR). In addition, the paper seeks to develop an accounting treatment for corporate social expenditure. A description on how Sudan Tax law of 1986 provides for corporate social responsibility was also presented. A critical approach was adopted to assess the relevant literature and to review the prevailing state-of-the-art of accounting and reporting for CSR. In most cases wages are determined by the employer.  A corporation may pay wages for its labor half of that paid by comparable firms and report a higher income. Furthermore, a corporation which failed to protect the environment from the negative consequences of its economic activities could also report a higher income compared with other environmentally responsible firms. Therefore, the net income of the former type of corporations could not be related entirely to a good economic performance. The paper argues that, the failure of a firm to meet the CSR will render its reported net income as nonethical.  How to report the cost of CSR in the balance sheet is still a debatable issue. No consensus was reached on whether the cost incurred by a corporation to prevent or mitigate the consequences of its economic activities be treated as a capital or revenue expenditure. The paper suggested an accounting treatment for capital expenditure of CSR on the basis of similar treatment approved by generally accepted accounting principles (GAAP).


Ethical income;Corporate Social responsibility;Ethics;income measurement; capital; Revere expenditure

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