CHAPTER V: SOCIAL

ACCOUNTING, AUDITING &

REPORTING (cont.)

BY: RICLYN D. MOSCOSA, CPA

Learning Objectives:

´ To enumerate the benefits and limitations of Social

Auditing
´ To enumerate the different dimension of social or
sustainability reporting
´ To understand the concepts of auditing the social or
responsibility reporting
´ To enumerate specific international standards as basis in
the social or sustainability reporting process
Advantages of Social Auditing
Social Accounts which have been audited provides:

´ CREDIBILITY
´ IMPROVEMENT
´ VALUE
´ RELIABILITY
´ ACCOUNTABILITY
 BENEFITS & SNAGS
´ Sharpens the definition and focus of the
organization
´ Extends accountability to main stakeholders
´ Provides useful framework for all the activities
of the organization
´ Gives credibility for the softer outcomes
´ Measures the perceived social impact of the
organization
´ Able to tie in with other audit process
´ Involves stakeholders in the organization
´ Provides flexible and adaptable process
´ Stimulates honest external and internal
appraisal of the organization
´ Time and effort is required
´ Cost of funding the activities involved
´ Recognition by stakeholders and others on the
value of doing
´ Reaching the views and opinions of non-
stakeholders who may be potential stakeholders
´ Dangers of becoming a paper exercise only
´ Problems on the possibility of manipulating
stakeholders views
´ Complicating process through scientificating and
professionalizing
´ No current standard for the process
´ No recognized qualification of Social Auditors
 CORPORATE SOCIAL REPORTING

A report published by a company or organization

about the economic, environmental and social
impacts caused by its everyday activities. It also
presents the organization’s values and governance
model and demonstrate the link between its strategy
and its commitment to a sustainable global economy.
(Global Reporting Initiative )

“To align business activities

with society’s expectations”
STEPS OF SOCIAL REPORTING
DIMENSIONS OF SUSTAINABILITY REPORTING
Social
q Concerns on the organizations impact to the social system within
which it operates

Environmental
q Concerns on the organization’s impact on living and non-living
natural systems, such as ecosystems, land, air and water

Economic
q Concerns on the organization’s impact on the economic
circumstances of its stakeholders and on the economic system at all
level
EXAMPLE OF CORPORATE SOCIAL REPORT
Auditing the Social Reporting Process

Auditing the social or sustainability report is a process of ensuring that a

company’s social or sustainability reports meets certain standards or
guidelines.
This should be verified by an independent external body i.e., external auditors.

External auditors should ensure that:

q The stakeholder engagement being reported did take place
q The issues raised were accurately reported
q The responses are genuine and incorporated in the daily business practices
Benefits of Assurance Services in
Sustainability Reports
´ It helps build trust in sustainability reports. Stakeholders will be able to rely on
the information given in a report and that they can easily access the
reports.
´ It confirms that the company is reporting in line with international standards,
which may be required by law or internal policies.
´ It can help reduce legal risk associated with sustainability reporting by
demonstrating that a company’s report is in accordance with the set
guidelines.
External Assurance in Sustainability
Reporting
´ A company can publish its report independently, using their own data and
analysis.
´ A company can use third party providers to help create or manage their
report for them.
´ A company can submit its report to a third party organization that assesses
the content and produces its own assessment against a standard set of
guidelines.
Different Types of Assurance Services

´ Third-party or peer review to assess a report against certain standards; this

can be carried out by either an individual or a team.
´ Confirmation of data sources to help validate information in a report; this is
carried out by an individual who assess whether the company has used
credible and up to date for their report.
´ Certification of specific claims in a report; this can be carried out either by
an individual group or group who check certain figures such as greenhouse
gas emissions data against standards set by international bodies.
International Standards which can be
use as criteria in Sustainability Reporting
AA1000 Accountability Principles
´ It is an assurance standard used by sustainability professionals for
sustainability related assurance engagements to assess the nature and
extent to which an organization adheres to the AccountAbilty Principles of:
a. Inclusivity
b. Materiality
c. Responsiveness
d. Impact
´ It focuses on the issues of completeness, materiality, regularity and
timeliness, quality assurance, independent evaluation, public confidence,
accessibility and information quality
Global Reporting Standards (GRI) for Sustainability Reporting
´ It enable any organization – large or small, private or public – to
understand and report on their impacts on the economy, environment
and people in a comparable and credible way, thereby
increasing transparency on their contribution to sustainable
development.
ISO 14001:2015 – Environmental management systems —
Requirements with guidance for use)
´ It specifies the requirements for an environmental management system that
an organization can use to enhance its environmental performance. ISO
14001:2015 is intended for use by an organization seeking to manage its
environmental responsibilities in a systematic manner that contributes to the
environmental pillar of sustainability.
´ It helps an organization achieve the intended outcomes of its environmental
management system, which provide value for the environment, the
organization itself and interested parties. Consistent with the organization's
environmental policy, the intended outcomes of an environmental
management system include enhancement of environmental performance;
fulfillment of compliance obligations and achievement of environmental
objectives.
ISO 14016:2020 - Environmental management — Guidelines
on the assurance of environmental reports
´ This document provides principles and guidelines for assuring the environmental
information an organization includes in environmental reports. It also provides
guidance on:
a. the output of the assurance engagement, i.e. the assurance statement and/or
the assurance report;
b. how the assurance engagement should address materiality, in terms of both:
c. determining if material issues have been included in the environmental report;
d. identifying any material misstatements and/or omissions.
ISO 26000 – Social Responsibility
´ It provides guidance to those who recognize that respect for society and
environment is a critical success factor. As well as being the “right thing” to do,
application of ISO 26000 is increasingly viewed as a way of assessing an
organization’s commitment to sustainability and its overall performance.
´ It helps clarify what social responsibility is, helps businesses and organizations
translate principles into effective actions and shares best practices relating to
social responsibility, globally. It is aimed at all types of organizations regardless of
their activity, size or location.