Social auditing involves regularly assessing an organization's social and environmental performance based on indicators agreed upon with stakeholders. It aims to evaluate impact on stakeholders, determine how well the organization lives up to its values, and improve strategic planning and accountability. The process involves defining objectives, identifying stakeholders, collecting and verifying data, analyzing and interpreting results, and disclosing findings publicly. Social audits empower communities and increase transparency and accountability in development programs.

1. SOCIAL AUDITING OF
NATURAL RESOURCE
MANAGEMENT FOR
DEVELOPMENT
PROJECTS
"Role of Community
Institutions and Civil
Societies in Combating
Center for Climate Change and
Disasters and Climate Environmental Advisory (CCCEA)
Change“ DR. MCR HRD Institute Campus,
Hyderabad
10-07-2012 to 12-07-2012
Dr. N. Sai Bhaskar Reddy 10th July 2012
saibhaskarnakka@gmail.com

2. Social auditing
 Social auditing is a process that enables an
organisation to assess and demonstrate its
social, economic, and environmental benefits
and limitations. It is a way of measuring the
extent to which an organisation lives up to the
shared values and objectives it has committed
itself to.

3. Social Audit
ensure transparency and
accountability in the system of
Governance to promote people‟s participation.
It is not a fault finding tool but a system to understand,
measure and assess the implementation of the schemes
and plans to improve the effectiveness of the local
governance.
It has been used as a process to empower people to
question the systems, processes and authorities in order
to assert their rights.
This course will give an outline of the different approaches
to social accountability and will also give relevance to
the term „accountability from below‟ in the present

4. Historical Roots
1960-70‟s – a fresh wave of interest in social
and ethical accounting, auditing and reporting
(SEAAR).
Concept of „stakeholders‟ emerges
While most of the early theorizing about
Social Auditing came from the US, most of the
practical experimentation took place in
Europe.

5. Basis of social audit
The main reason for the push for social audit is
the huge disconnect between what the people
need, what the government thinks it
needs, and what is actually done. This lack of
communication is represented by the following
diagram in figure . Figure 2 explains the
situation with social audit.

6. It is a process and not an event
 Thus, Social Audit is nothing but
understanding, measuring, reporting, and most
importantly improving the efficiency and
effectiveness of the local governance.

7. Objectives of social audit
1. Assessing the physical
2. Creating awareness 3. Increasing efficacy
and financial gaps
among beneficiaries and and effectiveness of local
between needs and
providers of local social development
resources available for
and productive services. programmes.
local development.
4. Scrutiny of various
5. Estimation of the
policy decisions, keeping
opportunity cost for
in view stakeholder
stakeholders of not
interests and
getting timely access to
priorities, particularly of
public services.
rural poor.

8. Advantages of social audit
Trains the
Encourages
community on Encourages local
community
participatory local democracy.
participation.
planning.
Promotes collective
Benefits Develops human
decision making
disadvantaged resources and
and sharing
groups. social capital
responsibilities.

9.  Social auditing provides an assessment of the
impact of an organisation's non-financial
objectives through systematically and regularly
monitoring its performance and the views of its
stakeholders.

10.  Social auditing requires the involvement of
stakeholders. This may include employees,
clients, volunteers, funders, contractors,
suppliers and local residents interested in the
organisation.
 Stakeholders are defined as those persons or
organisations who have an interest in, or who
have invested resources in, the organisation.

11.  Social audits are generated by the
organisation themselves and those directly
involved. A person or panel of people external
to the organisation undertakes verification of
the social audit's accuracy and objectivity.

12. What does Social Auditing
Involve?
 The social auditing process requires an
intermittent but clear time commitment from a
key person within the organisation. This social
auditor liases with others in the organisation
and designs, co-ordinates, analyses and
documents the information collected during the
process.

13.  Social auditing information is collected through
research methods that include social
bookkeeping, surveys and case studies. The
objectives of the organisation are the starting
point from which indicators of impact are
determined, stakeholders identified and
research tools designed in detail.

14.  The collection of information is an on-going
process, often done in 12-month cycles and
resulting in the organisation establishing social
bookkeeping and the preparation of an annual
social audit document/report.

15.  MNREGA‟s mandated use of social audits by the
village assembly (gram sabha) goes beyond the
right to information and serves to ensure
accountability and corrective
measures. Partnerships between government and
civil society, the training of local resource persons,
social mobilisations around the social audit forum
and gram sabhas and the use of community-
based organisations are just some ways in which
social audits are sought to be made more
effective
- Amita Sharma, Joint Secretary, Ministry of Rural
Development

16. Abstract of social auditing
Decisions taken report
Social Audit ppt

20.  Social audits like the hugely successful model
in Andhra Pradesh, which has set up an
independent and autonomous Society for
Social Audit, Accountability and Transparency
(SSAAT) to help ensure proper working of the
MNREGA, have excited people in various
countries, especially Africa.

21. What is Social Auditing ?
SA is a management tool and accountability
mechanism which can enhance an organization‟s
capacity to:
 Evaluate their impact on stakeholders
 Determine how well they are living up to the values
they espouse.
 Improve their strategic planning process by
identifying potential problems before they come
up; and
 Increase their accountability to the groups they
serve and depend on.

22. 6 Elements of Social Audit
 Multi-perspective
 Comparative
 Comprehensive
 Regular
 Verification
 Disclosure

23. 8 Steps in conducting SA
 Assemble organization and secure agreement and
commitment.
 Define and prioritize the organization‟s objectives and
establish the action it intends to perform to meet them.
 Identify the organization‟s “stakeholders”
 Agree upon indicators, information, benchmarks and
targets.
 Data gathering systems put in place.
 Collating, analyzing and interpreting results
 External verification process
 Disclosure and act on results

24. Why Social Audits ?
 To permit the enterprise to effectively monitor
performance.
 To permit the “stakeholders” in the enterprise affect its
behaviour.
 To allow enterprise to report on its achievements
based on verified evidence rather than on anecdote
and unsubstantiated claims.
 Permits those who invest in the enterprise and its
stakeholders to judge if it is achieving the values which
it set out to achieve.
- Pearce (1996)

25. 6 Reasons to conduct a SA
 Know what is happening
 Understand what people think and want
 Tell people what you are achieving
 Strengthen loyalty / commitment
 Enhance decision-making
 Improve overall performance
- Zadek (1998)

26. Potential Issues
SA has excellent promise as a management tool but
some potential problems remain:
 Reporting organization can deliberately limit audit scope in order to avoid
controversies.
 Process can be managed internally to the disadvantage of some external
stakeholders.
 Some significant stakeholders may be omitted.
 Organization may use arbitrary or inappropriate indicators to evaluate
outcomes.
 The standards, independence and honesty of the auditor may be open to
question.
Therefore the need for Generally Accepted Assurance Standard (AA1000)

27. Social Audits
Social auditing is “a process of measuring and
reporting, in order to understand and ultimately
improve, an organization‟s social performance”.
Mission Related
Benefits
Managerial Issues Accountability Issues

28.  India being a welfare state, several programs
and policies are implemented for the benefit of
people. Politicians and executives are usually
the ones who control and implement these
policies. Some policies are common to all and
some are special that are meant to benefit the
weaker sections of the society. To implement
all such policies, funds are drawn from the
state exchequer. The social control over
withdrawal and usage of this fund is called
Social Audit.

30.  Environmental accounting, which is a subset of
social accounting, focuses on the cost structure
and environmental performance of a company. It
principally describes the preparation,
presentation, and communication of information
related to an organisation‟s interaction with
the natural environment. Although environmental
accounting is most commonly undertaken as
voluntary self-reporting by companies, third-party
reports by government agencies, NGOs and other
bodies posit to pressure for environmental
accountability.

31.  Accounting for impacts on the environment may
occur within a company‟s financial
statements, relating to liabilities, commitments
and contingencies for the remediation of
contaminated lands or other financial concerns
arising from pollution. Such reporting essentially
expresses financial issues arising from
environmental legislation. More
typically, environmental accounting describes the
reporting of quantitative and detailed
environmental data within the non-financial
sections of the annual report or in separate
(including online) environmental reports. Such
reports may account for pollution
emissions, resources used, or wildlife
habitat damaged or re-established.

32.  In their reports, large companies commonly place primary
emphasis on eco-efficiency, referring to the reduction of
resource and energy use and waste production per unit of
product or service. A complete picture which accounts for all
inputs, outputs and wastes of the organisation, must not
necessarily emerge. Whilst companies can often demonstrate
great success in eco-efficiency, their ecological footprint, that
is an estimate of total environmental impact, may move
independently following changes in output.
 Legislation for compulsory environmental reporting exists in
some form e.g.
in Denmark, Netherlands, Australia and Korea. The United
Nations has been highly involved in the adoption of
environmental accounting practices, most notably in the
United Nations Division for Sustainable Development
publication Environmental Management Accounting
Procedures and Principles (2002)

33. Appropriate institutional level
for social audit
 The most appropriate institutional level for social audit
is the Gram Sabha, which has been given 'watchdog'
powers and responsibilities by the Panchayati
Raj Acts in most States to supervise and monitor the
functioning of panchayat elected representatives and
government functionaries, and examine the annual
statement of accounts and audit reports. These are
implied powers indirectly empowering Gram
Sabhas to carry out social audits in addition to other
functions. Members of the Gram Sabha and the
village panchayat, intermediatepanchayat and district
panchayat through their representatives, can raise
issues of social concern and public interest and
demand an explanation

34. Right to information for Gram
Sabha members
 Some States have already passed Right to Information
Acts. Notwithstanding some weaknesses, the Acts have
opened the way for transparency in administration from
the State to the panchayat level.
 The Right to Information Acts specify the modalities for
obtaining information and provide penalties or failing to
furnish or supplying false information. The Acts facilitate
social legislation such as on minimum wages and
gender rights and, more importantly, pave the way for
public debate on government development projects.
 However, none of the Acts have defined the right to
information to include inspection of works and
documents, and the taking of notes and extracts. This is
needed to make the social audit by the Gram
Sabha more effective.

35. Empowerment of people
 Social audit is most effective when the actual
beneficiaries of an activity are involved in
it. However, people can only get involved in
the process when they are given appropriate
authority and rights. To this end, the 73rd
amendment of the constitution has empowered
the Gram Sabha to conduct social audit. This
is relevant only in the villages. In the cities, the
Right to Information Act empowers the people
to inspect public records.

36. Proper Documentation
 Every thing right from the requirement
gathering to planning to implementation must
be properly documented. Some of the
documents that should be made mandatory
are:
Applications, tenders, and proposals
 Financial statements, income - expense
statements.
 Registers of workers
 Inspection reports.

37. Accessibility of Documents
Merely generating documents is useless if they
are not easily accessible. In this information
age, all the documents must be put on line.

38. Punitive Action
 The final and most important provision, about
which nothing is being done yet, is to have
punitive actions for non-conformance of the
process of social audit. Unless there is legal
punishment, there will be no incentive for the
people in authority to implement the processes
in a fair manner.

39. Generic Steps for Social
Audit
 Clarity of purpose and goal of the local elected body.
 Identify stakeholders with a focus on their specific roles and duties. Social
auditing aims to ensure a say for all stakeholders. It is particularly important
that marginalized social groups, which are normally excluded, have a say on
local development issues and activities and have their views on the actual
performance of local elected bodies.
 Definition of performance indicators which must be understood and accepted
by all. Indicator data must be collected by stakeholders on a regular basis.
 Regular meetings to review and discuss data/information on performance
indicators.
 Follow-up of social audit meeting with the panchayat body reviewing
stakeholders‟ actions, activities and viewpoints, making commitments on
changes and agreeing on future action as recommended by the
stakeholders.
 Establishment of a group of trusted local people including elderly people,
teachers and others who are committed and independent, to be involved in
the verification and to judge if the decisions based upon social audit have
been implemented.
 The findings of the social audit should be shared with all local stakeholders.

40. Hindrances in Social Audit
 Mindset of people. Even after 50 yrs of independence
people do not understand the concept of govt. for the
people, of the people, and by the people. Most of the
people still think themselves as being ruled by the
politicians, while politicians think that they are the rulers.
Due to this reason, common people do not get involved
in the developmental activities.
 Lack of any legal proceedings for not following social
audit principles. Unless there is a stringent penalty on
authorities for not implementing social audit, they will not
give up control because it reduces their kickbacks and
authority.
 Lack of education among the common masses. Since

41. Benefits of Social Audit
 Involvement of people in developmental
activities ensures that money is spent where is
it actually needed.
 Reduction of wastages.
 Reduction in corruption.
 Awareness among people.
 Promotes integrity and a sense of community
among people.
 Improves the standard of governance.

42.  Social Audit and Action taken report NREGA
 http://nrega.nic.in/circular/so_audit_Ajmer.pdf

43. References
 http://hanumant.com/SocialAudit.html
 http://www.fao.org/docrep/006/ad346e/ad346e
09.htm
 http://www.caledonia.org.uk/socialland/social.h
tm
 http://www.indianexpress.com/news/indias-
social-audit-of-schemes-draws-world-
attention/705883/0