The Need for Social ‘Audit’
The Social Audit Network, by Alan Kay
Is it me or is there a huge increase of almost epidemic proportions of social impact reporting amongst organisations and social enterprises that wish to explain the social difference they make.
This is to be welcomed, but it does raise the question of how much credibility we should attribute to these reports. Some of them are well-researched and detailed, others are more grandiose in their claims – but surely there must be some way of ensuring they possess integrity and are a true representation of what the organisation has achieved and the social impact it has made.
Understanding what changes as a result of an organisation’s actions is important, but it is also important to know that the claims made, have integrity. Thus, in the same way that financial accounts are given credence with an independent audit of the financial detail, it is clear that an account of the social change achieved by or organisation should be independently audited. This would enable on organisation to be confident of its claims and would show it to be accountable to a wide range of its stakeholders as well as to the wider public.
Organisations often employ independent evaluators to assess the degree of change that has happened as a result of their activity. This is fair enough, but it is expensive. Should an organisation not, therefore, keep social accounts using a social book-keeping system comprising of output and outcome information – and then subject that account to a ‘social’ audit? This would lie alongside the financial accounts and provide a more holistic picture of an organisation’s performance and impact.
The Social Audit Network (SAN) has be wrestling with these issues since the early 1990s. Through the experience of working with grassroots organisations and believing that organisations themselves can be empowered by keeping a track of their own monitoring and evaluation, we developed a process of ‘social accounting and audit’.
Annually an organisation would produce a social account of its performance and impact. This would then go to audit. In the early development of the process, a single ‘social auditor’ was used and this worked up to a point. However, a single person does not know everything and we plumped for the idea of having a panel of people – one who is a ‘social auditor’ and chairs the Panel meeting; at least one who knows the field of the organisation’s operation; and at least one other that knows the geographical area in which the organisation operates. To keep the costs down only the chair gets paid and the others volunteer.
The independent panel meets with the organisation for one day, having received the Draft Social Accounts in advance, and goes through them in detail suggesting changes, revisions, etc. There is a process which allows for feedback and discussion and also includes a random trail back to source materials and a checklist matching the draft against the eight social accounting principles (include here).
The Panel is not evaluating the organisation but, instead is assessing whether or not the Draft Social Accounts are credible. Once revisions have been made the Panel issues a statement – similar to a financial audit statement – that says, in their opinion, the social accounts are a fair reflection of what the organisation has achieved in terms of its performance and impact over the last social accounting period. The accounting process and audit is then built into the life cycle of the organisation.
In assessing the operations and activities of complex organisations over, say, a year, can be complex and result in long and complicated reports that have to be audited. For this reason often an organisation will write a summary version that is more widely distributed. However, this summary could not be written as an accurate document if the evidence had not been included in a more substantial report.
The social accounting and audit process is not completely fool-proof, but actual experience shows that it is effective and can provide valuable and impartial feedback to an organisation that not only wants to prove what it does but also want to improve in its effectiveness.
SAN believes that the audit part of social accounting and audit is essential. If not, we are going to get swamped with detailed reports, purporting to explain the social, environmental and cultural change that has happened as a result of and organisation’s activities…without necessarily knowing if we, as the wider public, can take them seriously or not.
The social audit should not become a way of consultants and other companies making money. It is about subjecting what one says about the performance and impact of an organisation, is true, meaningful and based on acquired and collected information – both quantitative and qualitative. It would re-assure the wider public of the authenticity of ‘social impact reports’ and at the same time can be used to plan focus and future actions.
These are key reasons why social audit is badly needed – particularly for organisations with a central purpose around social change.
Lastly it has to be said that carrying through with social accounting and audit is not for the faint hearted… An interesting early quote about ‘ethical accounting’ (which has much in common with social accounting) is…
“Ethical accounting is not for softies or funks. It takes guts to hang your dirty linen in public and to walk your talk.” Jorgen Giversen, former CEO of SBN Bank