SocialAudit

Introduction
Business is an integral part of society. It enjoys the benefit and privileges of the state and the society where it operates. So it must behave in a way that is socially responsible. Such Social Responsibilities are of 4 types

Social Responsibilities
Economic Responsibility- Produce goods and service that the society wants and to sell them at a profit. Legal Responsibility- Fulfill its economic mission within the legal framework laid down by the land of operation. Ethical Responsibility- Fulfill social responsibility along with legal, social by keeping internal and external stakeholders in good books. Discretionary Responsibility- Unclear and unspecified roles beyond the above 3 three mentioned- includes donations, medical, recreational benefits to be done by the business entity in its own interest.

Social Audit
First developed by Howard R Bowen in early 50s In order to measure a companys social responsibility against its own social objectives is done through a Social Audit It can be conducted by the company itself. However the one that is conducted by an external consultant will provide a unbiased view and audit.

CSR Audit-Social Audit

Just like a financial audit done by an external adds credibility to the evaluation, social audit done by an external party will lend credibility for the results announced and the general public has to believe the published results by the PR of the organization..contd

 Social Audit is also to be done by external consultant to add credibility and for public scrutiny. Social audit can be used by the Managers not only for social performance evaluations but also for external environment scanning, finding out vulnerabilities of companies, competitors

Case-Body Shop
Learned the hard way. Learned what happens when the company falls short of its social objectives. The company had created its CSR image based on socially responsible behavior for 20 years. In 1994, Business Ethics published an expose that said that the company was using ingredients tested on animals, not recycling as much as it claimed, threatened journalist, using nonrenewable petrochemicals in its products

Definition of Social Audit

Mondy, Sharplin, Premeaux says Social audit is a systematic assessment of a companys activities in terms of their social impact.

CSR Audit
The social audit is under severe public scrutiny Nearly all Fortune 500 companies publish their social audit report along with its annual report. Eg. GM, Bank of America, Control Data Etc.

Reason for Social Audit

Business investment proposed for social cause may be diverted to profitable activities to enhance its own profitability. Social audit cause moral pressure to undertake what it has promised. Business being a part of society, lives,breaths and growth in society.It uses societys resources for economic viability, so the company must be socially responsible for the societys well-being too. A business grows in a well developed society- it cannot sustain in a sick society..to sustain itself the business should in turn help the society to improvise itself.

Reason
Some investors will prefer only to invest in socially responsible firms. So by having a clear social audit it will be able to attract investors. The chances of survival in the society will be high when social audit is regularly done. It will be able to increase and retain its customers base due to transparency in social audit.

Approaches to Social Audit

The various approaches are Inventory approach- listing of all social activities done by the company. Outlay approach- Detailed report of each social activities along with its cost , ways to reduce the cost. Cost-Benefit Approach-It quantifies the benefit made to social life with the expenses it had incurred for each social activity. The report is presented in the form of a social balance sheet. Programmed Management Approach- In addition to the above, it also reports and checks whether it has realized its social objectives laid out

 Social Process Audit.-Effectiveness of activities to meet a particular social cause Financial Statements Format Social Audit two thoughts- Abt Associates and Linowes model Abt Associates balance sheet shld show social assets and social commitments on one side, liabilities and equity on other side.The income statement shld show cost and net incomes of social to staff, public, clients etc. Linowes Model- the above creates confusion.,so the expenses voluntarily to improve welfare of staff etc.. Shld be treated as improvements expenditure. Those expenditure made mandatory by law shld not be included in improvements expenditure since these are necessary to conduct business as per law. Only voluntary should be disclosed a social improvements expenditure.

Types of Social Audit

 Macro-Micro Social Indicator Audit.-requires evalution of micro social measure with marco social measures. Macro social factors-social goals of health,safety education housing accidents etd. Micro Social Factors- are those indicators which measures the performance of the company in those areas of macro social measures. Social Performance Audit:-In developed countries, social interest groups rank socially responsible companies on the basis of their social performances based on Opinion polls of goodwill measure , proactive measures of the company. Partial Social Audit-Companies interested in a particular social area only will do so.example
a company with environment concern will do a environment audit. Another interested in energy-will do an energy audit post 1970s oil crises most companies are looking into this keenly.

Difficulties & Barriers

Scope cannot be defined quantitatively. Yardsticks of measure for measuring cost and accomplishment are to a problem All activities of an organisation cannot be classified as social or otherwise.. So to avoid if only tangible social activities are taken into consideration.the scope gets restrained.