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Über dieses Buch

This book takes the concept of social audit and lifts it beyond the role of functioning largely as a management tool. The book proposes a system in which social audit is regulated so as to provide a mechanism for effectively promoting corporate accountability in society. Taking this as its theme, this book provides both a conceptual explanation of the developmental perspectives of social audit regulation and empirical evidence of the impact of social audit practice from different parts of the world. It is the first book to explore the issues and challenges related to the development of effective social audit regulation.



Social Audit: A Mess or Means in CSR Assessment?

Social Audits play an important role in the measurement and analysis of a company's social performance. They provide corporations with a tool to plan and manage their social responsibility activities. Similarly, they provide stakeholders with a tool which they could use when monitoring, assessing and analysing concrete and accurate company data. Whilst the topic of social audits has been raised and discussed by a number of scholars, industry representatives and government institutions over the years, such contributions have mostly revolved around the general notion and importance of social audit, rather than addressing the most effective ways to achieve a widespread and reliable adoption of the practice through the implementation of specific legal regulation and other methods. This matter is of significant importance as corporations can exert a considerable amount control over the entire social audit process, allowing them to disclose only information deemed beneficial to their own corporate image instead of releasing all relevant social and environmental data. In order to achieve a truly transparent system promoting corporate accountability, there is an obvious need for social audits to be regulated. One of the purposes of this book is to provide an overview of the development of social audit practices and regulation. It also sets out to explore the issues and challenges which have arisen relating to this matter around the world.
Mia M. Rahim, Victor Vicario

New Challenges for Internal Audit: Corporate Social Responsibility Aspects

The purpose of this chapter is to provide a succinct overview of the main coordinates that should define the role of internal auditors in the field of corporate social responsibility. It outlines the main key points concerning the internal audit’s contribution highlighted by academic literature, by reviewing recent literature, discussing the opinions issued by various academics and finally offering some suggestions for improving subsequent research in the area. It proposes a synthesis of the main arguments that justify the need for internal audit to play a significant role in corporate social responsibility, while there are emphasized main actions that should be included within an internal audit program, so that internal audit can provide its contribution to corporate social responsibility. Given the importance of the issue, this chapter provides an overview of academic research that examined the role of internal audit in corporate social responsibility and provide practical suggestions on how internal audit practitioners should develop their audit programs in order to provide as best as possible their significant contribution in terms of corporate social responsibility.
Adriana Tiron-Tudor, Cristina Bota-Avram

The Development of Integrated Reporting and the Role of the Accounting and Auditing Profession

A recent significant development in environmental, social and governance (ESG) reporting is the release of the International Integrated Reporting (<IR>) Framework by the International Integrated Reporting Council (IIRC) in December 2013. While there is widespread acknowledgement of the need to improve corporate reporting, a content analysis of the submissions to the IIRC’s discussion paper, consultation draft and exposure documents present varied views of the accounting and auditing profession in respect of how Integrated Reporting IR might effectively apply its principles of reporting connectivity and relationships within organisations. This chapter examines IR and the participation of the accounting and auditing profession during its development, outlining key aspects of the International <IR> Framework. It draws on the profession’s responses to discuss challenges for the accounting and auditing profession in maintaining its relevance in the evolving corporate reporting landscape. It concludes that the initial aims and promise of the International <IR> Framework have been somewhat diluted during the development process; the application of integrated thinking is crucial in achieving IR’s potential, but there are significant challenges facing the profession particularly in respect to building its capacity and cultivating integrated thinking.
Dominic S. B. Soh, Philomena Leung, Shane Leong

United States Accounting Firms Respond to COSO Advice on Social Audit, Sustainability Risk and Financial Reporting

In the United States, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides guidance on internal controls for corporations. COSO is a private-sector initiative jointly sponsored and funded by five organizations: American Accounting Association (AAA), American Institute of CPAs (AICPA), Financial Executives International (FEI), The Institute of Management Accountants (IMA) and the Institute of Internal Auditors (IIA). The Recent COSO white paper contemplates the connection between sustainability and accounting. This chapter examines the current COSO work and the evolution of accounting and sustainability, including the place of the social audit.
Katherine Kinkela

Social Audit Regulation Within the NGO Sector: Practices of NGOs Operating in Bangladesh and Indonesia

Social audit is one of those important mechanisms for strengthening NGOs’ accountability to poor communities (as NGOs’ key beneficiaries). However, conducting social audits within the NGO sector often rests on the individual interests and priorities of donors or NGOs themselves, effectively resulting in self-selection bias, and limiting the effectiveness and usefulness of social audits as a control and evaluation mechanism.
The purpose of this chapter is to identify the prevalence, scale, and scope of social audits within the NGO sector, particularly NGOs engaging in microenterprise development programs. Accordingly, this study examined 20 NGOs operating in two countries - Bangladesh and Indonesia. Data were collected from publicly available sources and in-depth interviews with senior executives of the participating NGOs. Further, 10 interviews were conducted with a small sample of beneficiaries (individuals or groups from four of the participating NGOs) in order to gain an understanding of beneficiaries’ perceptions of the NGOs’ social audit mechanism. The findings reveal a range of approaches to social audit among NGOs, as well as the usefulness and limitations of this mechanism for strengthening NGO accountability, particularly to beneficiaries. Findings highlight that within the NGOs investigated the conduct of social audits remained voluntary and was strongly dependant on donors’ requirements. As social audit regulation within the NGO sector is minimal, the findings provide regulators with valuable guidance for better understanding the value of social audit as a mechanism to strengthen accountability of the NGO sector, particularly accountability to beneficiaries.
Vien Chu, Belinda Luke

Social Audit for Raising CSR Performance of Banking Corporations in Bangladesh

Social audit, a mechanism to check corporations’ social responsibility performance, can ensure that organizations stay firm on their social commitments rather than greenwashing by creating a multi party communication platform where stakeholders get chance to crosscheck firms’ performances for social causes, for example, CSR. In the absence of mechanism in corporate regulation and a well designed framework, corporations try to maintain their social performance similar to their business performance i.e. profit purpose driven. Using the Bangladesh banking sector as a case study, this chapter assesses the role of an effective social audit in raising meaningful social responsibility performance of corporations in a developing country context. It suggests that the regulatory framework for the banking corporations in Bangladesh should focus on developing a culture that embraces social auditing, so that corporations are expected to align their CSR expenditures with social expectations. Such a development would also assist the stakeholders of these corporations in making informed decisions.
Md. Tarikul Islam

Corporate Social Responsibility Assurance: Theory, Regulations and Practice in China

This chapter aims to provide a comprehensive understanding of the theory, regulations and practice of corporate social responsibility (CSR) assurance in China. Built on stakeholder and related theories, it employs a demand-and-supply analytical framework to illustrate the development and current status of China’s CSR assurance market. It finds that government agencies, stock exchanges, accounting standard setters and industrial associations have collectively shaped the current regulatory framework on CSR reporting and assurance in China. Regarding demand, differences in the social and legal environments across such a large country influence the regional development of CSR assurance. Industries under intensive CSR regulations and/or social reporting pressure—for example, the finance, aviation and mining industries—more actively achieve CSR report assurance. Regarding supply, the CSR assurance market in China is shared by accounting firms and professional certification bodies. Different assurance standards adopted by the two streams of assurance providers have different foci, potentially leading to different assurance coverage and emphases.
Yuyu Zhang, Lin Liao

Social Audit: Case Study of Sustainable Enterprise Index-ISE Companies

Regarding corporate social responsibility (CSR), Brazil started with a strong philanthropic component. In recent years, CSR has become increasingly aligned with a company’s core business, including its marketing strategy. Environmental and social initiatives have started to be selected through strategic analysis of relations not only with traditional shareholders, but also with a network of other stakeholders. This chapter is about this development; it assesses the incorporation of social responsibility into the audits of 38 companies who, in 2013–2014, were comprised in the Sustainable Enterprise Index-ISE. The ISE family tracks the stock performance of the Brazilian leading companies in terms of economic, environmental and social criteria. This assessment suggests that state regulation seems to be effective in terms of CSR. With the new regulation on labor force, after Lula administration, the ISE companies appear to give more attention to internal public, rather than to external public, although business marketing explores the social and environmental responsibility of external public with very few audit practices.
Dalia Maimon, Cristiana Ramos

Corporate Climate Change-Related Auditing and Disclosure Practices: Are Companies Doing Enough?

This chapter explores whether the climate change-related audit and disclosure practices of corporations reflect real change in their corporate accountability practices for climate change. The growing need to deal with the threat of climate change raises a range of financial reporting and audit implications for corporations worldwide. There is evidence of companies undertaking social and environmental audit practice and disclosing information in relation to their climate change-related performance in response to the initiatives and guidelines provided by international government bodies, non-governmental organisations (NGOs) and research organisations. However, based on a review of media reports, archival documents and a case study, this chapter argues that there is limited real change in corporate action if there is no government regulation. A radical (reform based) approach, such as mandatory monitoring (compliance audit) and disclosure requirements, are necessary to ensure corporate accountability in relation to climate change.
Shamima Haque

Social Audit in the Supply Chains Sector

The issue of social auditing has suddenly become an even more important one than ever before for corporate social responsibility (CSR), Ethical Business and the supply chains industry following a series of scandals including the sad fatal incident of May 2013 in the garment factories of some suppliers to many Western household names, brands and retailers who source supplies of their merchandise from Bangladesh. There had been several unacceptable CSR incidents in this sector before the 2013 Bangladesh disaster relating to sweatshops, child labour, irresponsible working practices and conditions, poor and barbaric wage payments for long hours of work by under age children and adults in many factories in Asia and some other parts of the world see for example Nike’s 2001 child labour scandal, Hanes, Wal-Mart, Puma 2006 scandals and many others.
All these incidents have many things in common. First, that some suppliers in the third world cannot be trusted or left to their own devices to behave responsibly in this regard, that Western retailers too are still not embedding core CSR issues and robust social audit practices into their corporate strategies; (despite their making us believe that all is well in this area) and that there are still unidentified social audit indicators in corporate social responsibility which should point out areas where things are not conforming to plan. Similarly, that well-structured social auditing is either non-existent or ineffective in the supply chains sector despite this sector making us believe that social auditing is now being mainstreamed by them into their operational practices. This Chapter seeks to explore where we are in the field of CSR as far as social auditing in the supply chains and in general is concerned, what social auditing entails, how the current practices in the field of social audit could be made more effective and robust to identify quickly where CSR activities are failing to meet the needs of stakeholders. It also explores how we could take matters forward in order to prevent recurrences of these social ills that pervade our corporate scene and the supply chains sector in particular of the global economy and consequently prevent havocs being done to stakeholders and the environment by irresponsible operators in this sector and other sectors.
Samuel O. Idowu

AA1000: An Analysis of Accountability and Corporate Social Responsibility in the Contemporary Context

Contemporaneously, companies—especially private—present themselves as institutions with accountability. The private accountability is the issue addressed by companies from adopting a posture of social responsibility. The central idea of this article is to verify the debate about private accountability, taking into account aspects that comprise it, such as the stakeholder theory.
The standard AA 1000 will also be the subject of our reflections, as it aims to disseminate the central position focused on accountability, particularly in the context of private companies. The chapter presents the main aspects that make up the theoretical debate on the subject, while also addressing their criticisms, especially those made to studies that analyze the accountability from the private sphere—that would be counter to the traditional theories on the subject.
This chapter also discusses what we understand as the development of private accountability in the public sphere. This is a complex debate, especially because many scholars understand accountability as a characteristic phenomenon of the public sphere and can’t, therefore, be thinking and applied within the private sphere. However, the paths taken in this study indicate that accountability is, increasingly, an aspect that makes the concerns of private actors, befriending others, such as social responsibility. Understanding how these relationships develop is the purpose of this article.
Priscila Erminia Riscado

History and Significance of CSR and Social Audit in Business: Setting a Regulatory Framework

Business’s interest for social concern is not new. But, businesses core function is always driven towards financial performance. Businesses concern for social causes is evident from the philanthropic exercises that grew along with the growth of industries. To assess the financial, and the social performance of businesses, a systematic reporting mechanism was very much essential. Social audit is a mechanism for monitoring, measuring or appraising social performance largely in economic terms, primarily based on improving social activities, increasing public relations, and Corporate Social Responsibility also evolved as a philanthropic exercise and as consciousness grew, it became an integral element of the core business policy. This paper explores the patterns business adopts as an efficient Social Audit System, and tries to reach the aspirations of the stakeholders, discloses the information, and also develops a system of accountability which is best suited to the need of business and society. This paper systematically analyses guidelines and standards set by trans-governmental and private bodies, to arrive at a regulatory perspective for Corporate Social Responsibility (CSR) and Social Auditing in Business.
Anjana Hazarika

Defining a Methodology for Social Audit Based on the Social Responsibility Level of Corporations

Currently, global corporations face a series of challenges in terms of accountability towards the environment and society. One of the ways by which they could deal with these challenges is to introduce the use of social auditing to assist them to improve their reputation and the way they are perceived by all their stakeholders. Unfortunately, there is still no standard methodology for corporations to prepare their social audit report. This chapter seeks to fill this gap. It proposes a standardized methodology based on a disclosure checklist simulated on a range of sustainability/socio-environmental/corporate social responsibility set of information which companies provide in their annual reports. This methodology was developed based on a disclosure analysis using a sample of annual reports of the most responsible corporations worldwide. It was expected that these role model corporations when it comes to the best practice follow the same trendline regarding disclosures on sustainability/social responsibility information.
Adriana Tiron-Tudor, Ioana-Maria Dragu, George Silviu Cordos, Tudor Oprisor

Social Audit Failure: Legal Liability of External Auditors

Social auditing refers to the practice of external assurance or evaluation of an organisation's socially responsible reporting assertions. Usually, the reporting frameworks organisations use, such as the Global Reporting Index, are voluntary codes of reporting. For auditors accepting an engagement to review or assure such social reporting, the appropriate standards may be similarly voluntary. It is only during this century that financial accounting and reporting has developed a universal set of standards for assurance work on such engagements. By briefly tracing the history of financial reporting audit standards from no regulation, to self-regulation, to mandatory regulation, this chapter highlights the challenges to regulation of social audit faced by auditors, and identifies issues pertaining to auditor liability on social audits. Discussions about potential liability can be a useful lens to critique proposed solutions.
  • Quality standards and social auditing
  • Social audit regulation, issues and challenges
Larelle Ellie Chapple, Grace Y. Mui

Fostering the Adoption of Environmental Management with the Help of Accounting: An Integrated Framework

Social accountability of organizations has been intensely discussed in the recent past. As a means of being accountable organizations pursue many environmental management strategies in addition to other strategies. In order to analyze these strategies various models that trace the development of corporate environmental management have been suggested. However, without supportive greener accounting tools and techniques environmental strategies will not succeed. But there is limited guidance and analysis of how the vital accounting aspects can be integrated with environmental development to sustain corporate environmental strategies. This chapter aims to provide an integrated framework to facilitate the adoption of environmental management with the help of accounting in pursuit of corporate social accountability.
The framework suggests that the development of environmental management in an organization is evolutionary from compliance to leading edge stages. Initially driven by compliance, these strategies will later generate competitive advantage for an organization while ensuring social accountability. To reach the leading edge stage, environmental strategies should encompass all the significant environmental domains while engaging stakeholders on a regular basis. In this process accounting for environmental management (Environmental Management Accounting) with the provision of requisite information will act as the common thread that connects and sustains these practices. By providing useful practical and theoretical contributions the integrated framework adds a new accounting dimension to the existing discussions on how corporate environmental management strategies can be developed over time.
A. D. Nuwan Gunarathne


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