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

Social audit of public utilities or public undertakings would be greatly facilitated if the undertaking prepared a social accounting document. Several models of social accounting and reporting have been tried out in a number of countries but efforts at standardising the models have not borne fruit. Even simple reporting systems devised will enable the social auditor of public utilities or undertakings to draw conclusions about the social benefits.and social detriments arising from the operation of a public utility over and beyond the quality of service rendered by it for which it is set up. A reading of such reports over a time period of few years can provide the basis for judging whether the net social benefit is growing in acceptable proportion to the encroachments made by the utility on the resources of the society.

Social audit of utilities starts with the construction phase of the utility as it is at that stage that the greatest incursion is made upon the environment of the locality. Land values go up, water hitherto available to the public and agriculture gets diverted for the use of the utility. Landscape is damaged and scarred and debris accumulates. Roads have to carry heavier traffic than they are designed for. Noise and dust pollution reach very high levels. To these social damages must be added the cost of any

delay in making the intended service available. A social benefit to detriments analysis at the construction stage will invariably show that the detriments outweigh the benefits. It is the duty of a good management to keep the difference within acceptable and projected limits and the duty of the social auditor to point it out when these limits are transgressed.

Even where there is no established system of social accounting or reporting, the social auditor can himself prepare a social balance sheet or a statement of social benefits and detriments. He should also prepare, especially in the case of social welfare programmes, a statement of social benefit to social cost analysis. A study of marginal social benefit to cost ratio is an important part of the social auditor’s work. In some cases, the benefits bear a fixed relation to the costs, that is to say, the relationship is linear. For instance one might say that if the expenditure on certain kind of immunisation programme is doubled, twice the number of people could be covered. The eradication of small pox was a case in point where each quantum of additional input produced additional rewards in proportion. In fact it was more than in proportion with the result that the disease has been eliminated as a health hazard. But there are other programmes where beyond a certain level of achievement, the benefit to cost ratio becomes smaller and smaller clearly indicating the need for a shift in strategy. Often the social auditor, is the first one to realise that while the output to input ratio may remain constant, the benefit to cost ratio may be going down.

Another aspect to look into when conducting social audit of utilities is that of safety standards. The social auditor should discuss with the undertakings safety experts, list out the possible hazards, the measure taken to prevent them, the actual occurrence of accidents and other hazards and determine how the safety measures have performed in relation to the safety standards of other undertakings placed in similar situations.

Contributions to research and import substitution are areas to be looked into by the social auditor at least in the case of larger public utilities. In the former case, it is an investment for the future with which society is concerned. In the latter case, it not only strengthens the economy by saving foreign exchange but also gives a boost to the local industry. Support to local industry activity can take many forms. It can take the form of concessional supply of the principal service offered by the utility or the undertaking. For instance, electricity tariffs for small and medium industries and for commercial activities can be substantially lower than for domestic consumption or for larger industries. In India, agriculturists get power supply at a rate which has facilitated the wide-spread use of electrically operated tube-wells. The support can take the form of financial, consultancy and quality control assistance to set up industries with guarantees to purchase the whole or part of the output. The support can also be in terms of extra price incentives. All these concessions do not directly benefit the utility or the undertaking but contribute towards the well being of the people in the locality. Likewise a large utility would be expected to play an enlightened part in activities, such as running schools, in cultural activities, in promoting public health etc. In examining such social activities of an undertaking, 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.

Q.6. What are the different principles of Social Audit? Also explain social audit cycle.

Ans. Principles of Social Audit: The following figure depicts the principles of social audit and universal values:
These are the pillars of social audit, where socio-cultural, administrative, legal and democratic settings form the foundation for operationalizing social audit. The social audit process is intended as a means for social engagement, transparency and communication of information, leading to greater accountability of decisiàn-makers, representatives, managers and officials. The underlying ideas are directly linked to concepts of democracy and participation. The application of social audit at the village level holds tremendous potential for contributing to good local governance and increased transparency and accountability of the local bodies.

Who can use the Tool? : Social audit tool-kit can be used by government departments, private enterprises as well as the civil society. However, the scope in terms of audit boundaries would be specific to that of a government department, private organisation, an NGO or a community. In case of private organisations, the emphasis may be on balancing financial viability with its impact on the community and environment. In case of NGOs, in addition to using them to maximize the impact of their intervention programme, they could also be used as effective advocacy tools. Depending on the resources available social audit could be comprehensive, state-wise, and can also be localized to the community level.

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