Introduction
Social Audit, as the word suggests, is a combination of ‘Social’, i.e. Stakeholders of the Corporate and Audit, meaning to make investigation and examination. Social audit helps a company in assessing its social responsibility goals ranging from its resource(s) consumption to investments, in fulfilling their societal duties which is coined as “Corporate Social Responsibility”
Like the financial audit or the secretarial audit, team of social auditors primarily focuses on assessment of results of the Social Audit in order to improve the organization's social, environmental, and ethical performance. It would be appropriate to propound that Social Audit works on the principle of benefiting the community by benefiting the stakeholders and hence the concept as a whole is being adapted at worldwide.
Social Audit and Corporate Social Responsibility.
Corporates (Corporations/Companies) source their resources from the Society, and hence they are duty bound to reciprocate. Corporate Social Responsibility (CSR) envisions a significant role for businesses in advancing societal objectives. The concept of CSR has been well enshrined in the Companies Act, 2013 and accordingly different companies have framed their CSR policies to compensate the society for the resources driven by the Corporates. As CSR is a mandatory aspect in the modern corporate world, it is important that the social auditors have a basic understanding of the corporate functioning. This will lead to better formation of policies and creating a suitable environment for implementing CSR. Also, it is important for the auditors to be fair and transparent during the assessment of the CSR as slight infringement in the process may deter the reputation of the company and the stakeholders.
Scope and Objective
The Scope and Objectives of Social Audit in CSR are complementary to each other. Evaluations are based on contributions towards employees, environment, human rights, specially aided citizens, usage of resources for sustainable development, rural development, etc. The systematic efforts and assessments of a company’s activities fulfills the objectives which revolve around the targeted social mandate of a company.
There are certain objectives which every company works upon who wishes to adopt the service of social auditing in their Corporate Social Responsibility Activities which include, participation in philanthropic activities, Sensible Resource Usage, Fair and Transparent Hiring Practices, Transparency with financial and accounting practices. Above all, it gives the public access to the decision-making process and the standards used for the program's numerous aspects.
Methodology and Steps
The methodology for social audits must be developed while considering both general and specific issues. Several steps are taken by the companies to improve its operations for a standout performance in the corporate business race. This includes, free will of the organization to set up their priorities, make strategic plan of actions, and set up performance criteria. This results, the organization, in knowing and learning about its own potential and includes the following procedure:
1. Preparation of draft overview of the process
This comprises of well-versed knowledge about the organization and its objectives. This can be achieved by going through the Memorandum of the company to be within the objectives of the company.
2. Identification of Stakeholders and Consultation
It is important to extract relevant information from the stakeholders as they are experts in strategy formulation and implementation. The consultation should be objective and unbiased.
3. Preparation of list of things for Audit
It is very important to highlight the list of activities and issues for conducting the audit process. To achieve this, auditors should collect relevant data for Primary and Secondary Sources.
4. Public Opinion and Physical Verification
Public Opinion refers to obtaining public comment over the ongoing thing. The necessary findings are discussed with the public at large to know about the impact of the activity. Also, physical verification and daily visits and check ups of the authorized persons at the working sites is essential for the smooth functioning of the process.
Conclusion
The incorporation of Corporate Social Responsibility in the Companies Act, 2013 has been a great initiative which holds accountable the Key Managerial Persons of the company to be part of the Social Responsibility. It should be taken into serious consideration that social welfare activities are intended to bring a social change not only in society but in the minds of people as well. There are instances where the social auditors have faced problems which are beyond their control, which includes unprofessional layout of the programme, improper analyses the problem etc. This results in moderate success of the event and hampers the very purpose of the CSR.
Therefore, the CSR Committees formed in the companies should stick to the principles of auditing and should make sure that the audit is well conducted after a regular interval of time making sure a good amount of profit earned is contributed for the social cause and needy people.
By,
Aayush Bhatnagar
Intern at "Surange & Company"
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