ICAI had published an announcement regarding the need for subject matter experts in social auditing. As per the social activities of the companies, the selected human resource will be drafting the standard for social audit. These standards will form the part of certification course by the ICAI. The study material includes syllabus, e-books, question bank and e-lectures. The training module on social audit explains the different types and the importance of social audit.
Companies are active on social and ethical performance these days. The focus of the social audits is towards the non-financial operations, social objectives, and the view of stakeholders. Institutions and universities offer online courses on cyber security expert programs, social media marketing, quality management system program, information systems auditing, external auditor course, introduction to personal branding, trading strategies in emerging markets, and diploma in social media strategy. Social audit definition, principles of social audit and advantages of social audit enhance the social awareness to the companies. In this blog, the points are about the difference between social audit and financial audit and the importance of social audit.
Independent agencies, organizations and accounting firms engage in conducting social audits. The centre for good governance from Andhra Pradesh explains the social audit with two levels. The first level audit is with the organization, and the second level is with the society. Organizations have two types of social division to analyse. Internal and external audit relates to the social activities of the organisation. The audit conducted at the organizational level will fetch the data and compare the same with the society. The social benefits, societal expectations, social capital, community values, quality of programs are the intensive information needed for the second level of audit. The non-economic impact of the business will be understood only with social accounts, achievements and targets. Corporate social responsibility is the responsibility of the corporate to the society. From an accounting perspective, the different departments serve society with a mission. Social audits analyse the operations of different departments and set the targets for the departments to serve the nation.
Comptroller and Auditor General of India (CAG) is the authority to conduct an audit for the schemes designed by the government. CAG explains social audit at two levels viz., one is at the local body level, and the other is at the civic body level. The financial investors dealing with insurance companies and pension funds want to know about the investment plan of the deposited money. These companies are traded, and shareholders want to know the social and environmental performance of these Companies. Risk management and social issues have interconnection. This connection is the thought of many investors. They believe Companies play a vital role in the economic condition and social issues.
The difference between social audit and financial audit:
The following points enumerate the difference between social audit and financial audit.
• A financial audit is the impact of transactions and the ways to improve adherence to the laws. Social audit is the benefits or impacts faced by society because of the organisation.
• The financial audit covers non-financial matters that have an impact on the financial status of the entity. Social audit is the viewpoint of the outsiders and not the viewpoint of the owners or the managers.
• The impact of financial data is known through the financial audit. Social audit is to understand the impact of business on society. It helps to develop the social impact parameters.
• The growth of the company will be understood through a financial audit. A social audit helps to understand the gap between physical and financial resources for the development of the economy.
• Financial audits create awareness among the shareholders and stakeholders about the performance of the Company. Social audits will create awareness with the general public or beneficiaries about the services of the business.
• Financial audit improves the performance of the Company. Social audit help for understanding the importance of timely service to the public.
• In a financial audit, the team check the data for accuracy and fair presentation. In the social audit, the team check the data for understanding the connection between goals and the project.
• Financial is for the expectation of the shareholders. Social audit is for the expectation of the stakeholders.
• Financial audit brings out the efficiency of a project. The social audit focuses on the neglected issues of the society and areas where the services are needed.
The need for social audit:
State Government appoints auditors for development programs. Large corporations are attaching their social accounts to the annual reports. ITC, Aditya Birla Group, and Unilever are the companies that show their projects with social accountability. The stages of social audit are planning, fieldwork and reporting. The qualities of the social auditor are independence, knowledge, professional scepticism, inquisitiveness, adherence to standards, and understanding the social context. The standards of social audit are formulated by popular entities like the World Bank, United Nations, investment commission of India, and IECD. The objectives of the organization, social impact, stakeholder’s views, and data in the public domain form the primary and secondary data of the organization. The following points enumerate the need for social audits.
• In recent days there is demand for social audits as the media produce negative reports about the corporate bodies.
• Consumers think about the consumption pattern. Business awareness creates a question in the mind of the customer.
• Companies with profits need to attract stakeholders. Broadening the interest of society has an impact on the stakeholders of the organization.
ICAI is planning for a new certification course on social audit. The members are requested to submit their registration for the discussion and preparation of the study material. The notification was issued by ICAI on 16th January 2022. The certification courses prepare the students for the specialised areas. Government schemes are gauged by the auditors with the social audit. Social audit is the ideal method to enhance opportunities and timely service to the public.