Social Audit: Concept and Objectives

After reading this article you will learn about Social Audit:- 1. Concept of Social Audit 2. Objectives of Social Audit.

Concept of Social Audit:

Although no unanimous definition has yet been evolved, the term Social audit, in its simple sense, may be defined as the audit of the social responsibilities that should have been discharged by a business enterprise. Its meaning and content are synonymous with that of social responsibility accounting.

The concept has been under experiment for a number of years, but perhaps has not commanded the attention which it deserves. The measurement and methodology for the conduct of social audit are yet to be devised and developed.

The term ‘social audit’ is understood in different connotations by different men to include various practices, such as:

1. Inventory of ‘social programmes’ undertaken by a company.

2. Inventory of their ‘social impacts’.

3. Estimates in terms of money of various company activities having ‘special social significance’.

4. Results of surveys on environmental pollution, employment discrimination, occu­pational health and safety, etc., undertaken at the instance of the Government’s regulatory measures.

5. Critical report or surveys made on an area external to a company or industry, for example, sexual discrimination, caste discrimination, etc.

A general consensus of opinion is that the large-scale business houses have considerable social power in relation to pollution, landscape effects, community facilities and employment to minorities, etc., and that the society is increasingly becoming conscious about the social costs and benefits of corporate activity. Only recently, it has been thought of by a handful of corporate houses that a system of accounting for corporate social performance is needed.

Major reasons advanced in this respect are:

1. Increasing awareness of society about corporate social contributions; that is, comparatively better-off citizens in business should develop an emotional involve­ment in the improvement of socio-economic conditions,

2. Providing means of identifying and rewarding business for social contributions,

3. Identifying adverse effects on the environment,

4. Improving the credibility and reputation of business, and

5. Transferring costs of social activities to other various segments of society.

In the words of some eminent writers’ “social auditing is defined as a systematic attempt to identify, analyse, measure (if possible), evaluate, and monitor the effect of an organisation’s operations on society (that is, specific social groups) and on the public well-being.”

Social audit via social responsibility accounting may, therefore, be defined as a systematic assessment of and reporting on those parts of the activities of the company that have a social impact. A firm should earn a satisfactory profit no doubt but it must also assume its social responsibility as a member of society. The concept of social audit via social responsibility is thus a counterweight to that of an enterprise’s profit.

Objectives of Social Audit:

Social audit may have three objectives basically:

1. To identify and measure the periodic net social contribution of an individual firm, which includes not only the costs and benefits internalised to the firm, but also those arising from externalities affecting different social segments;

2. To help determine whether an individual firm’s plans, strategies and practices that directly affect the relative resource and earnings are consistent with social princi­ples;

3. To make available in an optimum manner to all social commitments, relevant information on a firm’s objectives, ultimate goals, policies, programmes, perform­ances and contributions to the social goals. Relevant information is that which should provide for a scheme of public accountability and public decision—making regarding capital choices and social resources allocation.

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