What is Social Audit?
Social audit can be defined as a mechanism that is taken into use for the purpose of understanding, measuring, reporting and enhancing the overall ethical performance of an organization and for this purpose the involvement of its stakeholders such as its clients, employees, customers, creditors, suppliers, vendors, shareholders, and society is very important.
This can be learned as a process that is used for the purpose of evaluating an entity’s involvement in social endeavors. In other words, social audit aims to assess the type of social as well as environmental influence an entity has on the society and enable the local social service providers aware of the ongoing needs of the local community.
Objectives of Social Audit
The objectives of Social audit can be classified into two categories which are mentioned below:
#1 – Principal Objectives
These are concerned with the payment of fair and timely dividends to the stockholders, fair salaries and wages to the employers and labors, fair, reasonable and best possible prices offered to clients and customers, and the extension, development as well as enhancement of an entity’s business and allowing it to become financially independent.
#2 – Secondary Objectives
These are concerned with factors like creating a provision of incentives and bonus for the employees, providing assistance in promoting and encouraging the amenities of a local community, boosting the development of the industry in which the company is operating, promoting research and development framework in the techniques used by the company as well as the industry.
#3 – General Objectives
The other and general objectives are to put an end on irregular activities, to reduce or diminish the economic as well as social gaps, to evaluate the conditions in which the employees are asked to work, to evaluate the impact of a company’s business operations on the environment and the local community, to formulate the initiatives that are taken in order to develop the local communities, and so on.
Process of Social Audit
The process of social audit involves the following steps:
- Initiating- In this phase, the users shall need to define a clear objective and evaluate what do they actually want to audit, establish an individual who will be responsible for the overall process of audit and accordingly secure funding.
- Planning- In this phase, the users shall need to select a strategy and identify the stakeholders of the company and understand the decision process of the government and then after, collaborate various approaches as well as practices, and accordingly engage the counterparts of the government.
- Implementing- In this phase, the users will need to perform the audit function, source as well as analyze all the information, disseminate the results and the information and then after, consider factors like sustainability and institutionalization.
- Closing- In this phase, the users will simply need to follow up to ensure that the social audit is successful.
Social Audit Examples
- ABC Limited is a company that purchases and sells household items and it claims to make donations in the form of offering groceries to needy families. In this case, it can be performed by thoroughly evaluating charity records, and such other documents to check and confirm the validity of the claims that are made by ABC Limited.
- After the research, it was found that ABC is doing a clean and green business and not causing any harm to the environment and implements the use of only eco-friendly procedures. This assessment report will be updated on behalf of the company on its website and this report will be of great significance for investors who are planning to make an investment in the shares of ABC Limited.
This is huge in today’s world where each and every business player is facing tough and neck to neck competition. Each business unit is not just connected with the internal stakeholders but is also largely connected to the external public too. Established companies are supposedly more powerful and make use of huge resources. This power can sometimes be misused and the result of these activities can create a huge impact on the local community or society and environment at large. In order to monitor and regulate the activities of the companies from time to time and motivate them to act in the best interest of the society and the environment too.
It is highly important as it helps the local communities with planning function, supports democracy, encourages the involvement of the communities, benefits not just individuals but their families too assists the human resource development and growth, enhances the image of the company in the eyes of the investors, promotes decision making, and so on.
- It helps the local community in planning
- It supports the democracy function in the community
- This promotes the active involvement of the local community
- It helps in enhancing the image of an organization in the eyes of the internal as well as the external public.
- It assists in the growth and development of human resources.
- This can be highly complicated and time taking for the users.
- It does not offer any sort of clear methodology.
- It defines scope might get really difficult for the users.
- It tends to be subjective is another reason why the same is highly discouraged.
- This lacks qualified trainers.
- The practical utility in social audit is really limited.
This is the need of the hour. It helps in monitoring unethical practices of the companies, and raises social consciousness and accountability and thereby offers a systematic evaluation and measures the social performance of companies at regular intervals. It acts as a guide and encourages the participation of the local community, and helps in the development of social capital and human resources.
This has been a guide to What is Social Audit & its Meaning. Here we discuss the objectives of social audit, process, and needs along with importance, examples, advantages, and disadvantages. You can learn more about from the following articles –