BBA 1st Year Business Ethics Corporate Social Responsibility Long Question Answer

Task 5 : Maintain the Dialogue and Deliver on Commitments: There can be a wide range of engagement approaches. There is no “one size fits all”. After the dialogue and engagement process have commenced and there is agreement by both the company and the stakeholders on the approach and deliverables, it is important for the participating parties to deliver on their engagement commitments. The dialogue should be maintained in accordance with the process that has been endorsed.

Q.3. What do you understand by social audit and explain its relevance to audit of public utilities?

Ans. Social Audit: A social audit is a way of measuring, understanding, reporting and ultimately improving an organisation’s social and ethical performance. A social audit helps to narrow the gaps between vision/goal and reality, between efficiency and effectiveness. It is a technique to understand, measure,- verify, report on and to improve the social performance of the organisation.

The Nature of Social Audit: Social audit may be regarded as being at the extreme end of the spectrum of audit functions. Over the centuries, audit functions have grown and evolved starting from the most ancient kind which maybe called vigilance audit which was concerned mainly with the detection of frauds. Then came, in more or less chronological order, regularity audit, propriety audit, value for money audit, performance audit and lastly social audit. We may regard the last three ofthese audit functions as representing economy, efficiency and effectiveness audit. As far as the State Audit is concerned, in value for money audit and performance audit, it examines areas internal to government agencies. In social audit, it goes beyond these areas and examines the impact of specific governmental activities on certain sections of the society which are in direct contact with the government agencies.

Its Relevance to Audit of Public Utilities is reflected in the following points:

1. Social Obligations and Social Welfare Programmes: In a welfare State, the government has a total obligation for the well-being of the people. This is translated in practical terms into a concern for the improvement of the “quality of life” by way of improving the standards of living, health, education, earning capacity etc. of the people. While each individual social welfare programme has its specific goals, it should also ensure that it does not come in the way of the Government’s efforts in other areas.

The symptoms of social problems which have to be tackled through a programme and its cause almost always exist at several levels.

For example, at the first level the problem’s symptom may be high incidence of illness and its cause may be lack of adequate living space, sanitary facilities etc. At the second level, the symptom to be tackled is precisely the cause at the first level, namely inadequate living space etc. and its cause may be insufficient income level of the families concerned. At the third level, the symptom to be tackled will be insufficient income level and its cause may be a lack of education and training which prevent the head of the family from obtaining and holding a job capable of providing adequate family income. Apart from such vertical symptom-cause relationships, there are parallel linkages such as environmental pollution, quality of water supply, availability of nutritious food etc. No social welfare programmes can thus succeed in isolation but can do so only as a part of a total package of welfare activities undertaken by the government arising from its concern for improving the quality of life of the people.

2. Social Obligations of Public Utilities: Utilities are setup to meet certain social obligations by offering certain public services such as water, power transport etc. which are essential to meet the totality of social obligations. As going concerns, their responsibilities are to function economically and efficiently and generally along accepted commercial lines. The fact that their activities might be subsidised by the state in order to reach the services to the public at reasonable rates does not in any way mitigate the need to function economically and efficiently. within the constraints under which they have to function. Normal commercial audit, built round value for money audit and performance audit deals with these areas.

Public utilities, as well as all public undertakings, have other internal and external social obligations over and above economic and efficient functioning and over and above the need to fit into the states’ total concern for improvingthe quality of life. Consider for example, the effect of a public utility onthe coñiiinity in which it is located. The utility consumes land, water, air, the services of other utilities and has various effects upon the community. Once he is satisfied about the quality of the direct service which he receives from the utility, the citizen of the community would be concerned with the “social performance” of the utility. Specifically he would like to know such things as the long-term plans of the utility for expansion and diversification which will have their impact on the local economy. He would like to know something about its effect on the stability of local employment levels; local taxes paid by it; its contribution to local charities; labour relation; hiring, promotion and pay practices; air, water, and noise pollution; power and water consumption; plant appearance; traffic flow; impact on local politics; contribution to research and import substitution, support to local industries etc. These are the various internal and external social obligations which should come under the scrutiny of social audit as distinct from economy and efficiency audits. Social audit of a public utility or a public undertaking is thus one step ahead of effectiveness audit which would be concerned mainly with assessing how effectively the main function of the undertaking is being discharged.

Q.4. What are the problems faced by social auditor?

Ans. The Problems Faced by Social Auditor: The 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 an 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 organisation. 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 implementors to deal with. This in a nutshell is the reason why it is difficult to prepare a social audit report which will be fair to the society, to the implementors of the programme and to its designers.

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