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Social Audit

What is Social Audit?

A formal review of a company’s endeavors in social responsibility. A social audit is a method of assessing, comprehending, reporting on, and eventually improving an organization’s social and ethical performance. A social audit assists in closing gaps between vision/goal and reality, as well as between efficiency and effectiveness.

Social Obligations of Business Organizations:

Every business organization has certain social obligations to be duly discharged to employees, government, owners, buyers, public, environment etc.

It is a good thing that businesspersons of today have understood their obligations and have been discharging them ably. Social audit scans the scope of the social responsibilities of a business enterprise and evaluates an organization’s social performance.

Social audit and compliance.

Measure of Social Performance

There are no specific measures established to rate the social performance standards of a business enterprise. Nevertheless, business enterprises do not seem to understand the relevance of social audit because much importance is attached with the economic aspects of a business. The features of social audit are listed down for better understanding of the process:

  • The focus is on the social aspect of a business organization rather than its economic aspect.
  • The activities of a firm that has an impact on the society, such as, environmental quality, consumerism, opportunities for women and other disadvantaged people in the society are taken into consideration for analytical purpose.

How to measure social performance of companies?

Social audit is confined to the process rather than concentrating on the results of social action. It is quite difficult to measure social performance in quantitative terms. How do you quantify social philosophy of management and human values?

Qualitative measurement is also relative, as, what appears right to one person may not be so for another. So a combination of quantitative and qualitative data must be used for the purpose of this audit.

Objectives of social audit.

If an internal auditor does the assessment, there is this problem of loyalty, which will outweigh all the other shortcomings present in the business.

If an external consultant is made to assess the situation, he can analyze the situation with no bias but he will not be familiar with the business activity of that particular firm. Therefore, a combination of both can work out well to carry out the assessment as they can complement each other.

A New but Necessary Concept

Social audit is a new concept, so there are not much standard procedures available to follow. Most companies are at the beginning of the learning curve with this process.

When companies do begin audit procedures, they tend to find that the process is more complex than originally contemplated. However, every aspect of business and its management has to be explored and analyzed for the benefit of future generations, so as to take proactive measures to tackle problem situations. 

Business firms obtain their resources from the society and are dependent on the society to sell their produce too. Hence, it becomes their moral responsibility of caring for the society, within their scope and potential.