Social Auditing (Chapter 6)
This chapter describes the definition, purpose, content, scope, uses, and benefits of social auditing. It then details four distinct approaches to social auditing, including two approaches developed outside the microfinance sector—the Social Audit Network and the Global Reporting Initiative (GRI)—and two approaches developed inside the microfinance sector—the USAID Social Audit Tool (SAT) and the MicroFinance Centre Quality Audit Tool (QAT).
In conjunction with the GRI, the section also devotes time to describing the assurance process and the Accountability 1000 Assurance Standard. The precise definition of social auditing varies significantly depending on the person or organization. Common to these different definitions, however, is the basic concept that social auditing is a process or means by which an organization accounts for its social performance to its stakeholders and seeks to improve its future social performance.
The purpose, content, and scope of the social audit vary. Generally, however, a social audit has (at least) the following six characteristics:
- 1. It aims to reflect the views of all the stakeholders involved with or affected by the organization.
- 2. It provides a means whereby the organization can compare its own performance against appropriate external norms or benchmarks.
- 3. It aims to report on all material aspects of the organization’s social performance.
- 4. It aims to produce social accounts on a regular basis such that the concept and practice become embedded in the culture of the organization.
- 5. It ensures that the social accounts are audited by a qualified social auditor (or assurance provider) independent from management.
- 6. It ensures that the audited accounts are disclosed to stakeholders and the wider community in the interests of social transparency and accountability.