The nerve-centre of social audit is the social responsibility. The social responsibilities are discharged by the performance of social activities. The social activities so performed are quantified and recorded in monetary terms. When an analysis is made, the progress and achievements are compared with the bestowed responsibilities. And a socio-economic statement supported by the Social Accounting (leading to the preparation of a social income-expenditure statement and social balance sheet showing social assets and social liabilities in monetary terms). The whole set is examined, assessed and then certified by the process of Social Audit.
But the most amazing fact is that todate the social responsibilities have not been adequately presented or defined by the government which holds a key role in a democratic socio-economic set-up. So obviously the amount of social responsibilities a business enterprise implements are determined and decided by the management on their own. Therefore it is essential to highlight the important• social responsibilities that a business enterprise should discharge. Below is a short-list of such responsibilities: 1. Obeying major laws particularly when a law has a widely accep ted social sanction (like loss against adulteration, ‘black marketing).
2. Human treatment of employees.
3. Honest, truthful and fair dealings with other enterprises, consumers and employees.
4. Respect for the intent and letter of contracts in providing a reasonable quality and quantity of products and services at fair prices.
5. Truthful and purposeful financial reporting.
6. Providing a fair return on investment to the owners by way of earning profit (but not by profiteering at any cost).
7. Equal employment opportunities for all at the basic level.
8. Internal accounting and capital budgeting in respect of items of social benefit in particular.
9. Obeying the laws restricting the pollution or danger to public life (Union Carbide tragedy at Bhoopal is an eye-opener).
10. Complete truthfulness and maintaining a social and moral discipline in advertising.
11. Employee benefits that assure family, health, society and welfare and improve the quality of life of employees.
12. Modest contributions to local charitable causes.
13. Proper recording, in monetary terms, of the elements of social benefits.
14. Actively pursuing improved social justice and quality of life for all .
It would be good for an enterprise to develop a statement of its social objectives, incorporate the same in the Articles of Association; and then periodically measure and record the estimated progress towards these objectives. These goals can be measured and recorded through Social Audit.
Obstacles to Social Audit
What are the primary obstacles to Social Audit and how is Social Audit conducted?
The main obstacle that an organisation encounters in conducting a social audit is its inability to develop measures of performance everyone will accept.
Other obstacles include : (a) inability to make creditable cost/ benefit analysis to guide corporate actions, (b) inability to develop consensus as to what activities shall be covered, (c) inability to develop consensus on todays to organise information, (d) potential danger to the organisation in. publishing the results of Social Audit, and (e) general decline in pressures on business to undertake social programmes.
Process of Social Audit 1. The auditor shall satisfy himself to the effect that the business enterprise prepares a statement on its social objectives. This may be further highlighted with reference to the Articles of Association which may and should contain the details of the social objectives. The objectives should be adequate. This can be ascertained by referring to the list of items of social responsibilities (as described in the “Salient features of Social Audit” herein before). Should the auditor think that the objectives, as prescribed by the enterprise, need further modification, he should recommend the same, so that the social objective statement may be redrafted. 2. He should examine the progress which are recorded in monetary terms in a separate accounting set up know as Social Accounting chapter of the organisation. The auditor should see how far does the progress adhere to objectives. 3. The auditor should now carefully examine the (a) Social income-expenditure statement, more popularly known as “social income statement”. This is an annual flow statement in which the social benefits to employees, communities, consumers and general public are reported by description and in monetary terms. Social costs to each respective constituency are then reported and subtracted allowing the determination of a firm’s ANNUAL NET SOCIAL INCOME (A specimen has been shown hereunder). (b) The social balance sheet which presents the social assets or benefits to society and social liabilities or social cost (A specimen shown hereunder). 4. The auditor will also examine the socio-economic statement prepared by the management incorporating the views and visions of the management in this respect. Based on the above functional performances the auditor should submit his report or certificate on the social audit.