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7/27/2019 Overview of Social Auditing (3)(1)
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Overview of Social Auditing
815 Broadview Ave, Suite A Toronto, Ontario, M4K 2P8T: 416-465-1972 F: 416-465-0271
www.interpraxis.com
http://www.interpraxis.com/http://www.interpraxis.com/7/27/2019 Overview of Social Auditing (3)(1)
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Historical Roots
To casual observer social auditing is a newphenomenon.
In reality, the concept of a social audit was formedmuch earlier in the 1940s when a depression eraacademic Theodore Kreps called on companies toacknowledge their responsibilities to citizens.
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Historical Roots
1960-70s a fresh wave of interest in social andethical accounting, auditing and reporting (SEAAR).
Concept of stakeholders emerges and organizationslike the US Chamber of Commerce make the linkbetween improvements in corporate socialperformance and long term profitability.
While most of the early theorizing about SocialAuditing came from the US, most of the practicalexperimentation took place in Europe.
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What is Social Auditing ?
SA is a management tool and accountabilitymechanism which can enhance an organizationscapacity to:
Evaluate their impact on stakeholders
Determine how well they are living up to thevalues they espouse.
Improve their strategic planning process by
identifying potential problems before they comeup; and
Increase their accountability to the groups theyserve and depend on.
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Social & Ethical AAR
SEARR involves accounting for, reporting on, andauditing an organizations policies, procedures andimpacts with respect to employees, communities (local
and global), suppliers, customers and the environment.
This can involve disclosure regarding, interaliacommitments to workplace conditions, fairness and
honesty in dealing with suppliers, customer servicestandards, community and charitable involvement andnon-exploitive business practices in developingcountries
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SEAAR Principles & Standards
SA 8000 (Council on Economic Priorities)encouraging enlightened labour/management
practices in 3rd world. Global Reporting Initiative (GRI) sustainability
reporting guidelines
AA1000 (Institute of Social & EthicalAccountAbility) specifies principles andprocesses to be followed in order to secure thequality of SEAAR
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6 Elements of Social Audit
Multi-perspective
Comparative Comprehensive
Regular
Verification Disclosure
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8 Steps in conducting SA
Assemble organization and secure agreement andcommitment.
Define and prioritize the organizations objectives andestablish the action it intends to perform to meet them.
Identify the organizations stakeholders
Agree upon indicators, information, benchmarks andtargets.
Data gathering systems put in place.
Collating, analyzing and interpreting results
External verification process
Disclosure and act on results
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Why Social Audits ?
To permit the enterprise to effectively monitorperformance.
To permit the stakeholders in the enterprise affectits behaviour.
To allow enterprise to report on its achievementsbased on verified evidence rather than on anecdote
and unsubstantiated claims. Permits those who invest in the enterprise and its
stakeholders to judge if it is achieving the valueswhich it set out to achieve.
- Pearce (1996)
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6 Reasons to conduct a SA
Know what is happening
Understand what people think and want Tell people what you are achieving
Strengthen loyalty / commitment
Enhance decision-making Improve overall performance
- Zadek (1998)
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Potential Issues
SA has excellent promise as a management toolbut some potential problems remain:
Reporting organization can deliberately limit audit scope in order to avoidcontroversies.
Process can be managed internally to the disadvantage of some externalstakeholders.
Some significant stakeholders may be omitted.
Organization may use arbitrary or inappropriate indicators to evaluateoutcomes.
The standards, independence and honesty of the auditor may be open toquestion.
Therefore the need for Generally Accepted Assurance Standard (AA1000)
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Social Audits: Conclusion
Social auditing is a process of measuring andreporting, in order to understand and ultimately
improve, an organizations social performance.Mission Related
Managerial Issues Accountability Issues
Benefits
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Review of Benefits:
Quality Management.
Recruitment and Retention of Employees.
Promote Genuine Partnerships w/ Suppliers.
Risk Management.
Better Governance.
Improved Accountability.
Member / Stakeholder Engagement. Increased Investor Trust.
Brand Equity
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Thank You !
815 Broadview Ave, Suite AToronto, Ontario, M4K 2P8
T: 416-465-1972 F: 416-465-0271www.interpraxis.com
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