Basic Primer on Social Audit & Social Auditors

Table of Contents

1. Evolution of Social Audit
2. Principles of Auditing
3. Code of Conduct for Social Auditors
4. Certification Requirements for Social Auditors
5. Competencies and Skills Required for Social Auditors
6. Empanelment of Social Auditors with SROs
7. Scope of Work for Social Auditors
8. Social Audit Process
9. Accounting System and Internal Control
10. Social Audit Report
11. Challenges Related to Social Auditing

Check out NISM's Social Auditors which is joint publication by NISM & ICAI on various aspects of Social Stock Exchange and Social Auditing. It covers a wide range of topics such as Social Sector Organisations, Enterprises and Interventions, Social Audit, Social Audit Techniques, Social Audit Standards, and Social Impact Assessment and Reporting.

1. Evolution of Social Audit

The concept of the social responsibility of enterprises has progressed rapidly in the last few decades. An organization’s performance in relation to the society in which it operates and its impact on the environment has become a critical part of measuring its overall performance and its ability to continue operating effectively.

In India, the Gandhian philosophy of trusteeship captures the business responsibility towards society. The philosophy of giving back to the society has been an integral part of the culture, which has also been imbibed in traditional Indian businesses since time immemorial.

Responsible Business Conduct is a globally recognized concept founded on the idea that businesses can perform better when engaged in re-vitalizing the society from which they extract resources for production. The National Guidelines on Responsible Business Conduct, 2018 (NGRBC), encourage businesses to contribute towards broader development goals while seeking to be economically viable.

Development of sustainability reporting standards like Global Reporting Initiative (GRI) ISO 26000: Guidance on Social Responsibility, Principles of Responsible Investing (PRI), Sustainability Accounting Standards Board (SASB) have contributed significantly to our understanding of social responsibility.

India is a signatory of global initiatives like The Sustainable Development Goals (SDGs), adopted by the United Nations in 2015. These global initiatives address universal social development issues and call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.

With sharp focus on the social impact of business, standards, frameworks and guidance on social auditing have become essential requirements. Monitoring, measuring and reporting the social performance of enterprises have emerged as a regulatory requirement. Based on the guidance in NGRBC, Business Responsibility & Sustainability Reporting is a compliance requirement for the top 1000 companies in India. The fact that NGRBC is dovetailed with the United Nations Guiding Principles on Business & Human Rights (UNGP) makes the BRSR disclosures globally relevant.

In India, the concept of monitoring and evaluation of social development activity and performance audit of flagship social development programs has been active for national social development initiatives like National Rural Health Mission, Sarva Shiksha Abhiyana, Pradhan Mantri Gram Sadak Yojana etc.

Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) was launched in 2006. It is pegged as the most ambitious anti-poverty program, which guarantees 100 days of unskilled manual labour for adult members in rural households. The Gram Sabha is expected to monitor the NREGA and conduct social audits of all NREGA projects implemented in the Gram Panchayat.

With the introduction of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2020 – social impact assessment came into the purview of compliance

In the said Rules, in rule 8, after sub-rule (2), following sub-rule is inserted, namely: –

“(3) A company having the obligation of spending average CSR amount of Rs. 5 Crore or more in the three immediately preceding financial years in pursuance of sub-section (5) of Section 135 of the Act, shall undertake impact assessment for their CSR projects or programmes, and shall disclose details of the same in its Annual Report on CSR.”

With the forthcoming launch of the social stock exchange – social audit has matured with well-defined deliverables. For the first time, the development of Social Audit Standards (SAS) by ICAI has defined the required social audit procedures for 16 thematic areas of social development.

1.1 Definitions of Social Audit

There are many definitions of social audits which are emerging. Some of the more acceptable ones are listed below.

Social Audit is the process of reviewing and verifying the Social Accounts at the end of each social accounting period. The term ‘social audit’ is sometimes used generically for the concept and for the whole process.¹

A Social audit is a formal review of a company’s endeavours, procedures, and code of conduct regarding social responsibility and the company’s impact on society. A social audit assesses how well the company achieves its goals or social responsibility benchmarks.²

The NREGA defines social audit as reviewing official records and determining whether state-reported expenditures reflect the actual monies spent on the ground.³

“Social Auditing is a process that enables an organization to assess and demonstrate its social, economic, and environmental benefits and limitations. It measures the extent to which an organization lives up to the shared values and objectives it has committed. Social auditing assesses the impact of an organization’s non-financial objectives through systematically and regularly monitoring its performance and the views of its stakeholders.”⁴

“Social Audit is an independent evaluation of the performance of an organisation as it relates to the attainment of its social goals. It is an instrument of social accountability of an organisation. In other words, Social Audit may be defined as an in-depth scrutiny and analysis of the working of any public utility vis-à-vis its social relevance.”⁵

The Social Audit process is intended as a means for social engagement, transparency and information communication, leading to greater accountability of decision‐makers, representatives, managers and officials. The underlying ideas are directly linked to concepts of democracy and participation.⁶

Social Audit Network UK defines Social Auditor as

“A person who chairs the social audit panel and manages the audit process at the end of each cycle, including the examination of the data and the sample checking to the source (the audit trail), and issuing the Social Audit Statement.”

SEBI defines a social auditor as an individual registered with a self-regulatory organization (SRO) under the purview of the Institute of Chartered Accounts of India (ICAI). To be qualified as a social auditor, an individual must qualify for a certification program conducted by the National Institute of Securities Market (NISM) and hold a valid certificate.

1.2 Difference between Social Audit and Financial Audit

The distinguishing features between the social audit, and financial Audit is given below:

1.2.1 Features of Financial Audit

• • Involves Audit of financial statements and transactions.
  • Covers non-financial matters limited only to those aspects that provide additional information to stakeholders of the business who are mainly interested in the entity’s financial status.
  • Financial Audits are done keeping in mind the objective of issuing an opinion on the state of financial affairs.
  • Deals mainly with the study of financial data.

1.2.2 Features of Social Audit

• • Looks at the impact caused on the society by the organization.
  • Takes an “outside in” approach of looking at organization, dealing more with how the non-financial stakeholders view the business rather than how the managers/owners of the organization plan it to be.
  • Deals with the study of social impact parameters, most of which can be gathered from outside the organisation which is being audited.
  • Involves the stakeholders of the enterprise and adopts a triple bottom line approach.

1.2.3 Difference between Financial and Social Auditors

2. Principles of Auditing⁷

Auditing principles help to make the audit an effective and reliable tool, by providing information on which an organization can act in order to improve its performance.

Adherence to these principles is a prerequisite for providing audit conclusions that are relevant and sufficient, and for enabling auditors, working independently from one another, to reach similar conclusions in similar circumstances.

2.1 Seven Principles of Auditing

2.1.1 Integrity

The foundation of professionalism.

Auditors and the individual(s) managing an audit programme should:

• • perform their work ethically, with honesty and responsibility;
  • only undertake audit activities if competent to do so;
  • perform their work in an impartial manner, i.e. remain fair and unbiased in all their dealings;
  • be sensitive to any influences that may be exerted on their judgment while carrying out an audit.

2.1.2 Fair presentation

The obligation to report truthfully and accurately

Audit findings, audit conclusions and audit reports should reflect truthfully and accurately the audit activities. Significant obstacles encountered during the audit and unresolved diverging opinions between the audit team and the auditee should be reported. The communication should be truthful, accurate, objective, timely, clear and complete.

2.1.3 Due professional care

The application of diligence and judgment in auditing

Auditors should exercise due care in accordance with the importance of the task they perform and the confidence placed in them by the audit client and other interested parties. An important factor in carrying out their work with due professional care is having the ability to make reasoned judgments in all audit situations.

2.1.4 Confidentiality

Security of information

Auditors should exercise discretion in the use and protection of information acquired in the course of their duties. Audit information should not be used inappropriately for personal gain by the auditor or the audit client, or in a manner detrimental to the legitimate interests of the auditee. This concept includes the proper handling of sensitive or confidential information.

2.1.5 Independence

The basis for the impartiality of the audit and objectivity of the audit conclusions.

Auditors should be independent of the activity being audited wherever practicable, and should in all cases act in a manner that is free from bias and conflict of interest. For internal audits, auditors should be independent from the function being audited if practicable. Auditors should maintain objectivity throughout the audit process to ensure that the audit findings and conclusions are based only on the audit evidence.

For small organizations, it may not be possible for internal auditors to be fully independent of the activity being audited, but every effort should be made to remove bias and encourage objectivity.

2.1.6 Evidence-based approach

The rational method for reaching reliable and reproducible audit conclusions in a systematic audit process

Audit evidence should be verifiable. It should in general be based on samples of the information available, since an audit is conducted during a finite period of time and with finite resources. An appropriate use of sampling should be applied, since this is closely related to the confidence that can be placed in the audit conclusions.

2.1.7 Risk-based approach

An audit approach that considers risks and opportunities

The risk-based approach should substantively influence the planning, conducting and reporting of audits in order to ensure that audits are focused on matters that are significant for the audit client, and for achieving the audit programme objective.

3. Code of Conduct for Social Auditors

ICAI has developed a Code of conduct for Social Auditors (SAs) based on international and Indian practices. The objective of the code of conduct is to guide the SAs in discharging their duties responsibly and diligently. The CoC is in addition to the regulatory requirements prescribed by the SSE or any other regulatory bodies having jurisdiction over them.

The important principles and values for social auditing are listed below:

1. 1. Integrity: Implies that the SA is right, truthful, fair dealing and honest. It is a core value for the Social Auditor. SA should not knowingly be associated with reports, returns, communications or other information where he believes that the information contains a materially false or misleading statement. High ethical standards are expected out of a SA.
   2. Objectivity: Implies that a SA will not compromise judgment because of bias, conflict of interest or under any person’s or institutional influence. Loss of objectivity can be detrimental to the conclusions of the social Audit.
   3. Confidentiality: Implies that information will not be disclosed to a third party during or after the closure of a professional relationship. Access to or any information gathered during the Social Audit is to be considered as Confidential information. Apart from certain circumstances like disclosures under law utmost confidentiality is expected of a Social auditor.
   4. Professional behaviour: SA is expected to behave lawfully taking care so as not to discredit the profession. It is expected that a SA has a pragmatic disposition having a broad perspective and able to understand complex operations.
   5. Professional Competence and Due care: Implies that a SA attains, maintains and updates professional competence in related technical, professional and business domains.
   6. Independence: Implies independence in mind (not being influenced in the professional judgment) and appearance (the avoidance of facts and circumstances that are so significant that a reasonable and informed third party would be likely to conclude that the Auditor’s integrity, objectivity or professional skepticism has been compromised.)

4. Certification Requirements for Social Auditors

Financial auditors can qualify to be social auditors after they have successfully completed a course at the National Institute of Securities Markets (NISM) and received a certificate of completion.

Other individuals desirous of being Social auditors need to have at least 1 eligibility criterion listed below:

1. 1. Post-graduates from universities recognized by the University Grants Commission (UGC) with a minimum of 3 years of experience in the development sector, or
   2. Graduates from universities recognized by the UGC with a minimum of 6 years of experience in the development sector, or
   3. Cost and management accountants, or any other persons with suitable accreditations with a minimum of 6 years of experience in the development sector.
   4. Complete the NISM certificate course mentioned above. All Social Auditors will have to be empanelled under an SRO (Institute of Social Auditors of India) formed as a separate Sustainability Directorate under the aegis of ICAI.

5. Competencies and Skills Required for Social Auditors

Competencies, are the auditors’ knowledge and behaviours that lead them to be successful in a job. The individual(s) managing the audit programme should have the necessary competence to manage the programme and its associated risks and opportunities and external and internal issues effectively and efficiently, including knowledge of:

(a) audit principles, methods and processes for social audit

(b) management system standards, other relevant standards and reference/guidance documents; e.g. Social Audit Standards, ISO 26000: Guidance on Social Responsibility, NGRBC, BRSR to name a few

(c) information regarding the auditee and its context (e.g. external/internal issues, relevant interested parties and their needs and expectations, business activities, products, services and processes of the auditee)

(d) applicable statutory and regulatory requirements and other requirements relevant to the activities of the auditee- social enterprise or CSR program.

As appropriate, knowledge of risk management, project and process management, and information and communications technology (ICT) may be considered.

The individual(s) managing the audit programme should engage in appropriate continual development activities to maintain the necessary competence to manage the audit programme.

Skills are the specific learned abilities that you need to perform a given job well.

1. 1. Essential Knowledge: This refers to knowledge applicable to the domain, especially the Social Audit Standards thematic area. It includes but is not restricted to understanding national law, international conventions, standards applicable to the domain, social audit standards, etc. Competency of a thorough knowledge of the SDGs and NITI Aayog SDG Index is necessary. Understanding national and regional laws is essential to contextualize the project/activity at the micro/macro level.
   2. Auditing knowledge and skills: Compliance issues of the domain, compliance issues in specific geographies.
   3. Stakeholder Consultation methods: Social Audit involves inclusion and feedback from various stakeholders- the auditor should be aware of the different consultation methods (interviews, focus group discussions, SWOT analysis etc.). The auditor should be able to deduce the relevance and suitability of the consultation methods adopted in the impact report.
   4. Effective Communication: The ability to communicate effectively with managers, staff, beneficiaries and government agencies/officials is crucial. An auditor must be a good listener; as active listening is critical to the social audit process. The ability to communicate clearly with all stakeholders in the appropriate language or dialect will be an added advantage.
   5. Interpersonal skills: These will be enhanced by sensitivity to gender, racial, ethnic, cultural and socio-economic issues. The auditor should be able to deal with people from different backgrounds and take clues from non-verbal communication.
   6. Personal-professional attributes include a high code of conduct governed by law with solid ethics and integrity—honesty, trustworthiness, and the ability to remain independent from personal interests.
   7. Ability to make decisions based on verifiable and material sources and verifiable evidence.
   8. Problem-solving and analytical skills are very important.

6. Empanelment of Social Auditors with SROs

All SAs shall be empanelled with a Self-Regulatory Organization (SRO) viz. Institute of Social Auditors of India. The empanelment process shall consider the following criteria:

• • Experience of the individual/firm/institution in assuring non-financial information (with the individual/firm/institution’s social sector experience carrying a higher positive weight in such consideration)
  • Number of partners/employees meeting the criteria for being social auditor (in the case of firm/institution) Disciplinary cases/sanctions against the individual/firm/institution would carry a negative weight in such consideration.
  • With the advent of time, more parameters will be considered for empanelment -e.g. size, nature/complexity, and scale of operations of the funders/projects; the possession of specific social sector expertise (e.g., nutrition, education, health, water & sanitation, energy conservation, environment and climate change) etc.

7. Scope of Work for Social Auditors

The social auditor managing the audit programme should:

1. 1. Communicate the relevant parts of the audit programme, including the risks and opportunities involved, to relevant interested parties and inform them periodically of its progress, using established external and internal communication channels;
   2. Define objectives, scope and criteria for each individual audit;
   3. Select audit methods- The audit methods chosen for an audit depend on the defined audit objectives, scope and criteria, as well as duration and location

 7.1 Audit Methods

1. 4. Coordinate and schedule audits and other activities relevant to the audit programme;
   5. Ensure the audit teams have the necessary competence;
   6. Provide necessary individual and overall resources to the audit teams;
   7. Ensure the conduct of audits in accordance with the audit programme, managing all operational risks, opportunities and issues (i.e.unexpected events), as they arise during the deployment of the programme;
   8. Ensure relevant documented information regarding the auditing activities is properly managed and maintained;
   9. Review the audit programme in order to identify opportunities for its improvement;
   10. Assessing the demonstration of the social intent of the organisation;
   11. Identify stakeholders and the targeted beneficiaries.
   12. Alignment of the objectives and goals with the NITI Aayog’s SDG India Index. NGRBC guidance etc.;
   13. Assessment of implementation and review mechanism, e.g. variances between intended and actual targets, staff capacity development, benchmarking, key impact indicators, internal or external audit;
   14. Assessment of the methodology for data collections techniques, research methods, desk review of existing documents;
   15. Review stakeholder’s responses to evaluation questions in the impact report;
   16. Evaluate subject matter information: whether the evidenced changes are traceable to the intervention and how much could have happened irrespective of the intervention, what are the unintended negative impacts as a result of the intervention and are they reported;
   17. Assessment of Evaluation criteria viz. the Key Impact indicators based on the subject matter information, quantitative and qualitative evaluation criteria to be identified against which impact needs to be mapped;
   18. Final assessment, including the audit opinion;
   19. Prepare audit report in compliance with SSE.

8. Social Audit Process

A typical social audit process – from collecting information to reaching audit conclusion is as following:

8.1 Collecting and Verifying Information

During the audit, information relevant to the audit objectives, scope and criteria, including information relating to interfaces between functions, activities and processes should be collected by means of appropriate sampling and should be verified, as far as practicable.

8.2 Audit Evidence

The evidence can be formulated in the form of:

• • Documentary:  This consists of varieties of documents gathered/verified/checked at the time of auditing. It may include different types of reports, notes etc.
  • Oral: This type of evidence includes oral discussions/interactions etc. with various stakeholders of an institution being audited. The auditors must note the inconsistencies, if any.
  • Physical: Physical evidence is where the Audit inspects the asset and counts them whenever required. This evidence is collected wherever possible based on the nature of the Audit.
  • Analytical: The use of analytical procedure is made to derive the required data or know the correctness of information obtained. The conclusions here are based on comparisons, calculations, and the relationships between the various pieces of information derived by the auditor.

8.2.1 Information and Documents Required by Social Auditor

The auditor must have access to all documentary evidence collected by the organisation relevant to the project/activity. Access to primary sources of data on which the Social Impact report is based are crucial evidence. Thus, the auditor must have access to:

1. 1. Secondary data: This data is readily available through a repository of information available with the organisation. The records that are maintained by the organisation as a part of their routine project activity are an example of secondary data. Data available in the public domain is also secondary data. If need be, social auditors can obtain data from any public authority under RTI.
   2. The auditor should demand access to relevant secondary data which is material to the project to be audited. Some examples of secondary data are: out of school children in a slum/zone, amount and value of loans given to women in a microfinance program etc.
   3. Monthly, quarterly and six-monthly reports maintained by the organisation. Case study reports, intake sheets of beneficiaries should be produced to the auditor on demand.
   4. Photo documentation, film clippings of events/activities are also important evidence and should be made available to the auditor.
   5. Stakeholders are an integral part of the social audit process. The auditor can also look into the documentary evidence used/cited in the Social impact report such as a list of farmers with signatures is one of the pieces of evidence to ascertain that they were indeed consulted for the Social Impact consultation. Any discrepancy noted herein can be further scrutinized.
   6. Primary data: This is obtained from first hand sources and needs to be included in the impact report. Key stakeholders from the organization and beneficiaries should be consulted. Interviews, questionnaires, focus group discussions, surveys are some examples of primary sources of data. Sources of primary data collected should be maintained in a form that can be retrieved by the Auditor during audit trail.
   7. The auditor needs to use appropriate techniques and sample size to ensure reliability, accuracy and validity of information collected to derive evidenced conclusions. Depending on the nature of the Social project, a combination of probabilistic sampling methods (simple random/systematic/cluster/stratified) or non-probabilistic methods (quota, judgmental, snowball) can be used to collect evidence.
   8. Evaluation of misstatements identified during the Audit and the evidence for the same.
   9. Audited financial statements of the organisation and the audited utilisation certificates of the project.

8.2.2 Evidence Building

The social auditor should plan and perform a social audit with an attitude of professional skepticism to obtain sufficient appropriate evidence of the implementation of the social program in the field.

Following are the points to be considered while building evidence:

• • When designing and performing procedures, the practitioner would also need to consider the relevance and reliability of the information to be used as evidence. If:

a. Evidence obtained from one source is inconsistent with that obtained from another; or

b. The social auditor has doubts aboutthe reliability of information to be used as an evidence,

• • The social auditor should determine what changes or additions to the procedures are necessary to resolve the matter, and should consider the effect of the matter, if any, on other aspects of the engagement.
  • The social auditor should accumulate uncorrected misstatements identified during the engagement other than those that are clearly trivial and determine the effect of the misstatement on the assurance report.
  • The social auditor should request from the appropriate party(ies) a written representation:

a. That it has provided the social auditor with all information of which the appropriate party(ies) is aware that is relevant to the engagement.

b. Confirming the measurement or evaluation of the underlying subject matter against the applicable criteria, including that all relevant matters are reflected in the subject matter information.

c. If, in addition to required representations, the social auditor determines that it is necessary to obtain one or more written representations to support other evidence relevant to the subject matter information, the social auditor should request such other written representations.

• • When written representations relate to matters that are material to the subject matter information, the social auditor should:

a. Evaluate their reasonableness and consistency with other evidence obtained, including other representations (oral or written); and

b. Consider whether those making the representations can be expected to be well-informed on the particular matters.

c. The date of the written representations should be as near as practicable to, but not after, the date of the assurance report.

• • Description of Applicable Criteria:

The social auditor would need to evaluate whether the subject matter information adequately refers to or describes the applicable criteria. The description of the applicable criteria advises intended users of the framework on which the subject matter information is based, and is particularly important when there are significant differences between various criteria regarding how particular matters may be treated in the subject matter information.

8.2.3 Characteristics of Audit Evidence

1. Competence signifies the reliability of an audit evidence

If the social auditor is unable to obtain sufficient appropriate evidence, a scope limitation exists and the social auditor should express a qualified opinion/conclusion or disclaim an opinion/conclusion, or withdraw from the engagement, where withdrawal is possible under applicable law or regulation, as appropriate.

2. Relevance means pertinence of the information to provide an opinion

The social auditor should evaluate the sufficiency and appropriateness of the evidence obtained in the context of the engagement and, if necessary in the circumstances, attempt to obtain further evidence. The social auditor should consider all relevant evidence, regardless of whether it appears to corroborate or to contradict the measurement or evaluation of the underlying subject matter against the applicable criteria. If the practitioner is unable to obtain necessary further evidence, the social auditor should consider the implications for the social auditor’s opinion/conclusion.

3. Sufficiency describes whether the information obtained is enough to provide an opinion/judgment/conclusion

The social auditor should form an opinion/a conclusion about whether the subject matter information is free of material misstatement. In forming that opinion/conclusion, the social auditor should consider the conclusion regarding the sufficiency and appropriateness of evidence obtained and an evaluation of whether uncorrected misstatements are material, individually or in the aggregate.

If the social auditor is unable to obtain sufficient appropriate evidence, a scope limitation exists and the social auditor should express a qualified opinion/conclusion or disclaim an opinion/conclusion, or withdraw from the engagement, where withdrawal is possible under applicable law or regulation, as appropriate.

8.3 Audit Conclusions

(a) review the social audit findings and any other appropriate information collected during the audit, against the audit objectives;

(b) agree on the audit conclusions, taking into account the uncertainty inherent in the audit process;

(c) prepare recommendations, if specified by the audit plan;

(d) discuss audit follow-up, as applicable.

8.3.1 Content of Audit Conclusions

Audit conclusions should address issues such as the following:

(a) the extent of conformity with the social audit criteria;

(b) achievement of audit objectives, coverage of audit scope and fulfilment of audit criteria.

If specified by the audit plan, audit conclusions can lead to recommendations for improvement, or future auditing activities.

Two audit opinions can be made by a Social Auditor based on the assessment of social impact as follows:

1. Unqualified opinion or unmodified opinion also known as “Clean Report”. This implies that there is no material mismanagement and there is sufficient and appropriate audit evidence obtained in reference to evaluation criteria applied for the impact assignment.
2. Qualified Opinion or modified opinion is given when the auditor is unable to obtain sufficient appropriate audit evidence or as a whole, the Impact report is not free from material mismanagement.

9. Accounting System and Internal Control

While performing the Social Audit, the auditor should obtain the basic understanding of the accounting system by obtaining and reading the following documents:

10. Social Audit Report

The social audit team leader should report the audit conclusions in accordance with the audit programme. The audit report should provide a complete, accurate, concise and clear record of the audit, and should include or refer to the following:

1. 1. A title that clearly indicates the report is an independent audit report;
   2. Social audit report is ordinarily addressed to the engaging party, but in some cases there may be other intended users;
   3. Audit objectives;
   4. Audit scope, particularly identification of the organization (the auditee) and the functions or processes audited;
   5. Identification of the audit client;
   6. Identification of audit team and auditee’s participants in the audit;
   7. Dates and locations where the audit activities were conducted;
   8. Audit criteria;
   9. Audit findings and related evidence;
   10. Audit conclusions;
   11. A statement on the degree to which the audit criteria have been fulfilled;
   12. Any unresolved diverging opinions between the audit team and the auditee;
   13. The audit report can also include or refer to the following, as appropriate:

a. the audit plan including time schedule;

b. a summary of the audit process, including any obstacles encountered that may decrease the reliability of the audit conclusions;

c. confirmation that the audit objectives have been achieved within the audit scope in accordance with the audit plan;

d. any areas within the audit scope not covered including any issues of availability of evidence, resources or confidentiality, with related justifications;

e. a summary covering the audit conclusions and the main audit findings that support them;

f. good practices identified;

g. agreed action plan follow-up, if any;

h. a statement of the confidential nature of the contents.

1. 14. Any implications for the audit programme or subsequent audits;
   15. A statement that the engagement was performed in accordance with SAS Framework or as any other framework as applicable;
   16. A statement that the social auditor complies with the independence and other ethical requirements of the Code of Conduct applicable to Social Auditor issued by the Self-Regulatory Organization (SRO)/SEBI.,

11. Challenges Related to Social Auditing

• • Social audit happens in a dynamic, multidimensional and an interconnected framework. The following highlight the challenges related to Social Auditing:
  • Capturing “softer data” can be challenging while capturing the social impact. Ex. confidence, self-esteem, sense of agency. The Social Auditor should ascertain that the AIR has used appropriate methods to capture outcomes for such indicators. It can be addressed by using proxy indicators, paisa scale or narrative numeracy methods. Social auditor needs to be skilled and knowledgeable to trace the materiality of data to the impact indicator reported.
  • Capturing social and economic impact is a tough task. Organizations will need refined documentation tools and data analysis methods to arrive at conclusions. Lack of appropriate indicators which are traceable might be a challenge. This can be mitigated by thinking through the data needs that need to be captured while at the project design stage. Hiring the services of a qualified professional may assist. The Social Auditor needs to be well versed with reporting frameworks/tools for the same.
  • Traceability of certain stakeholder groups e.g. an intervention for adult learners/nomads/may be difficult. Primary evidence/audit trail for such groups will be an impediment.
  • Access to appropriate data in a user friendly manner is necessary to draw conclusions. Organisations may hide/withhold data that may be counter intuitive.
  • Over claiming of impact needs to be addressed. Assigning roles to intervening variables, capturing quality of life indicators by stakeholders and using dead weights can avoid over claiming.
  • Multi-dimensional projects implementation will have convergence of sectors. (Example) A District/State rural health intervention will have convergence of sanitation, nutrition, behaviour change communication, primary health services, etc. Social Audits of this complexity and scale will make the Social Audit process lengthy and cumbersome. This may pose a challenge to the rigour of the Audit.
  • Lack of Social auditors who are equipped to conduct audits as per the Social Audit Standards which are aligned to the SDGs. It may be a challenge to have accredited social auditors and experts in all thematic sectors.

14. 4. 1. Social Audit Network, UK. https://www.socialauditnetwork.org.uk/.
       2. Chris.Murphy, Investopedia, https://www.investopedia.com/terms/s/social-audit.investopedia.
       3. https://nrega.nic.in/netnrega/SocialAuditFindings.
       4. Caledonia Centre for Social Development, United Kingdom (http://www.caledonia.org.uk/).
       5. (Centre for Good Governance, Andhra Pradesh. https://www.cgg.gov.in/).
       6. Kurian Thomas, Social Audit; https://pria-academy.org/pdf/m4-4-Social-Audit%20.pdf
       7. IS ISO19011 Guidelines for auditing management systems.