Importance Of Social Audit

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It refers to the evaluation or assessment of a company’s performance against planned goals in the area of social responsibility.
Every society accepts business to share the fruits of progress and growth. A healthy business must and should do something for the benefit of the society. Therefore, every business must accept obligation to be socially responsible and to work for the larger benefit of the community. A social audit is mainly done to improve its cohesiveness or improve its image within the society. For example, if a factory is believed to have a negative impact, the company may have a social audit conducted to identify actions that actually benefit the society. It is a systematic assessment of a company’s activities
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Inventory approach
3. Outlay approach
4. Programme management approach

COST BENEFIT APPROACH:- Under this approach, the information obtained about the costs incurred in each social activity is presented in the form of a social balance sheet. A company’s social performance is quantitatively measured in terms of such activities as producing goods and services that people need, creating jobs for the society, paying fair wages, ensuring worker safety, making efforts to control pollution. Thus this gives some indication of the economic contribution the organization is making to the society. Although it is not easy to measure the social performance in accurate financial terms, companies generally opt for cost benefit analysis to find where they stand in respect of socially relevant and meaningful activities in a cost effective manner.

INVENTORY APPROACH:- It mainly involves preparation of a list of social activities carried out by the company.
Social programmers for a specific period of time have been designed by the management and the list is supplied to the general public.
The main weakness of this approach is that it’s just a list and generally no details about costs or successes.

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This type of audit measures the effectiveness of the activities taken up by organizations to meet social objectives .It involves 4 steps

• Finding the circumstances leading to the social audit programme
• Listing the goals of the social audit programme
• Stating how the organization is going to meet such goals
• Evaluating what is actually done as against what has been planned


I n such audits, the company undertakes to measure specific aspects of its social performance because it considers that aspect to be very important.
Such aspects may relate to:
• Environment audit
• Human resource audit etc


Under this type of audit it measures, verifies and evaluates the total performance of the organization including its social responsibility activities. It mainly focuses on the management systems, the quality of processes and the information on which organizational decisions are taken, rather than on the actions or events.


• It is difficult to determine the precise scope of social audit. It is basically difficult to decide which activities are to be treated ‘social’ and which are
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