Advantages and Disadvantages of a Social Audit

To live in a fair society, accountability and transparency are of utmost importance. Currently, there has been a social divide apparent in every sector. This calls for research into the whys and whats of the divide. A good fact-finding of these social issues is through a social audit. So let us look at the importance and the barriers of social auditing.

WHAT IS SOCIAL AUDITING?

The Food and Agricultural Organisation of the United Nations (FAO) describes social audit as a way of measuring, reporting, understanding, and improving an organization’s social and ethical performance. It is a technique to understand, measure, verify, and ultimately report in the social performance of an organization. The assessment done in a social audit shows how well a company or an institution is achieving its goals keeping in mind their social responsibilities. It is a good way of understanding whether the community is positively or negatively receiving the actions of a certain organization. Governments also undertake social auditing to improve their social performance. 

The main objectives of a social audit are as follows – 

  • Studying the disparity (if any) between the needs of the community and the availability of these resources. 
  • Creating awareness among the stakeholders of the organization or government which includes the citizens, other beneficiaries, social service providers, etc.
  • Assessment of how the organization is achieving its goals and standards.
  • Scrutiny of the policy decisions to maintain transparency.
  • Carrying out research to focus on the social impacts of a development carried out by a particular organization or government.

GENESIS OF SOCIAL AUDITS

The term social audit can be traced back to the 1950s. The first known social audit of an organization was done at the Centre for Swedish Working Life (Arbetslivscentrum) in Sweden. It was a three year long study about the National Labour Market Board which was the central bureaucracy of Sweden. The study assessed the work experience of employees along with the management through interviews and questionnaires. This paved the way for a regular practice of social auditing in Sweden.

Similarly, India and other neighboring countries began social auditing from the 1990s. For example, during this time, Mazdoor Kisan Shakti Sangathan (MKSS), a grassroots non-governmental organization in Rajasthan (India) helped fight corruption in the public works departments. An important piece of legislation, the Right to Information Act was enacted in 2005 in India that sets out the procedure regarding citizens’ right to information which is enshrined as the fundamental right of a citizen. This helps in identifying irregularities in governance and correcting them.

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Advantages and Disadvantages of a Social Audit

ADVANTAGES OF A SOCIAL AUDIT

Transparency and Accountability

One of the main objectives of social audit is to strike a balance between profit-making and social responsibility. In other words, it strives to keep the company or organization accountable and transparent. The social auditor has the task of scrutinizing every policy and document in relation to all the activities of the implementing agency. These have to be studied keeping in view the interests of the stakeholders, particularly the rural poor. The auditor also has the right to ask for any clarifications required from these agencies or organizations about the policies, scheme, activity, or even expense incurred by the agency. This ensures financial transparency and also enforces the right to information in implementing the abovementioned activities. 

Impact on Governance

An important advantage of social auditing is that it creates an impact on governance. It focuses on amplifying the voices of the marginalized groups of society to ensure that they benefit from them. The aim of a social audit done by a governmental authority is to encourage local democracy and enhance local governance as well. So, this helps in strengthening accountability in local bodies. It not only keeps a check on the authorities but also encourages community participation. So, this results in an increase in social capital and better local planning. Hence, policymakers and decision-makers can identify the problem areas with the help of the community and come up with effective solutions.

Increases Efficiency

Social auditing helps organizations collate information in respect of the aspects that need improvement. For instance, in the case of a company implementing a social audit, it can look at the overall impact of the business’ activities. This results in finding out information about the corporate responsibility of a business towards their consumers. Social audits can help improve as well as increase the efficiency of the organization by looking at the problems holistically. Therefore, they can objectively meet their social objectives in the longer run. 

Informed Decision

Social audits cover various kinds of parameters. Some of these include community development, the environmental impact of the organization, work environment, worker benefits, and diversity. The different parameters allow the organization to make informed decisions with respect to the impact they have on its stakeholders, especially the community at large. 

DISADVANTAGES OF A SOCIAL AUDIT

Expensive

Social audits like any other auditing need a considerable amount of funding. Collecting information, auditing at regular intervals, surveying stakeholders, and then analyzing the result with the chosen standard and finally publishing it. This is a tedious task that needs volunteers and staff members. Undertaking such social audits require time, funds, and the right resources. Hence, this can be a big deterrent for taking up a social audit.

Optional

There are no mandatory provisions for undertaking a social audit. Since it is optional, it is not compulsory for the findings of these audits to be public information. So, it is highly possible that the positive feedback gets published for the public but the negative results are just kept as internal information. This negates the purpose of a social audit because they are conducted to increase transparency and efficiency to benefit every stakeholder.

Advantages and Disadvantages of a Social Audit

No Common Standard

Social audits do not have a set standard for their undertaking. So, different organizations have different parameters that are included in the social audits. Therefore, this limits the comparison of different social audits for a set benchmark. 

Looking at the pros and cons, it is clear that the advantages of social auditing far outweigh the disadvantages. With proper guidelines and standards in place, social audits can truly help bridge the gap between decision making and its effective implementation.

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Pros and Cons of a Social Audit

PROS

CONS

Transparency and Accountability

Expensive

Impact on Governance

Optional

Increases Efficiency

No Common Standard

Informed Decision