by A social audit is a formal review of a company’s endeavors in social responsibility. A social audit looks at factors such as a company’s record of charitable giving, volunteer activity, energy use, transparency, work environment, and worker pay and benefits, to evaluate what kind of social and environmental impact a company is having in the locations where it operates.
Social audits are optional. Companies can choose whether to perform them and whether to release the results publicly or only use them internally.
A social audit is an internal examination of how a particular business is affecting a society. It serves as a way for a business to see if the actions being taken are being positively or negatively received and relates that information to the company’s overall public image.
A social audit examines issues regarding internal practices or policies and how they affect the identified society. The activities included tend to pertain to the concepts of social responsibility. This can include activities affecting the financial stability of a region, any environmental impact resulting from standard operations and issues of transparency in reporting.
There is no standard regarding what must be considered as the society during the audit. This allows a business to expand or contract the scope based on its goals. While one company may wish to understand the impact it has on a small-scale society, such as a particular city, others may choose to expand the range to include an entire state, country or the world as a whole.
Principal Objectives of Social Audit
- The extension, development and improvement of the company’s business and building up of its financial independence.
- The payment of a fair and regular dividend to the shareholders.
- The payment of fair wages under the best possible conditions to the worker.
- The reduction of prices to the consumers.
Secondary Objectives of Social Audit
- Provision of a bonus to the workers.
- Assist in promoting the amenities of the locality.
- Assist in developing the industry in which the firm is a member.
- Promote education, research and development in the techniques of the industry.
From these objectives, we can infer that social audit is really an extension of the principle of public disclosure to which corporations are subject.
Need for Social Audit
Each business enterprise is not only connected with internal public but intimately connected with external public also. The modem corporations are more powerful and command huge resources. This power should not be used indifferently, irresponsibly or in an antisocial way. Its activities can create much impact on the society. As such its impact over society cannot be ignored or taken lightly. Its behavior not only affects the society but also creates problems to the Government. Thus, social audit has become the need of the day.
“This is a matter not of ambition”, Prof. Galbraith says “but of necessity”.
- 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.
- Economic Components:
Economic indicators of the organization must be audited, and required actions should be should if there is a case of any irregularity.
- 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.
- 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.
- 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.
