Every business player must know the types of social audit to face tough, neck-to-neck competition! In today’s world, business units are not only connected to internal stakeholders but are also connected to the external public. There are many companies that directly or indirectly impact the local community or environment at large. In order to regulate and monitor such irregular activities, the social audit can be very helpful. In my today’s article, I have listed down common types of social audit that you must know. Features, importance, advantages, and disadvantages of social audit ppt are also outlined below. Let’s explore the types of social audit more in detail.
List Of Types Of Social Audit
Various types of social audits are as follows.
- Social Process Audit
- Financial Statements Format Social Audit
- Macro-Micro Social Indicator Audit
- Social Performance Audit
- Partial Social Audit
- Comprehensive Audit
Each of the above-listed types of social audit has certain objectives. You can keep on reading further to know more about them.
6 Different Types Of Social Audit
Below, I have explained six social audit types in detail.
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Social Process Audit
The social process audit is the first type of social audit which is mostly used to examine all the activities of the organization. It tries to measure the effectiveness of their activities including what and how they are doing their work.
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Financial Statements Format Social Audit
Now, a financial statement social audit contains conventional financial information with information regarding social activities. In the balance sheet, a list of social assets is present on one side. While the other side contains social commitments, liabilities, and equity.
You can keep on reading to learn the other types of social audit processes.
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Macro-Micro Social Indicator Audit
In this type, the company’s performance in terms of micro-social measures against macro social measures is evaluated. The macro social factors include the social goals expected by society in terms of health, safety, education, and more. While the micro-social measures include the performance of the company in those areas measured by macro-social indicators.
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Comprehensive Audit
The comprehensive audit measures, verify and evaluate the total performance of the organization. It majorly focuses on management systems instead of actions or events happening in the systems.
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Social Performance Audit
A social performance audit involves several interests groups such as church groups, universities, mutual funds. Here, consumer activists regularly evaluate and rank socially responsive companies on the basis of their performance.
Let us now check out the partial social audit.
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Partial Social Audit
During the partial social audit, the company measures a specific aspect of its social performance. It is mostly used to evaluate social efforts in the following areas.
- Environmental Audit: Here, an internal group of people prepares a report about the environmental damages done by the company. This report is again re-examined by an external auditor to check if the release of toxic waste or pollution has been complied with or not.
- Energy Audit: This audit is used to determine how energy is obtained, consumed, and preserved by the company.
- Human Resource Accounting (HRA): Here, the investment in acquiring, training, and developing HRA is accounted for as an asset.
Continue to read to know the other important aspects of social audit in India.
Features Of Social Audit
The different features of social audit are as follows.
- Transparency: This whole procedure is completely transparent and gives the people full access to all relevant information.
- Participation: All the representatives and affected persons can participate in the process of final decision-making and validation.
- Accountability: If found guilty, the elected representatives and government members take relevant actions or inactions.
- Multi-directional: Stakeholders can share their feedback on multiple aspects.
- Comparative: It allows the organization to compare its performance with other organizations doing similar work.
Objectives Of Social Audit
The objectives of social audit are as follows.
- Social auditing helps to analyze the impact of the company’s operations on the local community and environment.
- Auditors can determine and minimize the economic and social gaps.
- It helps to assess the conditions in which the employees are asked to work.
- This process also determines whether workers are given fair wages or not.
- With the help of social auditing, you can put a stop to all the illegal activities happening with the organizations.
- You can formulate and activate initiatives for the development of local communities.
- It helps to implement effective measures for the extension and development of the company’s business.
- The shareholders of the company can have full information about the financial status of the company with social auditing.
- It tracks the prices of goods produced for the consumers.
- You can also determine whether the assets of the company are being used properly or not.
Factors Evaluated By Social Audits
Social audits evaluate many different factors within an organization. Some of the terms that social audit examine are as follows.
- Records of charitable contributions
- Volunteer events
- Transparency within the organization
- Work environment
- Salaries and wages of the workforce
- Community initiatives
- Workplace diversity
- Accounting transparency
- Financial transparency
Importance Of Social Audit In India
Conducting a social audit is very important for every organization. It is important for an organization so that they don’t exploit any resources to make a profit. However, it has become an essential element to minimize the antisocial actions of organizations. In addition, it also helps in creating a positive image of the company.
Advantages And Disadvantages Of Social Audit
Following are the advantages and disadvantages of social audit.
Advantages
- It encourages local democracy.
- Helps in identifying challenges faced by certain groups.
- They can be used to support the human resources and social capital of the organization.
- It promotes collective decision-making and sharing responsibilities.
- It assists the local community in planning.
Disadvantages
- It is very complicated and time-consuming.
- They do not offer any sort of transparent methodology.
- Their practical utility is minimal.
- It tends to be subjective.
Social Audit Examples
By now you have studied types of social audit in detail. Now, have a look at this example, so that you will understand its purpose.
Example
Tupperware is a company that purchases and sells household items. This company claims that they make donations by offering groceries to needy families. In such cases, auditors can check their charity records to find out whether this task was performed or not. If they are doing a clean business without harming the environment, their reports will be generated. Auditors can hand over these reports to the investors who wish to invest in this company.
How To Conduct A Social Audit?
To conduct a social audit, you can use the following steps.
- Step 1: Analyze the various departments and activities happening in the organization. This will help you to decide what should be audited and what should not be audited during the auditing process.
- Step 2: Now, decide who should be included in the process of auditing. Try to select those people who are unbiased and do not have any personal motives. Also, these people should be considered with the society and environment.
- Step 3: Determine the key issues and prepare a report. Here, mention all the issues tackled during the whole procedure.
- Step 4: Once the report is created, it must be reviewed and cross-verified by visiting the workplace. Eliminate errors if found or else your auditing report won’t be accurate.
- Step 5: Hand over the final report to the company’s management or shareholders.
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FAQ
What Are 3 Types Of Audit?
The three types of audit are as follows.
- External audits
- Internal audits
- Internal Revenue Service (IRS) audits
What Is Social Audit With Example?
A social audit is a process of how well the company is achieving its goals for social responsibilities.
Example: Tupperware is a company that purchases and sells household items. This company claims that they make donations by offering groceries to needy families. In such cases, auditors can check their charity records to find out whether this task was performed or not. If they are doing a clean business without harming the environment, their reports will be generated. Auditors can hand over these reports to the investors who wish to invest in this company.
What’s In A Social Audit?
A social audit is a process of how well the company is achieving its goals for social responsibilities.
What Are The Five Steps In A Social Audit?
The five steps in a social audit are as follows.
- Step 1: Analyze the various departments and activities happening in the organization. This will help you to decide what should be audited and what should not be audited during the auditing process.
- Step 2: Now, decide who should be included in the process of auditing. Try to select those people who are unbiased and do not have any personal motives. Also, these people should be considered with the society and environment.
- Step 3: Determine the key issues and prepare a report. Here, mention all the issues tackled during the whole procedure.
- Step 4: Once the report is created, it must be reviewed and cross-verified by visiting the workplace. Eliminate errors if found or else your auditing report won’t be accurate.
- Step 5: Hand over the final report to the company’s management or shareholders.
Who Is Father Of Social Audit?
Kreps Theodore J is regarded as the founding father of social audit concept.
Conclusion
In my above article, I have discussed types of social audits briefly. Social auditing is a process where how well the company is achieving its goals for social responsibilities is determined. There is a total of six social audits by which you can decide what should be audited during the auditing process. It includes Social Process, Financial Statements Format Social Audit, Macro-Micro Social Indicator Audit, Social Performance Audit, Partial Social Audit, and Comprehensive Audit. Social auditing has become an essential element to minimize the antisocial actions of organizations. By learning all the types of social audit, you can create a positive image of your company!
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What are the types of social audit?