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What is Social Auditing?

What is Social Auditing?

A social audit is a tool used to assess the effects of different programs and policies on communities. The main goal of a social audit is to allow people who were negatively affected by certain projects, such as land acquisition for development projects, a chance to voice their concerns about how they have been affected. In addition, the social audit also allows the government or business to remedy the situation.

How is social auditing done?

The process begins when people who feel they have been negatively affected by a certain project come forward and make their grievances known to the government or private company that is involved in the project. If it is found that these people are indeed correct, an investigation will be conducted into how things were handled throughout the project. If it is revealed that the process was flawed, the company will acknowledge its mistake and put a plan into action to fix issues that have been found.

Why is social auditing important?

By allowing outside parties to audit how business is done, or in some cases, how aid money was spent, the social auditing process helps weed out any corruption that may have existed previously. It also allows for better relations between companies and the communities in which they operate. They provide proof of Corporate Social Responsibility (CSR). By identifying inconsistencies in policies and procedures, people who are negatively affected will be able to voice their concerns to those who are in charge. This way, the project will not only run more smoothly but will be more beneficial for all parties involved.

What is an example of a social audit?

A manufacturer of laptops recently made the decision to dismantle a factory in South Africa without taking into account how it would affect the community. When word got out about what the company had done, many people came forward to voice their concerns about how this move has affected them. After conducting an investigation, more information was revealed. In addition to breaking labor laws by firing the employees, the company also evaded taxes. Once these facts were released to the public, a social audit began and those affected were able to voice their concerns. In order to fix the faults found during this process, a plan was put into action which includes paying back taxes as well as helping retrain those who have been laid off from the factory.

The Social in ESG and Accessibility with Max Brault

Auditing tools and support

The most popular example of social auditing is the Human Rights Impact Assessment. This tool is used to track what kind of effect a certain project will have on the people who use it, particularly how it affects their rights. The assessment can also be used for community relations by giving people in charge an idea about how locals feel about development projects. Community members are able to voice their concerns about projects that affect them before they even begin. By doing this, these projects will have a much greater chance of being beneficial for everyone involved.

Who performs a social audit?

Social audits can be performed by a variety of individuals and organizations, including non-governmental organizations, local communities, independent auditors, and government agencies. Organizations that have an interest in making sure their policies or practices are ethical often conduct social audits to learn more about how they impact the community.

Example: Microsoft has stated that it will perform a social audit for any project that has an annual budget of more than $5 million. This way, Microsoft is able to track the progress and find issues within the project without disruptions while it is still in progress.

Is a social audit a statutory audit?

A Social Audit is a type of audit, as the word ‘Social’ denotes. As such it is not a statutory audit. A statutory audit is defined as “An examination of financial records or accounts to check for accuracy and completeness of information, in order to form an opinion on whether they are free from material misstatements.”

As seen in this definition, statutory audits must rely on the financial records (Comptroller) of assets, income, and liabilities. Social Audits may focus on these (and other) aspects but are not limited to them. The information provided by social audits allows decision-makers to meet their obligations toward stakeholders so that projects can be run more efficiently, effectively, and ethically.

What is a social audit in accountancy?

Accounting is the measurement, processing, and communication of financial information about economic entities such as businesses and corporations. This includes supporting evidence in the form of documents and records. A socially responsible company will conduct a social audit to determine its social impact on its surrounding community, environment, and stakeholders. The financial and nonfinancial reporting process will be used to retrieve relevant information about the company’s social impact. A financial statement is a good source of evidence because it shows the results of the company’s business activities, providing insights into its overall performance and future prospects. This is why an annual report should not only disclose financial information but also information regarding ethical issues that have been taken into consideration.

What information is in a social audit?

Social audits can contain a variety of information, depending on the social audit. Information may include data collected from community members about their concerns with projects or practices, as well as complaints filed regarding a project or practice. There may also be any relevant information regarding building permits, employment, or contracts that are of interest to investigators. It may also touch on transparency in reporting any issues regarding the effect on the public or environment, accounting and financial transparency plus community development and financial contributions.

What were some issues found through a social audit?

There are many examples that show how people find issues with projects and practices. These issues can range from human rights violations to discrimination of cultures, languages, or religions. There may also be concerns regarding environmental protection and pollution, as well as health and safety issues resulting from the project or practice. Many times these issues are discovered through social audits before they become serious problems that can cause irreparable damage to a community or environment.

6 Types of Social Audits

  1. Economic Audit: These audits examine the costs and benefits of a certain project or practice, looking at resource allocation, where money is spent and made. They also look at how externalities affect things like community development, healthcare infrastructure, and housing needs for people in impoverished areas.
  2. Environmental Audit: These are similar to economic audits but they also consider the impact on the environment. Sometimes there may be heavy pollution of soil, water, or air that can affect human health. A social audit in this area would look at how the project has affected these things and whether or not it was done responsibly.
  3. Social Risk Audit: This is where social audits assess the risk of various negative consequences such as protests and violence, litigation, and criminal activities. They also look at specific impacts on people such as indigenous groups, women and children, and migrants.
  4. Community Audit: These audits examine community-based projects that provide services or employment to residents in a given area. They often help these communities enhance their capacities so they can take more ownership of these services or employment opportunities.
  5. Human Rights Audit: These audits are often done by non-governmental organizations, agencies, and other third parties to check if human rights have been abused in a certain area. Areas that are typically looked at include the use of child labor, freedom of association and assembly, freedom from discrimination, and rights of the indigenous people.
  6. Contract Audit: These audits examine how projects or practices affect people under contract with a company, for instance, whether they are paid fairly, treated humanely, and allowed to organize themselves if needed. They also look at accessibility to services such as medical treatment in case of injury on the job.

In conclusion, a Social Audit is an examination of a project’s social impact on the stakeholders affected by it, conducted after the project has been completed. This audit can be performed by anyone with an interest in making sure initiatives are beneficial for all parties involved.

Terms and Definitions

    • Content media refers to the forms of media used to communicate a message, such as news stories, advertisements, documentaries, music videos, and more. Key issues are topics or problems that are of particular importance and require careful attention and consideration.

    • A company is an entity created to engage in business activities, such as manufacturing, trading, or providing services.

    • The next social audit is an analysis of how a company’s activities affect society, from measuring its impact on workers and customers to assessing the sustainability of its operations.

    • Decision-making is the process by which an individual or collective uses available information to choose among two or more alternatives.

    • CO2 emissions refer to the amount of carbon dioxide released into the atmosphere as a result of human activities such as burning fossil fuels for energy production. Environmental scoring factors are criteria used to measure how companies consider environmental performance when making decisions with respect to their operations.

    • An image of the company is a visual representation of the values and goals of the organization, which can be used to build trust and loyalty among customers.

    • Irregular activities refer to any behaviors that are outside of the accepted norms or standards for a business and can lead to negative consequences.

    • Good public perception is an important element for companies, as it helps make sure that customers feel comfortable trusting them with their business.

    • A community is a group of people with shared interests, characteristics, or backgrounds who come together in order to work towards common goals.

    • Stakeholders are individuals or groups who have an interest in the success of an organization and have the potential to impact its outcomes.

Caveats and Disclaimers

We have covered many topics in this article and want to be clear that any reference to, or mention of corporate social responsibility, social audit, active involvement, Iowa State University, small business, measurable goals, social gaps, charity records, doctoral degree, companies, employees, business, society or environment in the context of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading and don’t forget to read How to Write a Sustainability Report.



Research & Curation

Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for SMEs and Investment professionals focusing on ESG principles. Their primary goal is to help middle-market companies automate Impact Reporting with ESG Software. Leveraging the power of AI, machine learning, and AWS to transition to a sustainable business model. Serving clients in the United States, Canada, UK, Europe, and the global community. If you want to get started, don’t forget to Get the Checklist! ✅

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