Social Audit

Context: Lieutenant-Governor of Delhi has raised the issue of the Delhi government’s 10-year delay in framing rules for conducting a social audit into the functioning of the public distribution system (PDS) and fair price shops under the National Food Security Act (NFSA), 2013.

About Social Audit 

• It is a continuous process that includes verification of works at the various stages of implementation of programmes/schemes with active involvement of the primary stakeholders.
• It is a way of measuring, understanding, reporting and ultimately improving an organization’s social and ethical performance. 
• It helps to narrow gaps between vision/goal and reality, between efficiency and effectiveness.
• It creates an impact on governance. It values the voice of stakeholders, including marginalized/poor groups whose voices are rarely heard.
• It is taken up for the purpose of enhancing local governance, particularly for strengthening accountability and transparency in local bodies.
• The key difference between a development and a social audit is that a social audit focuses on the neglected issue of social impacts, while a development audit has a broader focus including environmental and economic issues, such as the efficiency of a project or programme.
• It is a powerful tool, that is, associated with accountability and promotes the Right to Information (RTI).
• The states in India have taken up Social Audits of various programmes/schemes such as MGNREGS, Pradhan Mantri Awaas Yojana (PMAY), Mid-Day Meal Scheme (MDM), Integrated Child Development Services (ICDS) and Public Distribution System (PDS).

Origin of Social Audit in India 

• The concept gained significance after the 73rd Amendment of the Constitution.
• National Rural Employment Guarantee Act, 2005 provides for regular Social Audits so as to ensure transparency and accountability in the scheme. The State Government shall identify or establish, under the NREGS, an independent organization, Social Audit Unit (SAU), at the state level, to facilitate the conduct of social audit by Gram Sabhas.
• In April 2017, Meghalaya became the first State in the country to pass a social audit legislation, the Meghalaya Community Participation and Public Services Social Audit Act.

Need for Social Audit:

• Reduces corruption: It uncovers irregularities and malpractices in the public sector and maintains oversight of government functioning, thus reducing leakages and corruption.
• Monitoring and feedback: It monitors the social and ethical impact of an organization’s performance and provides feedback on the work.
• Accountability and transparency: It ensures accountability and transparency in the working of local government bodies and reduces the trust gap between people and local governments.
• According to the MGNREGA Social Audit Report of 2020, close to 3 lakh cases of financial misappropriation amounting a total of Rs 658 Crore, combining audits of both 2018-19 and 2019-20 were identified. 60 percent of these financial misappropriation cases pertain to issues of payment to persons who did not work under NREGA.
• Participative and democratic: It promotes the participation of people in the implementation of programmes and makes people more forthcoming for social development activities.
• Strengthens the Gram Sabha: It gives voice and influencing power to the Gram Sabha, the lynchpin of the rural governance structure.
• Collective platform: It provides a collective platform such as a social audit Gram Sabha, for people to express their common needs, resulting in social cohesion.

Objectives of Social Audit

• Physical and financial gaps: Assessing the physical and financial gaps between needs and resources available for local development.
• Awareness: Creating awareness among beneficiaries and providers of local social and productive services.
• Efficacy and effectiveness: Increasing efficacy and effectiveness of local development programmes and ensures that the audited accounts are disclosed to stakeholders.
• Scrutiny: Scrutiny of various policy decisions, keeping in view stakeholder interests and priorities, particularly of rural poor.
• Timely access: Estimation of the opportunity cost for stakeholders of not getting timely access to public services.
• Participatory: Encourages participation of stakeholders and sharing of their values and reflects the views (voices) of all those people (stakeholders) involved with or affected by the organization/department/programme.
• Transparency and accountability: Ensure that the social accounts are audited by a suitably experienced person or agency with no vested interest in the organisation.

Advantages of social audit

• Trains the community on participatory local planning.
• Encourages local democracy.
• Encourages community participation.
• Benefits disadvantaged groups.
• Promotes collective decision-making and sharing responsibilities.
• Develops human resources and social capital

Challenges of Social Audit: 

• Lack of Infrastructure: At ground level to address grievances made by the public during scrutiny.
• Lack of administrative and political will: In institutionalizing social audit mechanisms.
• Lack of stringent penal action: Against those creating hurdles in the process.
• Lack of awareness: Lack of educated and well-informed citizenry to undertake regular audits.
• Low skilled capacity: Lack of technical and managerial capacity such as book-keeping, and accounting.
• One size fits all approach: Lack of uniform process of social audit across states due to language and cultural barriers. No Benchmarking of Social Audit mechanisms for comparison purposes across districts.

Way forward

• Director and staff selection: The selection of Directors of Social Audit Units(SAUs) should be free of political control and the selection process should be strictly followed.
• Legally sanctioned outcomes: Social audit arrangements have mostly been ineffective because there is no legal provision for punitive action. States should enact legislation to facilitate social audit by the Gram Sabha on the line of Meghalaya’s Public Services Social Audit Act.
• Increased frequency: Social audits must be conducted in every Gram Panchayat once every 6 months.
• Using Management Information System (MIS): Usage of MIS to track details of schemes at all levels to streamline the life-cycle of programme planning, implementation and feedback.
• Displaying Information of Notice Board: The findings of the social audit should be shared with all local stakeholders. This encourages transparency and accountability. A report of the social audit meeting should be distributed for Gram Panchayat auditing. In addition, key decisions should be written on walls and boards and communicated orally.
• Civil society participation: People including students from different universities should be encouraged to participate as Village Resource Persons. Example, Jharkhand has instituted a formal mechanism by inviting prominent civil society representatives to be part of the SA panel.
• Better coordination: Seeks clarifications from the implementing agency about any decision-making, activity, scheme, income and expenditure incurred by the agency
• Scrutiny: Consider and scrutinize existing schemes and local activities of the agency.
• Database: Access registers and documents relating to all development activities undertaken by the implementing agency or by any other government department.

Independent agency: An agency like the Ombudsman can be set up to look into complaints of local maladministration.