What is the background and significance of Social Audit ? Describe its salient features.

Background and Significance

Business is business. But a business is born in a society, it grows and develops in the society, it cultivates its financial resources and human resources in the society, so it earns its incomes, it services and prospers. Thus the relationship between business and society is inseparable and one of interdependence. A business organisation has to be conscious and contributory to the benefits of the society. However, management being the primemover of the business may, and often does, excel more on the path of profit by shadowing the path of social excellence and benefit. For its survival and prosperity it must make profit and it must not go for profiteering at all costs by frustrating the social principles and social responsibilities.

A business house is a socio-economic institution. Society is definitely grateful to the business institutions for their great role of rendering services, supplying goods, mobilising resources and thus vitalising the life-blood of the economy. But there is the other touchy aspect that goes hand-in-hand with economic accomplishment. As it achieves the economic accomplishments, i.e. profit-making, it is proper and ethical that its prosperity enlightens the social path and makes desirable contributions to the society by discharging the social responsibilities. The question is how far and how well is there the balanced matching of the economic factors with the social factors in the business to-day? Generally the economic aspects are treated like the son-in-law and social aspects as the black-sheep of the family. This disparity of treatment has awakened the society so much that business to-day are being held responsible for this performance in a more precise and thorough fashion than ever before. Public wants business to contribute substantially more to achieving society’s goals. But for this there should be clearly defined social objectives and proper guidelines to identify the chain of social activities to be performed  by a business organisation to achieve the social goals. And. finally one would like to compare the ‘desired social objectives with the “accomplished social goals”. As there should be the communication of these particulars of information to the management and and Other quarters, there should be solid recommendations on ways and meaning to achieve the goals if the same have fallen short of objectives. Thanks to the forceful demand for social contributions from the business organisations. But how to effectively measure these social items? Accounting is based on money measurement concept: And it is not easy to quantify the elements of social contributions in terms of money. It is here that the Social Audit steps in as the most innovative method involving (a) assessment of social responsibilities of business institutions to the members of the staff and employees, i.e. to the community, to the public in general and to the stock-holders/owners; (b) examination of ways and means adopted by the business institutions to discharge these responsibilities, i.e. selection of objectives, assessment of progress continuously and of the achievements periodically with the help of financial statements; (c) preparation and communication of a socio-economic report on the basis of the above financial statements and the management’s report on these socio-economic aspects.

In the light of above discussion we appreciate the following definitions of Social Audit.

1. Cindy P. Norris, office manager of Students Department at Wheeling of Jesuit College (USA) describes Social Audit as a systematic study and an evaluation of an organisation’s social performance rather than its economic performance. Social Audit leads to a social performance report or social audit report for management and perhaps outsiders too.

2. According to Blake, Fredick and Myer, Social auditing is defined as a systematic attempt to identify, analyse, measure, evaluate and monitor the effect of an organisation’s operations on society and on the public well-being.

3. According Mr. Kamal Gupta, Technical Director ICAL, Social Audit is the product of a good deal of research and experimentation conducted to devise the techniques which measure the contribution that an enterprise makes to the society. These developments ‘result from an increasing realization and appreciation of the fact that business undertakings have social responsibilities and that their performance as a whole this end a number of proposals have been forwarded to design an extended accounting system which measures the social performance of the enterprises, leading to the preparation of a socio-economic operating statement (SEOS) to show the various benefits of social actions of enterprises. Examination of such set of accounts and SEOS and certification of the same is Social Audit.

4. According to Bauer (Harvard Business Review Jan: Feb. 73), the concept of social audit is a vision that at some future time corporations will assess their social performance in as much systematic a manner as they now assess their financial performance. Such audit, known as social audit, would be required both for public reporting and for internal management. (What Beuer described in 1973 as future time, in the present context, it is a reality—his foresight is appreciated.) Thus Social Audit is an audit with new dimension with its ramifications in the social accounting field to examine, ascertain and report on the social performance of a business ent6rpiise with reference to the social responsibilities that a business enterprise has to-day, its discharge of such responsibilities by a continuous process of defining and quantifying in monetary terms the decided: objectives, the progress and the achievement of the goals. This is further supported by the socio-economic statement submitted by the management.

Updated: July 24, 2019 — 1:38 pm

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