What is Social Audit?

• A social audit is a process by which citizens review and monitor government actions on the ground and use the findings from the review to place accountability demands on the government through the mechanism of a public hearing.
• Social Audit is a tool through which government departments can plan, manage and measure non- financial activities and monitor both internal and external consequences of the departments’ social and commercial operations.

What is the Need of a Social Audit?

• Of late, Government is introducing lot of socio- economic developmental schemes and various autonomous agencies like Panchayati Raj Institutions (PRI), Urban Local Bodies (ULB) etc are being made responsible for implementation of these scheme. Some of the schemes involve direct transfer of funds to those agencies.
• Especially after 73rd and 74th amendments to the constitution and as per recommendations of XI Finance commission there have been more responsibilities for these agencies. Hence need of Social audits to address new situation. Need of the Social Audits can be explained as under: What What People Missing Link government Missing Link What need thinks they Government need Delivers How Social Audit is defined?
• The concept of Social Audit is more comprehensive, having a greater scope than that of traditional audit. In general, Social Audit refers to a process for measuring, understanding and improving the social performance of an activity of an organization. In particular, it aims to involve all stakeholders in the process. It measures social performance in order to achieve improvement as well as to report accurately on what has been done.
• Social Audit is an ongoing process, often done in 12- month cycles that result in the preparation of annual Social Audit document or report of an organization. How CAG Audit is different from Social Audit? CAG Audit is kind of a social audit, though it is Government process and focuses more on Government officials and Government auditors, whereas Social audits in broader in its scope and seeks to make the audit process more transparent and seeks to take audit findings to public and stakeholders, who are users of Government schemes, services and utilities.

What is difference between Social Audit, Operational Audit and Financial Audit?

• Social Audit is often misinterpreted as another form of audit to determine the accuracy of financial or statistical statements or reports and the fairness of the facts they present. The Report of the Task Group on Social Audit (RTGSA) published by Comptroller and Auditor General of India in the year 2010 has explained the difference as under “While Social Audit has a crucial role in implementation of social sector programmes and even in ensuring corporate social responsibility, its objectives cannot in standalone mode, sustain the complete audit objective of any of the three basic types of auditing (viz. financial, compliance and performance audits). All the objectives and processes adopted for social audit will fit into the audit objectives of one or more of the three fundamental types of audits.”
• Financial audit is geared towards verification of reliability and integrity of financial information. Similarly, operation audit looks at compliance with policies, plan procedures, laws, regulations, established objectives and efficient use of resources.
• On the contrary, Social Audit examines performance of a department/programme vis-à-vis its stated core values in the light of community values and the distribution of benefits among different social groups reached through good governance principles. Centre of Good Governance, Government of Andhra Pradesh has published a paper Social Audit: A Toolkit (CGCSAT). The difference between Financial Audit Operational Audit and Social Audit has been depicted in this paper as follows:

Who carries out Social Audits?

• According to the RTGSA, Social Audit initiatives fall into two categories. a) Social Audits carried out by Gram Sabhas / Panchayats or local level Vigilance and Monitoring Committees as stipulated by the Government in the guidelines of program b) Social Audits carried out by civil society groups. At the organizational level, it is internal as well as external.
• The internal component corresponds to social accounting and social book keeping, whereas the external component involves verification of social account by an independent Social Auditor or an audit panel. How is working of Social Audit? The following diagram illustrates the working of social audit : What are steps involved in Social Audit? According to CGCSAT, six steps have been defined for Social Audits.
• Like Financial Audit, it also has a one year cycle. The steps are also comparable to activities carried out for financial audit or Operational Audit. The six steps as described by CGCSAT are:

1. Preparatory Activities Understand key principles of Social Audit List core values of the department / program List down social objectives the department is working towards or programs it aims to contribute. Match activities with objectives List current practices and delivery systems Fix the responsibility for doing Social Audit in the department. Budget for Social Audit.

2. Defining Audit Boundaries and Identifying Stakeholders Elaborate key issues for Social Auditing based on social objectives Prepare a statement of purpose, objectives, key issues and activities for Social Auditing. Identify key stakeholders for consultations Forge consensus on audit boundaries; identify stakeholders and formalise commitments.

3. Social Accounting and Book-keeping Select performance indicators for social accounting. Identify which existing records can be used, Identify what additional data to be collected, who would collect this data, when and how. Identify when stakeholders would be consulted and for what. Prepare a social accounting plan and timeline. Plan for monitoring social accounting activities

4. Preparing and Using Social Accounts : Prepare social accounts using existing information, data collected and views of stakeholders. Identify key issues for action Take stock of objectives, activities and core values Set targets for future.

5. Social Audit and Dissemination :

• Presenting social accounts to Social Auditor
• Social Auditor verifies data used, assess the interpretation and comment on the quality of social accounting and reporting.
• Social Accounts revised in accordance with Social Auditor’s recommendations
• Social Auditor has to collect information from the stakeholders regarding programme implementation and benefits accrued to them. Disseminate Social Auditor’s consolidated report to the decision-making committee that includes stakeholders. Disseminate report to civil society.
• Begin next cycle of social accounting.

6. Feedback and Institutionalization of Social Audit Feedback for fine-tuning policy, legislation, administrative functioning and programming towards social objectives. Follow-up action Reviewing support to civil society for its participationInstitutionalization of the process

What are strengths and limitations of Social Audit?

• The Task group of CAG of India in its Report on Social Audit described social audit as an opportunity to fill in a long felt gap in the audit process and techniques used by the Department. In addition, it is also understood to strengthen the democratic process in governance and grievance redressal.
• It also provides the most important link between oral and documentary evidence and offers a means of securing accountability of the managers of public sector programs and renders the monitoring and appraisal mechanism multi perspective and transparent.
• However, The Task Group felt that the scope of social audits is intensive but highly localized and covers only certain selected aspects out of a wide range of audit concerns in the financial, compliance and performance audits with the monitoring being informal and unprocessed.

Who are stakeholders and what is their role?

• According to CGCSAT, Stakeholders are those whose interests are affected by the issue or those whose activities strongly affect the issue; those who possess information, resources and expertise needed for strategy formulation and implementation and those who control relevant implementation, instruments. Stakeholders are also extension of the department as they influence, execute or facilitate department functioning. Their participation in Social Audit would serve following purposes:
• Assessing the benefits as perceived by the beneficiaries;
• Giving the department an opportunity to seek suggestions for optimizing efforts;
• Contributing towards initiating ownership among all stakeholders. The stakeholders of any organization can be identified from sectors like both the implementation sectors and the users/beneficiaries of the programme/organization who are directly or indirectly involved in the programme or the organization.
• For example, if the programme selected is ‘women empowerment through formation of self-help groups and micro credit societies’, to enlist stakeholders and collect information on how these processes have contributed to empowerment, the stakeholders should include not only those who are current members of micro credit societies or self-help-groups, but also involve those who have benefited from the process to truly assess the achievement of the women empowerment objective.
• Stakeholder’s involvement needs to be integrated into the Social Audit process during the planning stage, and indicators on which information will be sought from the stakeholders need to be detailed out.

Can we have examples of Social Audit?

• Social Audit in Jharnipalli Panchayat, Agaipur block, Bolangir district, Orissa In October 2001, the gram sabha members of Jharnipalli Panchayat conducted a one-day social audit of development works carried out in the panchayat over the preceding three years. This audit took place with the active participation of many individuals and agencies, including block and district administration officials, MKSS, NCPRI and Action Aid India. The audit found that:
• Although the works were not carried out, the sanctioned funds were shown in the records as having been utilized.
• Contractors were banned under government guidelines, but 31 contractors were working on the project. Muster rolls were not maintained by the contractors.
• Instead of the target of 100 man-days of employment for families below the poverty line (BPL), only 12 half days of work were generated.
• The BPL families could not buy subsidized food from PDS shops as partial wages because they did not possess the needed ration cards.

Conclusion

Social audit is need of the hour. Broader in scope and little away from financial and operations audits, this is quite useful tool to provide assurance to the society and stakeholders. Despite its limitations, experience in Social Audits across the globe is encouraging. To understand the gap between what people need and what they get through social program, such check and feedback is quite useful and Andhra Pradesh Government’s initiative is landmark in the direction.