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Social Audit and its Methodology

Conference Paper · November 2010

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 Social Audit and its Methodology

Abstract

“Social Audit is a process in which, details of resource, both financial and non financial, used by
public agencies for development initiatives are shared with the people, often through a public
platforms. Social Audits allow people to enforce accountability and transparency, providing the
ultimate users an opportunity to scrutinize development initiatives.”

Social audits conducted by civil society have been more effective than in fulfilling their
objectives rather than audits conducted by Gram Sabhas/ Panchayats for various social sector
programmes In these audits, the social auditors establish direct dialogue with all beneficiaries
and stakeholders on a large scale through Gram Sabha meetings, Jan Sunwais, and Sammelans.

Local participation is very necessary for a successful social audit so rural poor, women and other
marginaised groups of the rural community should be wooed for active participation in the whole
process. Local capacity should be built for smooth functioning of social audit process, it will
ensure local participation with higher degree of commitment. Mass campaign should be
organized to increase public awareness about the meaning, scope, purpose and objectives of
social audit. A team of social audit experts can be established in each district that will be
responsible for capacity building of all stakeholders. Different training programmes should be
organized to train local people on social auditing methods.

In this paper social audit methodologies has been discussed and different issues regarding
stakeholder’s participation has been highlighted adequately. Civil society organizations have
explored its importance and shown a unique way to check corruption through Social Audit. As a
result, a pressure atmosphere developed around govt. to accept Social Audit as a integral part of
different flagship schemes implemented at grassroots level.

Authors

Dr. Ritesh Dwivedi,

Lecturer, Amity School of Rural Management, Amity University Uttar Pradesh, Sec-125,
NOIDA.

Dr. Kirti Vikram Singh,

Amity University Uttar Pradesh, Gomti Nagar, Lucknow Campus.

Introduction

Social Audit has been a very effective tool to check corruption at grassroots level, primarily used
by Civil Society Organisations. Social Audit is a systematic, regular and objective accounting
procedure that enables organisations to establish social values and criteria against which they can
measure external and internal performance and their social plans.
This concept is becoming increasingly popular and relevant. The vital role of social audit has
been well accepted towards ensuring the local stakeholder’s role in grass root level
implementation of the poverty alleviation programmes, verification of deliverables and ensuring
accountability of the implementing agencies. It has provided a platform for participation of local
stakeholders and civil society in monitoring the implementation of the poverty alleviation
programmes / social sector programmes implemented through the rural and urban local self
government institutions.

Considering the significant contribution by various social audit groups in ensuring accountability
of the programme managers and implementing agencies, the Government of India has embedded
social audit in one form or the other (like village level monitoring committees/vigilance
committees) in almost all the flagship social sector programmes like NREGS, ARWSP, NRHM,
MDM etc.

It provides the strongest and irrefutable direct evidence for inputs, processes, financial and
physical reporting, compliance, physical verification, assurance against misuse, fraud and
misappropriation, and utilization of resources and assets. In addition, social audits also provide a
forum for strengthening the democratic process in governance and grievance redressal. Social
audit provides the most important link between oral and documentary evidence and offers a
means of securing accountability of the managers of social sector programmes.

Objective
The objectives of social audit revolve around empowerment of the beneficiaries and directly
affected stakeholders of the public sector programmes in matters of planning, implementation,
delivery of services, appraisal, corruption and frauds, impact, etc. The social audit procedures
provide a voice to the people to participate and be heard. Above all, social audit provides close to
complete transparency to the entire gamut of programme management and renders the impact
sustainable. It enables the people to view the decision making process and criteria adopted for
various elements of the programme.

Methodology

Techniques of audit evaluation and analysis are not special to social audit and are the same as
employed elsewhere, notably in economy and efficiency audits. But social audit methodology
has to be devised keeping in view all the various general problems as well as those which are
specific to the programmes audited.

The Social Audit methodology provides a framework in which organisations can establish their
own priorities, strategic plans and performance measurement criteria, and then monitor and make
decisions about how to maintain or improve their operations. Organisations, which undertake
Social Audit, should view the process as one by which they can learn more about their own
organisation and manage change, if required. This clearly distinguishes the Social Audit from
other types of measurement evaluations and surveys.
In examining social activities, the social auditor will not only measure the social changes brought
about with reference to costs but will also fall back on traditional techniques and verify whether
or not these social activities are undertaken in accordance with a well conceived policy based on
a proper survey and valid assumptions.

Social Audit aims to build a new definition of viability around a broader set of values that
represent the growing concern for wider responsibility in organisations. Finance accounting is an
essential part of management, but it does not include areas of responsibility that many
community organisations have to consider as part of their normal operations; the costs and
benefits associated with the activities of an organisation are much broader than those described
in financial terms. The profit and loss account only tells half the story; Social Audit tells the
other half. The methodology of social audit is presented here through which basic objectives of
social audit will be surely meted out. Social Audit is a very sensitive and motivating process
which should be implemented in the most participatory manner to gain maximum benefit.
Measurement of social benefits is a challenging task at the best of times. The quality of
relationships and social processes are extraordinarily delicate and sensitive. The challenge is to
explore them without diminishing their depth and complexity. So a well understood
methodology should be adopted to cover all aspects which have been discussed above.

The major steps involved in Social Audit Process are:

• Framing structure of Social Audit Process

• Identification of Stakeholders and Starting a Dialouge process
• Focusing on important Acitivities & cross verification of said achievements
• Findings and Verification

Framing structure of Social Audit Process

Identification of the organisation or programme or activity should be done very wisely and
reasons of selection should also be counted specifically to remove any confusion on the
objectivity of audit itself. These few poits should be taken care of by social auditors:

• Objective of the social audit

• Understanding the relevance of Social Audit

Objective of the Social Audit

Social audit is done to know or assess the output and impact of the programme, organization,
activity and a comparative analysis is conducted with the help of local people who to figure out
actual achievement of the organization / activity / programme. Identification of the works to be
audited is the first step in social audit.

Understanding key social aspects of organization / activity / programme is an important step

towards conducting social audit. The objectives of social audit should be relevant to the strategy,
realistic about what can be achieved and recognized by existing routine activity. The key
objectives of the social audit should be in this sequence:
• Need of the programme or activity
• Process of implementation of particular programmes / activity;
 • Participatory Assessment of quality of services provided under programme or activity
• Participatory Assessment of the quality of the infrastructure created;
• Dialogue with the beneficiaries for their feedback regarding implementation;
• Fixing responsibilities for any mismanagement or irregularity;

Understanding the relevance of Social Audit

Before starting any audit activity it is must to know correctly about organisation’s history, public
opinion and prevailing image of the organization. A social auditor has to gather background
information. What survey was made before the social welfare programme was drawn up? What
was the state of affairs when the programme was taken up? What assumptions were made and on
what basis? What internal monitoring machinery and methodology was provided? Was any
internal evaluation made? What are the other linked programmes which could affect the
effectiveness of the programme to be audited? How are those programmes progressing? On all
these questions, social auditor should gather the necessary information and literature before he
ever sets out to do his audit. This will help in conducting the social audit process on ground. It is
important for the social auditors to know if the intended benefits of the programme / activity are
reaching the targeted groups / beneficiary. It is also important there is transparency and
accountability in the implementation of such the programme / activity. It is in this context that
social audit plays an important role in instituting accountability and transparency in
implementation.

Identification of Stakeholders and Starting a Dialogue process

To start a dialogue process, every stakeholder should be involved to have fruitful discussion and
also logical conclusion. So the next important step of Social audit is indentifying the
stakeholders and determining how often these stakeholders could be included in the ‘dialogue’
process. Every stakeholder will represent himself through their representatives. Selection of
representatives should be very transparent and cover maximum stakeholder groups.
Stakeholders are those whose interests are affected by an issue or those whose activities strongly
affect the same, who possess information, resources and expertise needed for strategy
formulation and implementation; and who control relevant implementation. The key stakeholders
who can be involved include:
a. Programme / activity Beneficiaries
b. Elected Representatives of Gram Panchayat / Local Bodies
c. Government officials involved with the programme/ activity, if any
d. Civil Society Organisations (CSOs)
e. Media
f. National or State level Funding Agency

People do have their emotional views and they want to express the same before the auditors. So
this process is very sensitive and it should be handled in a very careful manner to collect the
primary information regarding programme/ activity, as people have varied perceptions and
interests. Dialogue process should be planned with the stakeholders to extract accurate and
needed information. Often primary consultation can bring surprising facts into light which can
affect audit process totally or partially. People provide relevant information if they are taken into
confidence and assured that malpractices will be thoroughly checked and treated also. These
consultations should be objective, unbiased with informal dialogue and help in building rapport
trust and confidence in the community.

Focusing on important Acitivities & cross verification of said achievements

It is very important to discuss with all stakeholders and narrow down the list of activities which
would be taken up for audit. Depending on the scope of the audit key issues need to be identified.
Each issue should lead towards an answer on a particular piece of outputs or results. These issues
are derived from the guidelines and design of the programme/scheme, involvement of
stakeholders and society. This activity involves identifying important components of programme
or schemes under which people interests are directly involved and implementing body should be
told that they have to present physical and financial performance before social auditors and other
stakeholders to be crosschecked during the social audit process. People will also be presenting
their views and queries as per their understanding of the issue and knowledge of ground realities
regarding programme/ schemes implementation.

In the social audit process, Secondary data collected from government / agency documents and
reports, followed by, primary data collected from stakeholders and community members.
Secondary information will be crosschecked with primary data obtained from community
members. The Right to Information Act (RTI) empowers the people to demand for information
from any public authority. Following tools are prominently used to collect data from the field
are: ---
Primary Data
1. Focused Group Interview
2. Interview Schedule & Questionnaire
3. Case Study & Depth Interview
Secondary Data
1. Articles, Reports published in Newspaper & Magazine on the relevant issue,
2. Information from Digital & Public libraries.
3. Internal progress / review reports of particular Agency to be audited.

Organising Public Meetings & Physical Verifiaction

The main purpose of public meeting is to obtain public testimony or comment. The key findings
of the audit will be discussed in the public meeting and the concerned government officials will
respond to the key issues raised in such a meeting. A public meeting for social audit is a special
meeting for a specific purpose with no other matters addressed other than a particular issue of
focus. Constitutional and statutory provisions place a severe restraint in many countries on the
social auditor approaching the beneficiaries of a social welfare programme and making his own
measurement of the impact of the programme. But where this direct method is available to him,
he should work out in advance a detailed questionnaire and determine the analytical and
statistical methods he will adopt to reach necessary conclusions.

It should also be remembered that social welfare programmes are not aimed at achieving
absolute standards but'at introducing social changes at predetermined cost and effort. If a
programme includes within itself the means for an assessment of such achievement and details
the quantum of change expected in relation to the quantum of thrust given, then this in itself will
give the frame of reference for social audit.

Where such access to the beneficiaries is not available, social audit can none the less be
performed, at least to some useful extent, by means of comparisons in space and time.
Performance comparison of a programme can be made at the same time in several geographical
areas, or in a country such as India, in the several states. Likewise, the impact of the programme
in the same area from year to year can be made. Such an audit, while not wholly as satisfactory
as what can be done if access to beneficiaries is available, will none the less give sufficient
indication of the satisfactory or unsatisfactory progress of the programme.

All the proceedings and discussion during the social audit process is very important and this all
should be documented and included in final report. Consolidating the collected information for
dissemination to the public during the social audit process is an important task. The data
collected is to be tabulated according to the requirements. Local level programme / activity
records / Muster rolls / a/c details and other relevant information ought to be consolidated as per
the works performed. Reasonable analysis should done and views with counterviews should be
included in the report.

Physical verification of the work is must and the visit to the worksite to verify whether whatever
mentioned in the social account has actually happened in the way mentioned. It is important to
find out whether the work has been done according to the technical sanctions. The findings
should be recorded properly. Utmost care should be taken in recording the findings as a small
mistake could leave the processes of the audit in disarray.

Some Government Initaitives

The Andhra Pradesh Government has established an independent and autonomous body
under the name of Society for Social Audit, Accountability and Transparency (SSAAT)
which is responsible for facilitating conduct of social audit by the rural poor. The
commissioner rural development of the state enters into a MoU with SSAAT for conduct of
social audit on the basis of a calendar prepared for the same. This model has proved to be
very successful. Till now discrepancies / misappropriations to the tune of Rs 88 crores have
been unearthed and more than 4,600 officials have been preceded against it. In comparison,
in the rest of the country, where social audits are conducted by the gram sabha, presided by
sarpanch, no major irregularity has been captured.
Contrary to the Andhra model of an autonomous audit body, the rural development ministry
has suggested that a directorate of social audit be set up by states on a reimbursement with
central assistance for the next 5-8 years and to be handed over to the state government. “The
ministry should not just fund the setting up of a directorate of social audit, but ensure that
the directorate is independent and able to carry out its task in the manner that Andhra has
done,” said Aruna Roy, member of the central employment guarantee council in her
recommendation to the ministry.
A social audit, as mandated by the Act, is one of the many mechanisms to check corruption
in the scheme. However with the government surreptitiously introducing an amendment to
section 13 of the act, that prevented the participation of the independent parties, the social
audit became an exercise controlled by the implementing agency.

source: Andhra Pradesh shows the way for NREGA social audit
(http://www.governancenow.com/news/regular-story/andhra-pradesh-shows-way-nrega-social-audit)
Problems Faced by Social Auditor

The following major problems are often faced during social audit:--

Problems faced by the social auditor are partly of his own making and partly beyond his control.
It should never be forgotten by him that social welfare programmes are intended to bring about
social changes. Mere measurement of inputs or outputs cannot meet the demands of effective
social audit. A social auditor should have a very positive approach. For example, he cannot
criticise a nutrition programme on the ground that it does not meet the nutritional standard set by
the World Health Organization. Often he may even be unable to justify criticism of non-
achievement of targets laid down in the programme. He has to look at the positive social changes
brought about and in some cases their costs. When scrutinizing short-falls and non-achievements,
he has to take into account the efforts of events beyond the boundary of the programme all of
which the designers of the programme may not have been in a position to envisage and allow for
the implementers to deal with. This in a nut-shell is the reason why it is difficult to prepare a
social audit report which will be fair to the society, the implementers of the programme and to its
designers.

The social auditor has to face several problems which are beyond his control. Not all social
welfare programmes are well designed or based on valid assumptions. Some programmes do not
attack the problems at the first level of symptom cause relationship, but at remoter levels and so
are destined to achieve only moderate success. Others ignore the need for a package of
programmes to simultaneously attack a variety of related unsatisfactory social situations. For
instance, a programme for the improvement of rural health must be part of a well designed
project containing several individual programmes dealing with the related issues of rural
housing, rural water supply, education, nutrition, rural pollution, rural trade and industries for
generation of income etc. And when a programme is well designed, it does not make the social
auditor's task any easier because, in preparing the social audit report on a programme, he has also
to consider how the related programmes are progressing.

Perhaps the most serious difficulty faced by the social auditor is the absence of a well conceived
information system as part and parcel of a social welfare programme. Government agencies
which design programmes often commit the error of relying on traditional government systems
of information such as government accounts and government methods of reporting for conveying
a picture of how a programme is progressing. This kind of hazy and incomplete system does not
help them to take stock, speed up, slow down or apply corrective measures as and when required.
In any case, the system can give no information on the social changes achieved nor on how other
related programmes have affected a programme. Thus a fundamental defect in the design of most
social welfare programmes is the fact that they do not provide for the measurement or
assessment of the social changes, that is to say, they do not provide for an internal evaluation
 machinery, in terms of men and methodology, for evaluation of the impact produced by the
programmes. Nowhere else as much as in social audit is the fundamental truth more obvious that
where an implementing agency does not itself have the means and methodology to assess
performance, no worthwhile audit can be done.

Apart from these problems of a general kind, individual programmes pose their own specific
problems to the social auditor. To give an example, a programme for immunisation of a section
of the people against a disease by vaccination may show measurable effect only several years
after it is implemented. Likewise, a programme of adult literacy in rural areas cannot be
evaluated fairly unless information is available on the migration of educated villagers to urban
areas. Almost every social welfare programme will present some such special feature whose
import has to be fully grasped by the social auditor.

References

1. Report of the Task Group on Social Audit, CAG Office, India, January 2010
2. Social Audit and Its Relevance to Audit of Public Utilities, M. Parthasarathy, Former
Additional Deputy Comptroller and Auditor General, India.
3. Final Report on “Social Audit Gram Sabha & Panchayati Raj”, Planning Commission Of
India, Vision Foundation, October 2005
4. A handbook for trainers on participatory local development: the Panchayati Raj model in
India Jain, S.P. & Polman, W., RAP Publication - 2003/07.
5. Social Audit: A Toolkit, Center For Good Governance (CGG) , DG & ED, CGG,
Haidearbad 2005.

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