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Social Audit-Procedure for successful Social Performance

The Social audit was originated in USA in 1950’s. This concept was firstly developed by Howard R Bowen and Kreps Theodore J is known as the Father of Social audit concept.

The concept of social auditing was specifically coined to measure, evaluate and to improve the social as well as ethical performance of an organization.

TABLE OF CONTENTS

1. Definition
2. Objectives of Auditing
3. Features of Auditing
4. Types of Social Audit        
5. Components of Social audit
6. Approaches of Social audit
7. How to conduct Social Audit?
8. Benefits of Social Auditing
9. Conclusion
10. FAQ

Definition

Social audit is the systematic process that not only measures, evaluates but also improves the effectiveness of an organization’s social performance. Moreover, it also gives information about how company can achieves its profits accordingly along with their social responsibility.

In other words, for example, suppose we have donated 50,000 rupees to a local hospital. Then, in this case, social audit will immediately tell us whether the money is being used for particular purpose or it is being misused.

Objectives of Auditing

  • Prevents abuse of power as well as funds.
  • Moreover,to improve social performance of an organization.
  • Proper utilization of funds accordingly as per budget.
  • To increase efficiency as well as effectiveness of development program.
  • To encourage public as well as organizational participation in social program.

Features of Auditing

social auditing

Social Audit

Measures social performance

It not only measures but also evaluates the social performance of both an organization as well as of public.

Particularly, it inspects all the activities of each and every organizations. Then, meanwhile it also gives the detailed report of their activities briefly along with the suggestions for improving their social performance.

Systematic evaluation

Specifically, it is the systematic evaluation of the performance of the firm. Since it inspects all the activities immediately in a systematic manner, and in addition with that it also tells how good a firm is performing for the welfare of the society.

Provides information to managers

It provides information eventually to the managers of an organization so as to help them in decision-making. It gathers all the information quickly during auditing process. Then it gives the detailed report to the managers.

Use of qualitative and quantitative data

It uses qualitative as well as quantitative data for analysis. It uses qualitative data because they are concise and precise. But the qualitative data is often used specifically to supplement the quantitative data.

Conducted at regular intervals

Moreover, it is conducted at regular intervals to know the performance of the firm at every time period. If it is not conducted regularly then it will affect the social as well as regular performance of the firm.

Types of Social Audit

Social process audit

Social process audit determines the effectiveness of organizations those activities which are specifically related to the organization’s social objective. It specifically helps socially active organizations to know their performance of their processes.

Social performance audit

Social performance audit not only measures but also evaluates the social performance of organizations and also rank them as per their efforts and performance.

Moreover, it rank all the organizations eventually as per their social performance and efforts.

Financial Statements format

Financial statement format audit
Financial statement format audit

F.S.F. moreover gives the information of social activities of an organization accordingly altogether with its financial information.

Comprehensive audit

Comprehensive audit not only analyse but also evaluates the organizations total performance along with its social activities.

Particularly, it focuses on organization’s management system which takes decisions of the organizations accordingly.

Macro-Micro social indicator audit

Micro-macro social indicator audit quickly evaluates the performance of the company in micro indicators against macro indicators more specifically.

In short, this method helps to evaluates the contribution of the companies eventually for social life improvement.

Components of Social audit

auditor performing audit
Auditor performing audit

There are particularly five components of social auditing, which are described below:

Social components

Social components are specifically related with the relationship between company and a society along with all the employees working on the whole.

On the whole it involves the rights and working conditions of the employees in addition with the organizations initiative for the society.

Economic components

Economic components are the economic indicators of a company, that must be examine regularly and the proper actions must be taken in case of irregularly.

Health and educational components

Health and educational components are concerned specifically with the required health and education facility for the people in the workplace of an organization.

Environmental components

Environmental components are particularly concerned with the impact of the organizations production process on the environment.

It specifically focuses on harmful effect of organizations procedures on environment and the measures to minimize the impact on the environment.

Political components

The political components particularly involves the relationship between the management and employees, employer as well as manager in addition with the workers of the company.

The political environment of an organization is specifically needed to be audited regularly in order to know the relationship of the people working in the organization.

Auditing
Auditing

Approaches of Social audit

There are four approaches of auditing which are following:

Inventory Approach

Inventory approach is the approach under which the list of all the social activities is prepared accordingly which are done by all companies.

Cost or Outlay Approach

Cost or outlay approach is the approach in which all the amounts spent on all the activities of a company is disclosed specifically.

Program Management Approach

The program management approach is the approach that involves both inventory as well as cost approach along with a statement which is made as to whether or not a company met its objective for all the activities accordingly.

Cost Benefit Approach

The cost benefit approach is that approach in which all the benefits and contribution of each and every expenditure of the firm for the social activity is quantified specifically.

Also Read: Environmental Scanning-An Earnest Analysis of Firm’s Environment

How to conduct Social Audit?

How to conduct social audit
How to conduct auditing of big/large data

Steps for conducting social audit are following

  1. Define the scope

    Firstly, we have to specifically define the scope of social auditing. It involves the auditing of all the activities in addition with departments of the firm at the same time.
    Therefore, we have to decide accordingly which part is needed to be audited and which is not to be audited.

  2. Choose the participants for the process

    Secondly, we have to particularly choose people which are specifically to be included in the process of auditing.
    Moreover, the people which are involved in the auditing process should be unbiased and should have no personal objective.

  3. Define the issues to be checked in the process

    Now thirdly, we have to ultimately identify the issues which are to be checked in our social auditing process. Then, all the major issues as well as other issues should be cross-checked accordingly in this step.

  4. Make procedure for data collection of issues

    Now fourthly, we have to immediately make procedures for the data collection of the issues that we have cross-checked in the previous step.
    All the data as well as information should be carefully analysed and ultimately collect the relevant and important data.

  5. Create a report for the finding and verify it

    Fifthly, we have to make a detailed report of the overall findings of our social auditing. We must verify our report accordingly for its accuracy since a single mistake can particularly give misleading results.

  6. Present the report

    Finally, we have to present our social audit report ultimately to higher authority of the firm. In fact, it particularly depends on the firm if it wants to share the report publicly or not.

Also Read: Corporate Social Responsibility-For a Successful Corporate

Benefits of Social Auditing

Setting auditing target
Setting auditing target

The benefits of Social auditing are:

  • Firstly, it promotes social performance.
  • Secondly, supply data for comparing effectiveness.
  • Thirdly, gives data for effective response for external applicant.
  • Fourthly, it avoids conflicts.
  • Fifthly, it builds team spirit and discipline.
  • Finally, considered as the desirable option.

The above prescribed points as further clarified below:

Promotes social performance

It also promotes social performance in the firm and also directs firms to do those activities which affects the welfare of the society.

Supply data for comparing effectiveness

It collects information related to all the activities of the firms which help to compare one year with another year and one firm with another firm.

Data for effective response for external applicant

Moreover, in the mean time, it provides the information of all the activities of firm. Eventually, this information is used by the external applicant for comparing effectiveness of various social welfare program.

Avoid conflicts

It is the effective procedure used by the firm in order to avoid conflict among the management, owner, and employees due to disagreement.

Team spirit and discipline

It develops team spirit as well as discipline since it gives data for the comparison of policies and standards.

Considered as a desirable opinion

Social audit is specifically considered as the most desirable opinion. It helps organizations to measures their social performance due to which the firm attain its goals ultimately.

Conclusion

In brief, social audit is an effective tool for the organizations to improve and evaluate their social performance.

At the same time, it helps to increase the efficiency as well as effectiveness of an organization.

At last, every organization should conduct it frequently in order to know their social performance as well as their contribution in welfare of the society.

Also Read: Business Policy and Strategy-2 Key’s for successful business

FAQ

(1) What factors are examined by social audit? 

(Ans.) Some of the major factors examined specifically by social audit are volunteer events, work environment, records of charitable contributions, efficient energy utilization as well as employees wages.

(2) Who can conduct social audit?

(Ans.) Generally, social audits are particularly supervised by the autonomous bodies including government as well as non-government representatives; and the 73rd Amendment of Constitution have empowered Gram Sabhas specifically for formerly conduction of social audits.

(3)  What are the major key factors for a successful social audit?

(Ans.)  There are particularly major 3 factors for a successful social audit, they are:

  i. Firstly, it must involves major key facilitators in the social audit process.
  ii. Secondly, the information shared with stakeholders as well as with their involvement must be particularly of rural poor, women in addition with some of other marginal sections.
 iii. And thirdly the elected members of Gram Panchayat must set committed, serious and clear responsibilities simultaneously for the follow up actions.

(4) Why is social audit required?

(Ans.) Social audit is particularly required for enhancing local governance specially for strengthening accountability as well as local body transparency.

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