A social audit can be defined as a review of a company’s production procedure, policies, and code of conduct to find how they impact society. It is conducted out of social responsibility by an organization to establish its positive image in public, and if anything is found negative, then suitable actions are taken to correct them.
What is Social Audit?
The meaning of social audit is to inspect a company’s working and production procedure to improve its social performance. The output of the social audit provides information on how well a company is keeping a balance between social responsibility and making profits.
Social audit is mandatory to be conducted as a company might overlook the social responsibility to make profits. The term “Social audit” is part of business culture since 1950.
Another reason for conducting it is to establish a positive image of the company in society to attract more customers. Companies conduct social audit internally, and if everything is found fine and per the society, then the report is made public.
This not only put a positive impression on the customers of the company but will also attract investors.
Components of Social Audit
A social audit is a diverse process. There are various components which are associated with a social audit. In this section, you will learn about a few components which are examined in a social audit of an organization.
#1 Social Components:
Social components are a concern with the relationship of the company with society and the employees working in it. The social component is concerned with the general working conditions of employees, their rights, and the initiative taken by the organization for the betterment of the society and the local community.
#2 Economic Components:
Economic indicators of the organization must be audited, and required actions should be should if there is a case of any irregularity.
#3 Health and Educational Components:
The measurement of the health and educational facility in the organization. Whether the required safety and health measures are taken by the organization in the workplace.
#4 Environmental components:
Whether the production process or working procedure is harmful to the environment. Whether the working process of the organization is polluting the environment and what measures are taken by the organization to minimize the impact on the environment.
#5 Political Components:
The political environment in the organization is audited, which is the analysis of the relationship between management and employees, and manager and workers of the organization.
Objectives of Social Audit
- To assess the impact of the company’s operations on the local community and environment.
- To determine and minimize or eliminate the economic and social gaps.
- To assess the conditions in which workers are made to work.
- To determine whether workers are being paid fair wages or not.
- To determine whether the shareholders of the company are given fair information about the financial status of the company or not and whether they are paid their dividend in the company’s income regularly or not.
- To put a stop on irregular activities.
- To formulate and activate initiatives for the development of local communities.
- To Take measures for the extension and development of the company’s business.
- To keep the fair price of the goods produced for the consumers.
- To ensure that whether the assets and resources of the company are being used properly or are being wasted.
Importance of social audit
Conducting a social audit is important, as an organization not only impact the employees working in it or the consumers who consume products produced by them, but it also impacts the society and people of the local community.
It is conducted so that no powerful organization can exploit the resources available to it and don’t use any antisocial means to make a profit. In some countries, a social audit is made mandatory by the government.
However, to make the reports public or not is completely in the hands of the organization. Because of the continuous deteriorating condition of environment and society, the social audit has become essential to curb the antisocial and anti-environment actions of organizations.
In addition to this, a positive report creates a positive image of the company.
Examples of Social Audit
If a stationery store makes donations to local government schools. They claim to make provides books, notebooks, and other stationery things to needy students. A social audit will perform a thorough evaluation of charity records, documents, volunteer work, etc. to check the validity of the claims made by the store.
If a company is doing a green business without harming the environment in any way and by opting environment-friendly procedures.
A social audit assessment report can be made available for the company on the website of the company, which can be referred by the people who might plan to invest in the company.
How to conduct Social Audit?
Followings are the well-defined steps involved in the social audit.
#1 Define the scope of the social audit:
Social auditing consists of the auditing of various departments and activities at the same time. Therefore, it is important for the auditor to establish the boundaries that mean he should decide what should be audited and what should not be audited during the auditing process.
The objective of conducting a social audit is to analyze the process implemented for the execution of the process, quality of basic services and infrastructure created, and to assess the health and security measure taken.
#2 Choose the people participating in the social audit process:
In the next step, you will decide who should be included in the process whether they are the management of the organization or stakeholders an also define up to what percent a person would be involved in the process, how often they would be contacted, and what information would be shared with whom?
They can also work as the consultation in the social audit process, make sure that people involved in the process are unbiased and have no personal objectives. The whole purpose of conducting the social audit process should be concerned with the society and environment.
#3 Define the key issues which are required to be cross-checked in the social audit process and a data collection procedure for those issues:
In the next step, key issues which are required to be analyzed and tackled through the social audit process should be defined. Define what information should be collected for the particular issue and what methods should be opted to collect information.
Different records should be analyzed at different point of time to prepare a report.
#4 Generate a report for social audit findings and verify it:
In the next step, you should generate a report about the findings of social auditing. Social auditing reports might be or might not be published. Therefore, It is important to review the report and physically verify the process of important tasks.
Make sure to verify the processes by visiting the workplace; otherwise, a small mistake in the social auditing report might leave the accuracy of the whole report in jeopardy.
#5 Present the social audit report:
The main purpose of conducting a social audit is to present the report about the work process of an organization. The report is presented to designated management or shareholders, and sometimes reports are presented publicly.
However, a company holds the right whether to share report publicly or not. Finally, the required steps are taken to address the issues.