Business social intelligence and social analytics tools are constantly shaping the way that businesses relate with its environment. One of the fundamental success factors in this hyper competitive business environment is the ability of a company to be social and socially responsible.
Social audit is the totality of a well planned activities performed by a qualified professional in order to express opinion as to whether a company is meeting its social responsibility/ objectives or not. There is no legal requirement for a business entity to perform social auditing. The aim of this process is to provide management with useful managerial information that would aid in making strategic management decision.
A social audit can be looked at from two broad perspectives. One perspective is the one activity that enquires into a company’s interaction with the resources in the environment. Here, the social auditor is looking at the impact that a company’s operation is having on its environment. Questions like; what amount of energy is a company using, what is the average salary that a business pay its staff members, how many charitable projects has a company supported, etc?
The other perspective of social auditing is the one that deals with analysing the big data that are generated by the general public.
A social audit can be done by an in-house staff or an outside professional. This is similar to the traditional auditing that accountants perform but the only difference is the scope and purpose of the audit. A social audit can be carried out by both profit seeking businesses and non-profit seeking businesses.
While the traditional audit process is aimed at rendering credibility to piece of financial information as contained in the financial statement of a company, the main aim of social audit is to gain strategic information of the perception that people have about our organization.
STEPS IN SOCIAL AUDITING
Gaining understanding of the entity to be audited: the first step involved in social auditing is to gather sufficient appropriate evidence about the company. This will provide the audit practitioner the necessary tools that are needed to confidently start and finish the project.
Risk analysis: based on the understanding gained from the above exercise, an auditor would now perform risk analysis. The aim of this risk analysis is to ensure that audit risk is reduced to the barest minimum.
Planning your audit: equipped with the right detailed information obtained from the above two steps, a social auditor can now plan the audit in the light of available resources. Plans should be made to deploy audit staff with the right sets of skills that would ensure that the job is satisfactorily done.
Performing audit procedures: substantive tests and audit procedure is performed as required. This might be as rigorous as it would be if we were engaged in the more traditional audits, but nothing should be overlooked.
Reporting: the last stage of social auditing is to conclude and prepare report. The findings should be contained in the report.
The aim of social auditing is not to meet any regulatory requirement but to provide insightful information that can be used by management. Social auditing is more like business analysis with the only difference being that this does not involve financial and ratio analysis.