Accounting Theory and Issues: JB Hi-Fi's CSR and Agency Theory

This report delves into the accounting theory and issues faced by JB Hi-Fi, an Australian retailer. It examines the company's Corporate Social Responsibility (CSR) initiatives, particularly the "Helping Hands" program, which involves employee giving and community support. The report explores the concept of CSR, its benefits, and JB Hi-Fi's commitment to it. It also analyzes the application of agency theory in the context of JB Hi-Fi, discussing the relationship between shareholders and the company. The report highlights how JB Hi-Fi's CSR efforts align with accounting principles and provides recommendations for future improvements, emphasizing the impact of workplace giving on employee engagement and retention. The analysis includes financial contributions, employee participation, and the positive outcomes of the "Helping Hands" program, such as increased employee morale and community impact. This report provides a comprehensive overview of JB Hi-Fi's accounting practices, CSR programs, and related theoretical frameworks.

Running head: ACCOUNTING THEORY AND ISSUES
JB Hi-Fi
Accounting Theory and Issues
9/9/2019

ACCOUNTING THEORY AND ISSUES 1
Table of Contents
Introduction................................................................................................................................2
Background of JB Hi-Fi.........................................................................................................2
Concept of Corporate Social Responsibility..........................................................................2
Corporate Social Responsibility in JB Hi-Fi..........................................................................3
Social statement of “Helping Hands” program..................................................................3
JB Hi-Fi’s Workplace Giving Program – “Helping Hands”..............................................4
Helping Hands – In Australia.............................................................................................4
Change for Change – donation Boxes in JB Hi-Fi Stores..................................................5
Accounting Theories..............................................................................................................7
Agency theory....................................................................................................................7
JB Hi-Fi Disclosure................................................................................................................8
Recommendation........................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

ACCOUNTING THEORY AND ISSUES 2
Introduction
Accounting theory is said to be the set of frameworks and assumptions adopted in the
application of principles of financial reporting. The accounting theory study is comprised of
review of accounting practice’s historical foundations and the way under which the practices
of accounting are altered and included to the supervisory framework that oversees the
financial reporting (Waweru, Prot Ntui and Mangena, 2011). Every theory of accounting is
destined by the theoretical accounting framework. This framework is established by the
Financial Accounting Standards Board (FASB), which is one of the independent entities that
works to found and plan the key objectives of the financial reporting by the enterprise (Miller
and Power, 2013). Further the theory of accounting could be considered as the supports in the
guidance and evaluation of the accounting practices (Coetsee, 2010). The intent of this report
is to discuss about the one of the accounting issues experienced by JB Hi-Fi which is the
well-known retailer of Australia deals in the selling of consumer goods. The report is also
highlighting some of the associated accounting theories that can rationalize the argument and
help in making recommendations for the business to make improvements in the future.
Background of JB Hi-Fi
JB Hi-Fi is the Australian retailer and a publically listed company that is involved in the
selling of consumer goods. The company majorly operates its business in New Zealand and
Australia. Headquarter of the company is established in the Melbourne’s shopping centre. In
1974 the company was introduced in the market by Mr. John Barbuto (IBIS World, 2018).
Concept of Corporate Social Responsibility
CSR is developed as the self-regulating business model that supports a business to be socially
answerable, towards its stakeholders. By adopting the practices of CSR which is also known

ACCOUNTING THEORY AND ISSUES 3
as corporate citizenship, businesses can be careful about the type of impact they leave on
every aspect of the society comprising environmental, social, and economic (Lindgreen and
Swaen, 2010). In order to get involved in the CSR in the standard course, a business has to
operate in the way such that it can improve the society and environment, in place of
contributing in the adverse manner. CSR is a varied concept that can take numerous forms
based on the industry. With the help of CSR program, business can offer major benefits to the
society along with boosting its own brand. This reflects that CSR is not just beneficial for the
society it also offer benefits to the businesses (Hopkins, 2012). The activities of CSR can
helps in making stronger bond between company and workforce, as it increase morale and
help them feel connected with the world. For a business to be socially responsible, the first
requirement is to become responsible towards shareholders and even towards itself. Most of
the businesses that establish CSR programs have developed their operations so that they can
again give back to the society (Kitzmueller and Shimshack, 2012). Therefore, CSR program
is basically a strategy of the big business.
CSR in JB Hi-Fi
JB Hi-Fi is a group that keeps its CSR at priority to not just contribute towards its own
development but also for the development of society. The company has been involved in
different CSR programs that have supported it in contributing in enhancing the society
growth and employees (JB Hi-Fi, 2019). The corporate social responsibility program of JB
Hi-Fi “Helping Hands” is the one that is contributing in this development.
Social statement of “Helping Hands” program
The group understands the implication of their social responsibility towards employees,
customers, and suppliers, etc. Being the Australia’s and New Zealand’s top retailer, the entire
Group is dedicated towards effectively working with its suppliers, customers, and employees

ACCOUNTING THEORY AND ISSUES 4
for confirming that they contribute to the community development (JB Hi-Fi Solutions,
2019).
JB Hi-Fi’s Workplace Giving Program – “Helping Hands”
The “Helping Hands” Program was introduced in the year 2008, by the JB Hi-Fi. In 2016 and
2017, the program received the award for being the Best Overall program and the Workplace
Innovative Charity/Employer Partnership. With the help of this program, the company’s
directors, employees, as well as executives are capable to donate to the listed organizations of
charity (Low, 2016). The business of JB Hi-Fi Company matches dollar for dollar regular
contribution of the workforce by its system of payroll, which is doubling the community
partner’s financial benefit. In Australia, the management of the JB Hi-Fi works with the
Workplace Giving Australia that is officially called as the Australian Charities Fund for the
program development and maintenance and while doing this, it adds to the vision of the entire
Group of having a major social impact by the combine work of the community organization
and employees. With the combine contribution of the JB Hi-Fi organization and its workers,
the company believes to make a huge change to the society through the program (JB Hi-Fi
Group, 2019).
Helping Hands – In Australia
In Australia, the “Helping Hand” program of the company comprises over 6,200 employees
that account for over 81% of the total employees of the JB Hi-Fi Australia. All the company’s
employees are contributing their part on the weekly basis (JB Hi-Fi, 2018). In 2018, overall
$2,400,000 fund has been raised by the entire organization and $13,700,000 fund by the
Australian unit (JB Hi-Fi, 2018). The present charity partners of the company to which it
contributes are ReachOut.com, The Song Room, RedKite, Medicins Sans Frontieres, Fred
Hollows Foundation, and the Animal Welfare League Australia.

ACCOUNTING THEORY AND ISSUES 5
Donation Boxes with Title Change for Change at stores of JB Hi-Fi
The program with the name Helping Hands has helped in introduction of the Change for
Change boxes at every store of the Company all over in New Zealand and Australia. All these
boxes are placed at the store’s point of sale for raising donation from the consumer. The
entire donation that is gathered is shared to the charity partner of the CSR program of the
company. In 2018, around $51,000 was collected at the Australian stores of the company and
since beginning the overall fund raised through this is over $594,000. In the stores of New
Zealand marker over $31,000 has been raised through the Change for Change boxes (JB Hi-
Fi, 2018).
The “Helping Hand” program of JB Hi-Fi has again came into news. As per the recent news
report posted by Carter, P (2018), JB Hi-Fi is gaining the benefits of its giving program under
which it is saving over $8 million in an year on the training and recruitment of the workforce
because its corporate charity program is enhancing the employee retention and engagement
(JB Hi-Fi, 2018). The Helping hand program of the company is allowing its 12000 employees
to contribute to the nine charity partners by the constant payroll donations.
Recently, JB Hi-Fi has reported related to the program and reflected the positive influence of
the workplace giving on workplace culture, employee engagement and Return on Investment:
 Around 91% of the company’s workforce showed that they are proud to be the part of
JB Hi-Fi (Carter, 2018)
 Over 76% of the employees felt that JB Hi-Fi is the best place to work for (Carter,
2018).
 65% of the employees felt motivated and engaged in their job roles (Carter, 2018).
As per the CEO Jenny Geddes of JB Hi-Fi, “Workplace Giving program are offering
opportunities to the employers in introducing low cost and efficient payroll. “Workplace

ACCOUNTING THEORY AND ISSUES 6
giving programs” are the most well-organized, ethical, and easiest conducts of operating
business under which company can involve their employees in the community partnerships.
In fact, as per his review, the workplace giving programs that are successful are those under
which the workforce comprehend the way program fits with the culture of the business and
where the business can simply provide the report to the employees about the difference that is
being made to charity partners and eventually to the society. Further, the CEO included that
in the procedure of making a material difference, JB Hi-Fi is the inspiring example of
enhancing the engagement of the employees with their manager. Workplace giving program
is really a win for everyone including society, employee, and organization.
As per the statement of Carter, P (2018), the program of Helping Hands has majorly saved $8
million every year of the company by enhancing the employee engagement and retaining at
high level which has decreased the direct cost related with the training and recruitment of the
workforce. On the question rose over CEO Richard Murray of the company by the Australia
Probone that how the JB Hi-Fi Company got involved in the program, he answered that
Helping Hands was introduced from the company’s gratitude that its workforce desire to
contribute to the society in a significant manner, and the organization desired to allow them
the opportunity to do so at the workplace and then the company partnered with the
Workplace Giving Australia for establishing the program that reproduces company’s values
and culture. This program has been a success from the time it has been introduced because
80% of the company’s employees are donating on the weekly basis (Carter, 2018).
According to the statement of Sarah Davies the CEO of Philanthropy Australia, pro-social
behaviour concept (that is volunteering and giving) provides profit to the donor by the
increasing emotional and physical wellbeing. It has also been highlighted that employers that
get engage with the employees profoundly and with drive with the society, seek benefits
related to the employee engagement that is retention as well as satisfaction. By concluding,

ACCOUNTING THEORY AND ISSUES 7
the CEO said that workplace giving programs are offering best results for the organization as
well as society (Carter, 2018).
Accounting Theories
Agency theory
Agency theory is said to be the accounting principle that is utilized to explain and solve the
issues between the relationship of agents and principals. In general terms, this theory talks
about the relationship between shareholders that is principal and company that is agent
(Bryant and Davis, 2012). The term Agency, is a wide work which highlights the relationship
between two person and parties under which the agent, represents the principal, in the daily
transactions. The principal considered to be the hiring party of the agent to serve on their
behalf. Principals offer the authority of decision making to the agents (Kinnunen and
Koskinen, 2010). This is because there are number of decisions that influence the principal
financially that are made by the agent, due to difference in priority, perception, and interest.
According to the definition of the agency theory, an agent is making use of the resources
provided by the principal. The principal has delegated money but has no daily input. The
agent is considered to be the one who takes decision but is taking no or little risk because the
loss is beard by the principal (Panda and Leepsa, 2017).
As per the concept of Agency theory, JB Hi-Fi is the agent who is making use of resources of
its shareholder that is principal. This also illustrates that the resources being used are of
shareholders that must be given back to them in the form of return to their investment. In
addition to this JB Hi-Fi is liable towards its shareholders to make best use of their resources
and that is being done by the company by contributing towards the society through its
Helping Hand Program. Some of the employees of the company are also the shareholders
who own shares of their employer stock. Employees shared the possible rights of employees

ACCOUNTING THEORY AND ISSUES 8
and shareholders. As per the concept of agency theory, here employees work as the principle
and company as an agent. The employees of the agent that is JB Hi-Fi are contributing in the
helping hand program by using maximum utilization of the resources which in return offering
high social responsibility position to the company. The resources include funds contributed
by the employees which are in return attained by them as the benefit packages.
JB Hi-Fi Disclosure
The JB Hi-Fi Company regularly pursues to offer timely as well as relevant information to
the shareholders connected to its CSR and contribution of the employees and it is focused
towards meeting its constant disclosure obligations. The investor website of the company that
is https://investors.jbhifi.com.au is comprised of the details of the Group’s businesses and
their history JB Hi-Fi (2018). In addition to this, the company provide information such as
 Market statements and associated documents that are posted directly after release to
the ASX;
 Documents related to the executives and directors of the company
 Corporate governance documents
 Calendar of approaching main dates like result release dates and Company’s AGM;
 Summary related to the dividend policy and history of dividend payment
 Details related to the investors and how company contacts with them and its share
registry.
 Social risk disclosure as well as its contribution towards the society
JB Hi-Fi Group feels proud on leading its business in the most accountable manner towards
the society and trusts that it the most significant to give back to the society.
In addition to this, the company provide disclosures related to the management personnel and
other employees as presented below:

ACCOUNTING THEORY AND ISSUES 9
Source [(JB Hi-Fi, 2018)]
Share Based Payments
Group share option plans for the executives and non-executive management
Source [(JB Hi-Fi, 2018)]
Recommendation
From the above analysis, JB Hi-Fi Company is recommended to disclose the terms and
condition related to allowing shares to its executives, employees, and other non-management
executives such that all the shareholders can have a clear picture related to the on which basis
the company allow its employees to purchase the shares. In addition to this, this will enable a
strict and structured share allotment procedure within the business.
In addition to this, JB Hi-Fi is also recommended to disclose about its contribution to the
society with the help if Helping Hand program in monetary terms. With this, the company
will be able to improve its image in the market and among shareholders. Further, this will

ACCOUNTING THEORY AND ISSUES 10
help the shareholders and stakeholders to feel proud about their important contribution
towards the development of society.
Conclusion
The above report has discussed about the CSR met by the JB Hi-Fi and its recent contribution
in the development of the society. From the analysis, it has been identified that JB Hi-Fi is
contributing towards the development of the society with the help of its Helping Hand
program under which the employees as well as organization is raising funds that is then
provided to the community partners. The employees of the company are encouraged to
contribute from their pay for which the company has introduced a different payroll system.
Besides this, according to the recent report of the Probono Australia, the Workplace Giving
program of the JB Hi-Fi is considered to be one of the best programs that has not just
supported society in the development but has also motivated employees to contribute for the
development. The report also highlighted the satisfaction level and feeling about being part of
“Helping Hand” and majorly of JB Hi-Fi Company. In addition to this, the report has
rationalized the argument with one of the accounting theory that is Agency Theory and
provided the company’s disclosure related to CSR.

ACCOUNTING THEORY AND ISSUES 11
References
Bryant, P. and Davis, C. (2012) Regulated change effects on boards of directors: A look at
agency theory and resource dependency theory. Academy of Strategic Management Journal,
11(2), p.1.
Carter, P. (2018) JB Hi-Fi Saving to the Tune of $8M With Workplace Giving Program
[Online]. Available from https://probonoaustralia.com.au/news/2018/07/jb-hi-fi-saving-tune-
8m-workplace-giving-program/ [Accessed 11 September 2019]
Coetsee, D. (2010) The role of accounting theory in the development of accounting
principles. Meditari Accountancy Research, 18(1), pp.1-16.
Hopkins, M. (2012) The planetary bargain: Corporate social responsibility matters 2nd ed.
U.S: Routledge.
IBIS World (2018) JB Hi-Fi Limited - Premium Company Report Australia [Online].
Available from https://www.ibisworld.com.au/australian-company-research-reports/retail-
trade/jb-hi-fi-limited-company.html [Accessed 11 September 2019]
JB Hi-Fi (2018) Preliminary Final Report [Online]. Available from
http://member.afraccess.com/media?id=CMN://3A498121&filename=20180813/
JBH_02008547.pdf [Accessed 11 September 2019]
JB Hi-Fi (2019) About Us [Online]. Available from
https://www.jbhifi.com.au/General/Corporate/Consumer-Matters/About-Us/ [Accessed 11
September 2019]

ACCOUNTING THEORY AND ISSUES 12
JB Hi-Fi Group (2019) Corporate Social Responsibility [Online]. Available from
https://www.jbhifi.com.au/General/Corporate/Consumer-Matters/Corporate-Social-
Responsibility/ [Accessed 11 September 2019]
JB Hi-Fi Solutions (2019) JB Hi-Fi Helping Hands [Online]. Available from
https://solutions.jbhifi.com.au/project/helping-hands/ [Accessed 11 September 2019]
Kinnunen, T. and Koskinen, K. (2010) Translators' agency 1st ed. U.S: Tampere University
Press.
Kitzmueller, M. and Shimshack, J. (2012) Economic perspectives on corporate social
responsibility. Journal of Economic Literature, 50(1), pp.51-84.
Lindgreen, A. and Swaen, V. (2010) Corporate social responsibility. International Journal of
Management Reviews, 12(1), pp.1-7.
Low, C. (2016) JB Hi-Fi lauded at Workplace Giving Excellence Awards [Online]. Available
from https://www.smh.com.au/business/companies/jb-hifi-lauded-at-workplace-giving-
excellence-awards-20161116-gsqe95.html [Accessed 11 September 2019]
Miller, P. and Power, M. (2013) Accounting, organizing, and economizing: Connecting
accounting research and organization theory. The Academy of Management Annals, 7(1),
pp.557-605.
Panda, B. and Leepsa, N.M. (2017) Agency theory: Review of theory and evidence on
problems and perspectives. Indian Journal of Corporate Governance, 10(1), pp.74-95.
Waweru, N.M., Prot Ntui, P. and Mangena, M. (2011) Determinants of different accounting
methods choice in Tanzania: A positive accounting theory approach. Journal of accounting in
emerging economies, 1(2), pp.144-159.

ACCOUNTING THEORY AND ISSUES 13