What is Social Audit?

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Author: Sarthak Bhalerao

Introduction

The audit is the examination or inspection of all the books of accounts of a firm, organisation, or company by an auditor. The audit is followed by actual physical checking of the inventories to make sure that all departments are following the documented system of recording the transactions. Auditing is done to ascertain the accuracy and authenticity of the financial statements of the firm, company, or organisation. In this article, we will be looking briefly at the Social Audit.

Table of Contents

  1. What is a Social Audit?
  2. Understanding Social Audit
  3. History of Social Audit
  4. Items evaluated by Social Audits
  5. Use of Social Audit findings

What is a Social Audit?

A Social Audit is a formal evaluation of a company’s procedures, code of conduct, and endeavours with respect to Corporate Social Responsibility (CSR) and social impact. It portrays how well the company is achieving its goals. Many companies make goals and objectives with regards to CSR initiatives, and the same can be reviewed with the help of Social Audits. Social audits have a strong impact and influence on the public relations image of the companies as these companies strive to maintain a balance between their social responsibilities. By doing this, they provide value to their investors and shareholders.

Understanding Social Audits

Corporate social responsibility is increasing rapidly in today’s business world. It has become necessary for corporations to maintain a delicate balance between responsibility to their shareholders and investors. They have to make certain objectives with regards to making strong social impacts. CSR is often integrated into many other areas of a company’s service lines. A social audit determines how a particular business affects society. The audit helps companies to determine if they are meeting their objectives. The audits also serve as a way for businesses to check whether their actions are affecting the public image in a positive or a negative way. This can help the companies in improving their public image and public relations. This is a crucial aspect for many larger publicly traded corporations as the public perception is tied to their earnings and share price.

History of Social Audits

Social audits are a relatively new concept in the business world. The first social audit was carried out in Sweden by work-life researchers at the centre for Swedish Working Life, John Fry and Ulla Ressner. The audit was published in Sweden in the year 1988 by Allmäna Förlaget under the title “Social Revision av ett Ämbetsverk” [1]. The three-year study of Sweden’s central bureaucracy relied in interviews and questionnaires with many of the organisation’s employees from all designations. Its main focus was on the senior management and junior staff. They evaluated the objectives for the company established beforehand. From the responses, the researchers were able to get a better understanding of the effectiveness of the organization and make recommendations for improvement as a result of the social audit.

Items evaluated by Social Audits

Social Audits takes into consideration many aspects within an organization to measure, report, and improve the organisation’s performance. Some of the items examined by social audits are:

  • Record of charitable contributions
  • Volunteer events
  • Transparency within the organisation
  • Work environment
  • Salaries and wages of the employees
  • Community initiatives and activities
  • Diversity in the workplace
  • Accounting and financial transparency
  • Non-discriminatory practices
  • Charitable giving
  • Community development and financial contributions

It should be duly noted that there are no specific standards or rules to follow, and organisations typically have a lot of flexibility when it comes to implementing social audits. Social audits are not necessarily made available to the public. It can also be for the internal management to further improve the company’s social efforts.

Use of Social Audits

Social audits do not have a government body which means that the organisation can freely decide whether to share the finding of the social audits to its shareholders and investors. The results of the audits are extremely beneficial to the organisation. They help understand the strengths and weaknesses of the organisation. Social audits also help the organisation to evaluate their social initiatives. This strongly influences public image and relations. 

References

[1]

A. Förlaget, “Social revision av ett ämbetsverk,” p. 332, 1988.

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