What is Social Audit? Objective, Advantages, Report

  • Post last modified:20 April 2021
  • Reading time:7 mins read
  • Post category:Finance
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What is Social Audit?

Social audit may be defined as a commitment to systematic assessment of and reporting on some meaningful, definable domain of a company’s activities that have social impact.

In short, Social Audit is the process of evaluating a firm’s various operating procedures, code of conduct and other factors to determine its effect on a society.

The main objective is to identify what, if any, actions of the firm have impacted the society in some way. A social audit may be initiated by a firm that is seeking to improve its image within the society.

A social audit is a way of measuring, understanding reporting and ultimately improving an organisations social and ethical performance. A social audit helps to narrow gaps between vision/ goal and reality, between efficiency and effectiveness. It is a technique to understand, measure, verify, report on and to improve the social performance of the organisation.

Social audit is based on the principle that democratic local governance should be carried out, as far as possible, with the consent and understanding of all concerned. It is thus a process and not an event.

Social auditing creates an impact upon governance. It values the voice of shareholders, including marginlized / poor groups whose voices are rarely heard. Social auditing is taken up for the purpose of enhancing local governance, particularly for strengthening accountability and transparency in local bodies.

Objectives of Social Audit

Like any other audit, social audit is expected to achieve some objectives. These objectives can be stated as under:

  • To determine the extent to which the management of an enterprise is aware about its social responsibility.

  • To identify and measure the periodic net social contribution of any enterprise. This net social contribution to be calculated by considering the costs and benefits available to the enterprise internally as well as the costs and benefits available externally to different sectors of the society.

  • To help determine whether an enterprise’s plans, strategies and practices which directly affect the resources and earnings are consistent with the social principles already in existence and accepted by the society.

  • To provide to the maximum extent all the relevant information about the enterprise’s objectives, ultimate goals, policies, programs, performances and contributions to the social goals.

    Relevant information is that which should provide for a scheme of public accountability and public decision-making regarding capital choices and social resources allocation.

Social Audit Report

Contents of a Social Audit Report

When work of social audit is completed by a social audit team a report is prepared by it and submitted to the management of the business organisation whose social audit it has conducted.

The major items which are included in the social audit report are as under:

Activities related to the shareholders/owners

  • Use of capital is it done in an optimum way and if not, which alternate uses are suggested.

  • Precautions taken for safety of the capital.

  • Is return given on the capital satisfactory from the shareholders’/owners’ point of view? Where the rate of return stands for the current year in comparison with previous year’s rate and in comparison with the rates of other similar organisations?

  • Has capital appreciation taken place and is it satisfactory from the owners’ point of view?

Activities related to employees of the organisation

  • Training programmes conducted for the employees.

  • Opportunities provided for advancement and promotions.

  • Medical check-up, medical assistance provided.

  • Education facilities to employees and their children.

  • Safety arrangements made to minimise the risk of accidents and injury to the employees.

  • Subsidised canteen facility and establishment of co-operative store for the employees.

  • Recreation and cultural programmes arranged for the employees and their family members.

Activities related to customers

  • Provision of quality goods/services at reasonable prices in the required quantity and at required place.

  • Provision of guarantee and warranty for the products sold to the customers.

  • Precautions taken to avoid harmful effects on the consumers of the product. iv. Research and development activities undertaken for improvement in the products manufactured to improve their quality, increase durability and reduce cost of production

Activities related to the society

  • Programmes undertaken for improving economic and social standard of certain groups of people in the society.

  • Creation of employment opportunities for needy people in the society.

  • Programmes undertaken for spread of education in the society.

  • Installation of equipments for reducing air, water, noise pollution, disposal of solid-waste, etc.

  • Programmes such as tree-plantation, rain-water harvesting, soil conservation, preservation of natural environment, etc. undertaken for the benefit of the society.

  • Donations given to school, library, medical camps, etc. and during emergency period caused by the natural calamities like storm, flood, earthquake, etc.

Advantages of Social Audit

Following are the main advantages of Social Audit.

  • Trains the community on participatory local planning.
  • Encourages local democracy.
  • Encourages community participation.
  • Benefits of disadvantaged groups.
  • Promotes collective decision making and sharing responsibilities.
  • Develops human resources and social capital.
  • Helps to narrow gaps between efficiency & effectiveness.
  • Helps to narrow gaps between vision & reality.

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