UNIT 2 CSR AUDIT CSR Audit

Structure

2.1 Introduction
2.2 Need for CSR Audit
2.3 The Scope of CSR Audit
2.4 Audit Procedure
2.5 Selection of Audit Personnel
2.6 Let Us Sum Up
2.7 Keywords
2.8 Bibliography and Selected Reading
2.9 Check Your Progress – Possible Answers

2.1 INTRODUCTION
The corporate sector in India, both public and private, have been
implementing CSR activities for a long time without any mandatory
requirement. It was being done more as charity or philanthropy and was
focused on creating basic social infrastructure like primary schools, health
centres, orphanages, etc. The objective was the feel-good factor by meeting
the thriving deficiency of basic social infrastructure facilities. The concept of
the responsibility to stakeholder and the consideration of community as
stakeholder was missing.

The national voluntary guidelines for social, economic and environmental

responsibilities of business brought in the formal concept of responsibilities
of business to all stakeholders which was endorsed under the Companies Act,
2013. The Act created a level playing field by mandating expenditure on
CSR activities. The regulatory mechanism of social compliance is gradually
becoming more comprehensive. At the same time, stakeholders are expecting
greater accountability to see the impacts of this CSR activities. It is becoming
important for both government and the corporate to assess whether the social
investments in the CSR activities are in compliance with the provisions of the
Companies Act and whether these investments are making an impact by
giving the social dividend to the corporate and the nation.

After studying this unit, you should be able to

• Explain the CSR audit and its need

• Discuss the scope of the CSR audit covering different aspects
• Describe how to conduct CSR audit

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2.2 NEED FOR CSR AUDIT
An audit is an important Management Information System (MIS) tool upon
which many management decisions are dependent. The purpose of any audit
is to acquire information and provide additional discipline on the internal
processes to validate proper functioning of the specific system. Benefits of
such an exercise in reducing the waste and cost and improving the efficiency
and efficacy in the system are evident.

A CSR audit is a management tool comprising a systematic, documented,

periodic, and objective evaluation of how well CSR organization, process and
management are performing with the aim of creating social value to
stakeholders. It is an independent evaluation of:

i) Compliance to policy and principles,

ii) Compliance to systems, procedures, and practices,
iii) Performance of elements relating to CSR,
iv) Compliance to regulatory requirements, and
v) Reliability of data management, records, and disclosure.

The advantages of such an exercise are not only assuring conformance/

compliance with statutory requirements but also reducing social risk and
liability; and increasing efficiency and efficacy of CSR projects. A good
system of audit is the backbone of every successful programme. The process
of audit gives a better understanding of the monitoring practices, availability
of records, and input for evaluation of programmes.

2.3 THE SCOPE OF CSR AUDIT

The output is the quantitative impact of the CSR activities carried out by the
organization. The audit will include assessment of the physical changes that
have taken place during an identified span of time because of the activities
undertaken. This impact would vary depending upon the efficiency of the
community development activities carried out, the number of intended
beneficiaries identified, and the social/physical infrastructure provided to the
community.

I. Audit for financial resources and utilisation

This covers the primary aspects of the project management that is, if the
CSR project was delivered within time, within estimated cost and with
required quality. This is generally covered under the financial audit of
the corporate.

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II. Audit for compliance to the Companies Act and the CSR policy & CSR Audit
business process of the company
This will ensure that the system and process both under the Companies
Act and under the corporate plan, strategies and policies are complied
with. It will also enable the company to examine and ensure that the CSR
is fully integrated into business processes, business plans and business
risk register.
i) Compliance with the Companies Act
This covers the audit of compliance to processes identified in the section
135 of the Companies Act. This may include how the CSR projects are
identified, CSR goals established, and CSR projects formulated. It also
covers auditing the identification of CSR projects vis a vis the activities
identified under Schedule VII of the Companies Act and the
clarifications given by Ministry of Corporate Affairs from time to time.
ii) Effectiveness of CSR policy
This covers the audit of the effectiveness of the CSR policy, whether it
has given the desired results and what changes have been made or should
be made to deliver the stated aims and objectives of the policy.
iii) Identification and formulation of CSR projects
The audit will cover the identification and the formulation of the CSR
projects including defining the output and outcome that it intends to
achieve. The audit will cover whether adequate resources were deployed
to achieve the objective.
The audit will also cover whether the need assessment survey was
aligned with the national goals and the sustainable development goals as
per the national plan of the government.
iv) Institutional setup
The audit will cover the assessment of the deployment of suitable human
resources and their efficient utilisation by the implementing agency
whether in-house or through an NGO or any other lawful agency. The
human resource audit would identify the suitability of the staff deployed
and their training needs. The audit would provide data to the
management on efficient use of the resources per unit of production
thereby reducing resource consumption and minimising the waste. The
audit will cover the training requirement and management of the CSR
staff and the NGO deployed for planning and implementation of the CSR
activities.

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CSR Accounting Activity 1
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Visit the CSR department of a company in your vicinity. Ask the CSR
employees, about their felt needs of training. Ask them about the types of
training that has been provided to them. Write down their responses.

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v) Data management
The audit will cover the adequacy of the data management system and
the communication system with the stakeholders and the beneficiaries.
vi) Stakeholder engagement
The CSR projects are the only activity which a company does not plan
for its own benefit but for the benefit of communities which are its
stakeholders. Hence, the stakeholder engagement becomes the most
important aspect of planning, implementing, and reporting. Without
appropriate engagement, the objective of implementing the CSR projects
gets distorted and perceived to benefit the company rather than the
stakeholders.
III. Audit of outcome as per the project report
Social impact evaluation basically means the evaluation of qualitative
impact of the community development programmes carried out by the
organization for the community. The evaluation includes assessment of
the awareness and perception of the people for whom the activities were
aimed. The assessment could be on the economic aspect or the socio-
cultural aspect or on both the aspects. This impact would vary depending
upon the effectiveness of the community development (CD) activities
carried out.
Social impact evaluation would help to determine the extent to which the
community people have got benefited from the CSR-CD activities
implemented for them and whether CSR-CD activities have been able to
bring desired changes in the educational/ health/ economic status of the
communities.
The audit will include assessment of the outcomes such as:
i) The short term and long term social/cultural/economic impacts of
the CSR-CD activities on the community.

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 ii) The effectiveness of the existing programmes/activities with respect CSR Audit
to the needs of the community.
iii) The contribution of CSR-CD activities in raising the living standard
of the people.

It would help analyse the objectives and results of the programmes executed
thereby making sure that the current programmes conform to the needs of the
communities.

Check Your Progress - 1

Notes: a) Write your answers in about 50 words.

b) Check your answer with possible answers given at the end of the
unit.
1. Define CSR audit.
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2. What is audited in compliance with the Companies Act?
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2.4 AUDIT PROCEDURE

A systematic and well executed process of audit should clearly indicate the
following:

i) Accountability as to how the funds have been used.

ii) It fixes accountability for tasks.
iii) Feedback in terms of targets achieved.
iv) Targets that have not been met.
v) Whether resources have been fully utilized or not.
vi) Clearly defined indicators that serve as concrete evidence for all future
interventions.
vii) The shortcomings in the process.
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CSR Accounting viii) Changes to be made in the format, the process, the strategies, etc.
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ix) Serves as a guide for development of future policies/interventions.

The audit should be carried out at regular intervals. The internal audit should
be more frequent supplemented by random audit through external agencies
which would help identify the efficiency and effectiveness of internal audit
system and identify the training needs of audit staff.

Different types of audit should be conducted by separate/distinct groups in

order to maintain absolute objectivity. The report should be based on facts
supported by documentary evidence of the site management and should
include action plan for corrective measures with specific responsibilities and
deadlines. A specific structured questionnaire should be prepared for
consistency and follow up action.

A follow up action plan should be drawn up by the site officials in

consultation with the auditor for implementing the recommendations of the
audit and minimise deficiencies/shortcomings in the system. The difference
of opinion if any, could be sorted out through discussions with the top
management.

2.4.1 Procedure for financial audit

This is a well established procedure and is an integral part of the financial
audit of the company. This ensures whether the financial resources are
deployed as per the financial process of the company.

2.4.2 Procedure for compliance audit for the Companies Act

and the CSR policy and business process of the
company
This is based on the basic quality concept of PDCA, i.e., plan, do, check, act.
This will ensure CSR projects are properly planned, implemented, monitored
and reviewed and the learning is deployed back to improve the policies and
processes.

i) Procedure for compliance audit for the Companies Act

There are specified processes to be followed for identification,
formulation, approval, reporting and closure of a project and all CSR
activities are to be implemented in a project mode. The audit will cover
whether the process specified in the section 135 of the Companies Act
and the activities specified in schedule VII of the Companies Act are
followed.
ii) Procedure for audit for effectiveness of CSR policy
The CSR policy framed by the company is not a static document but is to
be reviewed and revised on regular intervals. This has to be based on the
evaluation of the effectiveness of the policy. The audit will include
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 whether policy has been evaluated for assessing its effectiveness and CSR Audit
whether the policy has been suitably reviewed and revised.
iii) Procedure for audit of CSR project identification and formulation
The audit will review the project report prepared for each CSR project
and activity, specifically the following:
i) Gap analysis covered in the need assessment survey report
ii) Long term goals and targets to be achieved based on national
development goals and sustainable development goals
iii) Goals and targets to be achieved based on the identified
development indicators
iv) Review of primary and secondary data on identified development
indicators
v) Procedure for audit of institutional setup
This audit will evaluate the deployment of appropriate human resources
and their effective utilization. It is the human resource that will
implement the CSR project. It will include the training process of the
human resources deployed for CSR activities. It will also review whether
there is defined process for selecting the NGOs for implementing the
CSR projects and the monitoring and review mechanism for the NGO.
iv) Procedure for audit of data management
The integrity and completeness of relevant data is very important for
measuring the success of a CSR project. The qualitative and quantitative
data will be collected from primary as well as secondary sources based
on the indicators as mentioned against each CSR project. The data may
be available from structured questionnaires and records of focused group
discussions. This needs verification with the secondary data compiled/
published by various government agencies.
The data on the project is to be checked with reference to the format
specified in the Companies Act. The copy of the data format is given in
Annex – 2.
v) Procedure for audit of stakeholder engagement
The audit will cover the stakeholder engagement process to ensure that
the activities are planned and implemented through a consultative
process for inclusive benefits and equitable development.

2.4.3 Procedure for audit of outcomes as per project report

The outcome audit covers the evaluation of qualitative and quantitative
impact of the community development programmes carried out by the
organization on the community.

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CSR Accounting The audit includes assessment of the development indicators as identified
and Audit
under the project report that have taken place during an identified span of
time because of the activities undertaken as well as the awareness and
perception of the people for whom the activities were aimed. The impact
could be short term or / and long term.

The outcome audit would help to determine the extent to which the
community people have got benefited from the CSR-CD activities
implemented for them and whether CSR-CD activities have been able to
bring desired changes in the development indicator like on educational/
health/ economic status of the communities. It would therefore propose the
changes that need to be undertaken thereafter.

The broad objectives of outcome audit are:

i) To determine the impact of CSR project on development indicator

identified in the project report like on education/ health/ social/ economic
conditions of the people in communities.
ii) To assess the changes in the quality of life among communities through
CSR project interventions.
iii) To get objective description of social impacts than what people might
perceive.
iv) To identify requirement of changes in the existing policies and projects
to take care of the changing needs of the people.
v) To enhance stakeholder engagement and the capacity of institutional
setup.
vi) To improve and reliability of data management and reporting.

2.4.4 Formulation of audit procedure

The content and depth of audit procedure will vary for each company
depending on whether it wants basic compliance to financial processes or
comprehensive compliance to legal and corporate policies and process or
advance compliance to check the impact and improve the policy and CSR
projects. It will depend on the maturity, size and CSR budget of the
company. There is no mandatory requirement to conduct all categories of
CSR audit at present. Therefore, the company has to design the scope and
process of audit on its own. The ICAI has brought out an indicative list of
points to be covered in the CSR audit. The select portion of the copy is given
in Annex – 3.

Activity 2

Visit the CSR department of a company in your vicinity. Ask them about the
categories of CSR audit done in their company. Write down their responses.

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2.5 SELECTION OF AUDIT PERSONNEL

The audit should be carried out by qualified and experienced personnel who
are not directly involved in the day-to-day affairs of the factory. They
should however be, well versed with various processes of the CSR
project/programmes, which would thereby help management to conduct
unbiased evaluation and dissemination of information.

Conflict of interest in selection of audit personnel should be avoided. For the

internal audit, the people or the group who are involved in the formulation
and implementation of CSR projects and programmes should not be
involved. Similarly, for external audit, the consultants and NGOs who are
involved in the formulation and implementation of CSR projects and
programmes should not be involved.

The auditors should be well versed and experienced with the following:

i) Technical sectoral knowledge about the CSR projects like in education,

water management, community health, etc. including development
indicators for the sector.
ii) Have knowledge about the NDGs and the SDGs.
iii) Have knowledge about the formulation, implementation, monitoring and
review of projects.

Check Your Progress - 2

Notes: a) Write your answers in about 50 words.

b) Check your answer with possible answers given at the end of the
unit.
1. What is the procedure for audit of stakeholder engagement?
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CSR Accounting 2. What knowledge should the auditors have?
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2.6 LET US SUM UP

CSR audit is a basis for developmental planning whose ultimate aim is social
benefits. It could help the industry in assessing the performance of business
in terms of value addition to social capital. The CSR audit will not only
ensure the legal compliance and the financial prudence of CSR activities, but
also improve the effectiveness of creating the social and community capital
and also facilitate optimal utilisation of resources invested in CSR projects.
It will also enable the company to minimize and mitigate the risk related to
legal compliance, social discontentment and reputation. In this unit you have
read about various aspects of CSR audit. The unit deals in detail with the
need and scope of CSR audit. You have also read about the audit procedure
and selection of audit personnel.

2.7 KEYWORDS
NAS: Need Assessment Survey: It is a way of asking a group or
community’s members what they see as the most important needs of that
group or community.

SDGs: Sustainable Development Goals: The Sustainable Development

Goals (SDGs), also known as the Global Goals, were adopted by all United
Nations Member States in 2015 as a universal call to action to end poverty,
protect the planet and ensure that all people enjoy peace and prosperity by
2030.

SIE: Social Impact Evaluation: Social Impact Assessment includes the

processes of analyzing, monitoring and managing the intended and
unintended social consequences, both positive and negative, of planned
interventions (policies, programs, plans, projects) and any social change
processes invoked by those interventions.

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2.8 BIBLIOGRAPHY AND SELECTED CSR Audit

READINGS
The Companies Act, 2013
MCA notification dt 27th February' 2014
MCA notification dt 31st March 2014
MCA general circular dt 18th June 2014
MCA notification dt 6th August 2014
MCA notification dt 24th October 2014
MCA general circular dt 12th January 2016
MCA notification dt 23rd May 2016
The Companies (Amendment) Bill, 2017
MCA general circular dt 28th May 2018
MCA notification dt 19th September 2018
DPE guidelines on CSR and sustainability dt 21st October 2014
National Voluntary Guidelines on Social, Economic and Environmental
Responsibilities of Business issued by Ministry of Corporate Affairs
Guide on Corporate Social Responsibility (CSR) Audit by The Institute of
Chartered Accountants of India

2.9 CHECK YOUR PROGRESS – POSSIBLE

ANSWERS
Check Your Progress – 1

Answer 1: A CSR audit is a management tool comprising a systematic,

documented, periodic, and objective evaluation of how well CSR
organization, process and management are performing with the aim of
creating social value to stakeholders.

Answer 2: The compliance with the Companies Act covers the audit of
compliance to processes identified in the section 135 of the Companies Act.
This may include how the CSR projects are identified, CSR goals established
and CSR projects formulated. It also covers auditing the identification of
CSR projects vis-a-vis the activities identified under Schedule VII of the
Companies Act and the clarifications given by Ministry of Corporate Affairs.

Check Your Progress – 2

Answer 1: The audit will cover the stakeholder engagement process to

ensure that the activities are planned and implemented through a consultative
process for inclusive benefits and equitable development.
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CSR Accounting Answer 2: The auditors should be well versed and experienced with the
and Audit
following:

i) Technical sectoral knowledge about the CSR project like in education,

water management, community health etc including development
indicator for the sector.
ii) Have knowledge about the NDGs and the SDGs.
iii) Have knowledge about the formulation, implementation, monitoring and
review of projects.

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 Annexure-I CSR Audit

Schedule VII (See Sections 135)

Activities which may be included by companies in their Corporate Social
Responsibility Policies Activities relating to:
1. Eradicating hunger, poverty and malnutrition, promoting health care
including preventive health care’’ and sanitation including contribution
to the Swachh Bharat Kosh set up by the Central Government for the
promotion of sanitation and making available safe drinking water.
2. Promoting education, including special education and employment
enhancing vocation skills especially among children, women, elderly and
the differently abled and livelihood enhancement projects.
3. Promoting gender equality, empowering women, setting up homes and
hostels for women and orphans; setting up old age homes, day care
centres and such other facilities for senior citizens and measures for
reducing inequalities faced by socially and economically backward
groups.
4. Ensuring environmental sustainability, ecological balance, protection of
flora and fauna, animal welfare, agroforestry, conservation of natural
resources and maintaining quality of soil, air and water including
contribution to the Clean Ganga Fund set up by the Central Government
for rejuvenation of river Ganga.
5. Protection of national heritage, art and culture including restoration of
buildings and sites of historical importance and works of art; setting up
public libraries; promotion and development of traditional art and
handicrafts.
6. Measures for the benefit of armed forces veterans, war widows and their
dependents.
7. Training to promote rural sports, nationally recognised sports,
paralympic sports and Olympic sports.
8. Contribution to the prime minister's national relief fund or any other fund
set up by the central govt. for socio economic development and relief and
welfare of the schedule caste, tribes, other backward classes, minorities
and women.
9. Contributions or funds provided to technology incubators located within
academic institutions which are approved by the central government.
10. Rural development projects.
11. Slum area development.
Explanation.- For the purposes of this item, the term `slum area' shall mean
any area declared as such by the Central Government or any State
Government or any other competent authority under any law for the time
being in force.
Note: Other thematic areas are added to Schedule VII by orders of the
Government from time to time. Hence, recent notifications should be checked
by the readers/students/ practitioners to keep oneself updated.

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CSR Accounting Annexure-2
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FORMAT FOR THE ANNUAL REPORT ON CSR ACTIVITIES TO
BE INCLUDED IN THE BOARD'S REPORT

A brief outline of the company's CSR policy, including overview of projects

or programs proposed to be undertaken and a reference to the web-link to the
CSR policy and projects or programs
1. The Composition of the CSR Committee.
2. Average net profit of the company for last three financial years.
3. Prescribed CSR Expenditure (two per cent of the amount as in item 3
above).
4. Details of CSR spent during the financial year.
i. Total amount to be spent for the financial year;
ii. Amount unspent, if any.
5. Manner in which the amount spent during the financial year is detailed
below:
(1) (2) (3) (4) (5) (6) (7) (8)
S.No CSR Sector in Projects or Amount Amount Cumulative Amount
project or which programmes outlay spent on expenditure spent direct
activity the (1) Local (budget) the projects up to the or through
identified Project area or project or reporting implementing
is other or programs period agency
covered (2) Specify programs Sub-heads:
the State wise (1) Direct
and district expenditure
where on projects
projects or or
programs programs
was (2)
undertaken Overheads
1
2
3
TOTAL

*Give details of implementing agency:

6. In case the company has failed to spend the two per cent of the average
net profit of the last three financial years or any part thereof, the
company shall provide the reasons for not spending the amount in its
Board report.
7. A responsibility statement of the CSR Committee that the
implementation and monitoring of CSR Policy, is in compliance with
CSR objectives and Policy of the company.
Sd Sd Sd
CEO or Chairman, Person specified under clause (d) of
MD or CSR committee sub-section (l) of section 380 of the Act
Director (wherever applicable)

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 Annexure-3 CSR Audit

Illustrative CSR Checklist as per ICAI guide

1.0 Management and Strategy Level

1.1 Leadership Commitment and Involvement

SN Yes/ Comment
No
1 Senior leaders support CSR at all levels of
leadership and explicit roles are assigned, clear
direction provided and they are personally involved.
The company has a process of appointing a director
in charge of CSR and assigning a specific role to the
CEO and all senior leaders.
2 Senior leaders periodically evolve and declare the
common direction on CSR.
3 Social and Environmental Performance is an
important area of performance and CSR goals are
achieved and accounted through the regular
Performance Management System governing the
leadership in the Company.
4 There are processes to include CSR goals and
activities in the Balanced Scorecards of all levels of
leadership and linked to the Performance
Management Systems down the line.
5 There is a process of appointing and assigning roles
on CSR to a Corporate Head-Social Responsibility
integrating Environmental Management, Safety,
Ecological and Biodiversity issues, Social
Development and Volunteering.
6 CSR demands an intensive and integrated role from
all major functional heads of the company.
7 Organizational commitment includes the
involvement of functional heads and processes to
factor CSR considerations in all operational
decision-making processes and activities.
8 All operational heads and functions have processes
to factor and consider CSR implications into their
operational and activity flowcharts and work
instructions.
9 Data gathering and information systems incorporate
the collection of data that is CSR sensitive.
10 In all meetings and conventions that endorse 319
CSR Accounting management decisions on operational areas, there is
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an emphasis on CSR implications and senior
leaders, heads of functions are intently involved in
carrying out their social responsibility.

1.2 Management Structure and Deployment

SN Yes/ Comment
No
1 The company has evolved appropriate
organizational structures and positioned senior
level/functional representatives to drive CSR
effectively
2 The company has formed a Cross Functional Team
on CSR integrating Human Resource, Business
Excellence, Ethics, Communications, Operations
with Environmental Management and Community
Development all into one focus with a convention
for functioning.
3 The Cross Functional Team is effectively
operational and adequately meets the organizational
requirements to drive CSR.
4 There is a process/convention to ensure that the
members of the Cross Functional Team have put
down detailed work plans/ programs for the year
with adequate measurement and indicators for all
areas of work in all locations and divisions.
5 The CEO/senior leaders proactively support the
Cross Functional Team in terms of deploying
budgets and resources as agreed in the annual plans.
6 There is a reasonable priority accorded to CSR
activities and a process exists to ensure that the
Team is not constrained by empowerment,
budgetary or resources allocation considering that
the activity is sensitive to the Brand Assurance.

1.3 Strategy Development and Action Plan

SN Yes/ Comment
No
1 The company’s strategic planning and
implementation process includes a systematic
approach to factor CSR considerations aligned to the
company’s overall approach to CSR.
320 2 There are annual plan/timetable and strategic
 objectives not only for the environmental and social CSR Audit
work but also for providing support to CSR by way
of HR and communication support and other aspects
linked to the strategy.

1.4 Review Mechanism and Reporting

SN Yes/ Comment
No
1 Periodic meetings to review the progress of various
CSR initiatives are being held systematically with
appropriate actions being decided and followed up
by the CEO and senior leaders.
2 There are formal and informal processes and
conventions for dealing with CSR issues and
include regular meetings
3 CSR is a part of Corporate Governance and is
reviewed by the Board.
4 The Company has a process to review CSR at least
3 times in a year along with the Cross-Functional
Team with CEO/ Director and set a direction on
CSR that is adequately communicated

1.5 Communications and Awareness

SN Yes/ Comment
No
1 The organization has a system of communications to
inform employees on CSR and receive feedback
through mechanisms in place.
2 There are specific channels of communication
dedicated to CSR and reaches all messages,
activities, events and practices apart from policies
on CSR to all employees throughout the
organization
3 The Company considers it proper to document case
studies, best practices and significant achievements
for dissemination to employees and all stakeholders.
4 There are processes and frameworks in place to
document important CSR work and disseminate it
through different medium.

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CSR Accounting 2.0 Employee Response Level
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2.1 Selection, Career Development of key Employees and Performance
Management

SN Yes/ Comment
No
1 Employees driving CSR should be able to connect
well with others and motivate employees.
2 They should also be fairly knowledgeable about
working with people and in groups beyond mere
professional capabilities. They also cannot be easily
outsourced because a certain degree of cultural flow
and acceptability within the organization is vital for
their success.
3 The HR function is sensitive to this aspect and has
developed processes to internally identify this talent,
4 There are processes to engage professionals and
operatives with people having CSR as a part of their
role, appropriate weightage is given to this part of
their role to accomplish the annual business plan,
5 The process relies on progressively nurturing
employees identified and engaged in CSR events
and volunteering.
6 This process extends to training, development and
career path planning for key CSR employees.

2.2 Training for leadership development, enrolment of other employees,

personal learning and development and enhancing role in CSR.

SN Yes/ Comment
No
1 Facilitators are required to perform on CSR and also
institutionalize CSR performance. They need to
steer more than row, facilitate more than do.
2 Facilitators are good connectors bringing people
and possibilities together.
3 They acquire leadership qualities to spread CSR
widely across the organization and foster, enroll,
mentor volunteers.
4 The processes of training include special provisions
to factor the development of leadership skills
particularly encouraging facilitators to create more
facilitators.
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2.3 Volunteer Scheme and evolving degrees of Volunteering CSR Audit

SN Yes/ Comment
No
1 The company enables its employees to volunteer
through a system procedure and senior/ functional
heads support employees to participate in programs.
2 Employees are also encouraged to learn from this
work. This is achieved through a systematic scheme
on volunteering.
3 There is an official scheme on volunteering in the
company to identify, engage, recognize any willing
employee who wishes to contribute. It is based on
the competency matrix and volunteering profile
worked out for each company and is driven through
the HR function and community network to register
volunteers, their talents, the project, volunteering
days spent

3.0 CSR Implementation Level

3.1 Managing Change and Assessment of Social Impact

SN Yes/ Comment
No
1 The company has identified the major socio-
economic changes in the key communities caused by
its presence/ operations/ major expansion programs.
2 The company has a formal process of deploying its
own officers or hired agency to conduct social
impact surveys before installing the facility and
thereafter periodically. Issues like consumption
patterns, land use, rehabilitation, biodiversity and
other issues may be considered.
3 The company has identified the possible impact on
the lifestyle of its key communities and as a
responsible Company it takes corrective actions and
provides alternatives mutually agreed between its
management and the impacted people, if there are
conflicts of interest.
4 The assessment also goes to another level of impact
such as those on infrastructure (roads, traffic, power,
water, and so on); common facilities (hospitals,
schools, housing stock); and market price-line of
essentials and standards/practices of living that
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CSR Accounting could be impacted.
and Audit
5 In these processes the company also takes into
account all other impacts specific to their situations.
6 Specific impact assessment related to the situation is
also separately addressed.

3.2 Needs of the key community related to core competencies

SN
Yes/ Comment
No

1 The company has identified and established its key

communities.
2 There is a process and a rationale to define and
declare key communities and this is distinct from
and beyond the idea of limiting it to neighborhoods.
3 The company has developed approaches, processes
and methods to systematically survey and assess
needs of the key communities as articulated by
people in that community and is fairly
representative.
4 The process broadly outlines a sequence of events,
periodicity and procedure of assessing felt needs.
5 This includes the arrangements with the company
officers, responsible, experts, agencies and NGOs
for conducting the surveys with a mention of
participatory techniques and methods for empirical
studies and questionnaires used. This is distinct from
an unplanned, extemporized and informal approach
of meetings within and outside the Company to get a
feel of the situation.
6 Importantly, the item includes how the company has
identified its own competencies, capacities and
technologies to reach out to fulfill the needs of its
key community.
7 The company has systematically done a one time
workout and annually reviewed the specific
capacity, capability, facility, technology,
competency that it could reasonably afford towards
meeting these needs, as against random approaches
to do this work.

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3.3 Volunteering Process in the Community CSR Audit

SN Yes/ Comment
No
1 The program officer has a specific process to
identify areas for corporate volunteering.
2 The different tasks in the program are marked for
volunteering and dovetailed with the company’s
volunteering scheme.
3 The company works out provisions to encourage
volunteering within the community involving all
members including other stakeholders depending on
the possibility.
4 The company has done a one time workout and
subsequent periodic reviews on the specific
possibilities to encourage volunteering amongst the
people and has adequate processes to stress on this
area as an integral part of building community.
5 This may include the participation of community by
way of labor inputs that could be separately
recorded for accounting purpose, but is treated and
acknowledged in a collective spirit and measure of
participation.

3.4 Social Concerns addressed through Programs

SN Yes/ Comment
No
1 Child Development (Age 0-14 years):
The company is encouraged to build programs
around child development covering health and
nutrition to enhance the overall wellbeing of the
child.

The company is encouraged to work with the

government and NGOs on systematic and long term
child development programs that will include steps
to reduce infant mortality, immunization programs,
all nutrition and health factors related to child
development
2 Community Health:
This covers the general health of the community
with a focus on preventive and curative measures
taken to address specific health concerns identified
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CSR Accounting in the local communities while working with
and Audit
authorities and NGOs.

Based on specific surveys conducted by NGOs, local

authorities or by the ccompany, programs on health
are identified to not only address the immediate and
curative aspects but are aimed at addressing
preventive and long term issues related to health.
This includes not only the process of training
members of the community, generally, into better
quality of life, but also specific training of health
workers to address the issue of institutionalizing
formal and informal better practices in health care.

There are specific data and information management

processes to track performance that are reliable and
set into the tenets of management by fact with
adequate controls to ensure that figures are traceable
and verifiable with the sources.

Where the company has more control over the

project and programs, the outcomes specific to every
aspect of the intervention are monitored to depict a
clear trend analysis of how the intervention helped
the communities to deal with and eradicate diseases
and consequently improved health.
3 Basic education and schooling (Age 7-14 years):
This item recognizes the value of the child’s basic
educational needs, upbringing and holistic
development to be partly covered under formal
education and also includes a variety of important
interventions under informal education.

An important consideration and emphasis on the

high quality of building, infrastructure and the sense
of space created that impacts the ambience in the
school recognizing the child’s right to play and the
child’s need for open spaces.

Under formal education, the company could support

programs of local government/NGOs related to
mainstreaming children, provide resources and
facilities to improve access to education, enhance the
quality of teaching methods and teaching material,
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 advocate the inclusion and mainstreaming of special CSR Audit
categories of children like the dyslexic and the
physically challenged.

Under the informal interventions undertaken by a

company, there could be a variety of programs,
aimed at the overall development of a child in terms
of confidence building, sociability towards
becoming a better person.

The girl child needs special support and attention to

enhance female literacy, education and development.
Indicators such as, increase in the number of
opportunities made available for girls’ education,
reduction in the dropout rates ensure the girl child’s
progress in the community.

There are processes to consider building and

infrastructural specifications beyond the normal
requirements and specifically resource on innovative
architectural inputs.
4 Women:
The role of women in the process of development is
duly recognized and the company has specific
programs to support local government and NGOs in
the process of empowerment, eliminating gender
biases, increasing participation of women and
developing leadership among them.

This not only includes creating several

arrangements, conventions, opportunities and
occasions but essentially consists of skill and
capacity building, creating income generation
opportunities and the independence/ ownership by
women in the stakes of development.

While assisting authorities and NGOs in their

programs focused on women, there is a special
emphasis on empowerment referring to women
independently taking the responsibility for and
authority to make critical decisions for the
community and family.

Different forms of talent building, individual 327

CSR Accounting achievements and encouragement are other forms
and Audit
that the company initiates and promotes.
5 Child Labour:
This item recognizes a child’s right to be free from
labour/ any kind of formal employment imposed by
societal compulsions and reinforces the importance
of fulfilling the child’s educational and other
developmental needs. The child has right to access
minimum formal and informal methods of education
and development. The child has the right to play,
develop peer understanding, cultivate friends and
imbibe other social skills.

The company has specific sensitivities towards the

development of the girl child who is being made to
work at home, if not outside for earning income.

In all, the program manager does appreciate the

importance of some form of practical and
experiential learning which is part of the educational
program.

The company is encouraged to work with the

government and NGOs on systematic and long term
strategies to abolish/ eliminate prevalence of child
labour and mainstreaming them back into the
community.

The company also ensures that it does not employ

children below 14 years of age as per the legal
requirements and discourages the practice of
employing children amongst its supply chain.

There are checks on how an educational program or

otherwise addresses the concern of mainstreaming
the girl-child. There are provisions for practical
work as part of holistic learning for children in
balance with the curriculum
6 HIV/AIDS:
The company is encouraged to develop strategies for
effectively addressing HIV/ AIDS at the workplace
and to build/ strengthen programs on combating the
disease at work and in the community.
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 Under the workplace interventions taken up by a CSR Audit
company, there could be a variety of programs
aimed at implementing preventive measures on
HIV/AIDS, treatment, care and support to those
affected, workplace policy and guidelines on
HIV/AIDS and awareness programs for the
employees.
7 Differently Challenged:
This item covers the inclusion of persons with
disability, both mental and physical, at the
workplace and in the community at large with a
belief that every individual without regard to his/ her
disability has the ability and the potential to
contribute.

The company provides equal opportunities for

employment to the persons with disability and
identifies/ develops job specifications that could
accommodate the disabled.

The company also provides design and facilities to

improve access and mobility for the disabled at the
workplace. In the community, people’s negative
attitudes towards disability could be changed by
encouraging the sharing of positive experiences with
disabled persons, including them in community
activities and sharing resources in a more equitable
manner.
8 Livelihood:
The company recognizes the value of livelihood and
sustenance factors of the people in the community
and contributes towards strengthening these.

The company either carries out programs or supports

government agencies/NGOs towards building
capacity in the people to improve their income,
provide vocational training to equip them with skills
for employment/entrepreneurship, provide training
in better farming techniques, strengthen self help
groups for better savings, etc.

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CSR Accounting 3.5 Improving Attitudes/ Government Processes
and Audit

SN Yes/ Comment
No
1 This item deals with how the company has worked
towards and assisted the process of changing
people’s attitudes to do things differently. This is an
important objective of every project.
2 The company articulates the specific ‘before’ and
‘after’ changes in conventions, ways of doing things,
rituals and practices to establish that a significant
number of people in key communities have learnt,
evolved and agreed to do things differently.
3 This is to ensure that new skills and attitudes
acquired by the people have been responsive to
increasing sustainability of target community.
4 As a result, how local authorities and government
internalized and institutionalized this change is
reflected separately in this item. This is important
because changes become more institutionalized and
sustainable.

3.6 Self Reliance and Sustenance

SN Yes/ Comment
No
1 The company/ project officers identify the specific
areas or state of dependencies in terms of skills,
knowledge, confidence, experience, marketing
talents or generating and using income. These
dependencies are articulated as opportunities for
improvement in terms of action and correction.
2 The program officer identifies parameters on self-
reliance in a specific situation and may include the
capacity gaps, training, awareness, and ability to
assume responsibility, certain values that go to build
a community that is free to act on its own. This is
distinct from addressing needs of people on an
ongoing basis without minimizing dependence.
3 The intervention has in place specific factors that
can make the various corrective actions sustainable
in future without excessive dependency on the
company. It is important for programs to indicate a
cut off date for withdrawal or resources committed
330 for specific periodicity or annual time frames.
4 The parameters for sustenance are those such as new CSR Audit

arrangements, systematic partnerships, renewed

income generating capability, better networking,
more resourcefulness, revived leadership, new
conventions and practices that enable the community
to continuously perform on its own to meet the
required/growing levels of performance.

3.7 Learning and Innovation Transfer

SN Yes/ Comment
No
1 The program captures its learning and innovations
directly related to the project, meeting objectives
and goals.
2 The new ways of conducting activities (performing
eye operations, treating patients, teaching methods
in schools or use of fertilizers, etc.) get documented
for future use and for others. Processes are
developed to evolve/create ‘models’ for meaningful
deployment out of trends, information and data
sources.
3 This item is devoted to depict the learning and new
outcomes from experiences related to managing and
organizing the activity, with a hope that others can
benefit from the experience.
4 As facilitators of a development process, the project
owners of the company learn new ways to organize,
reduce costs, become more effective and enhance
performance.
5 The company has developed self-assessment
processes so that facilitators could be encouraged to
spend time and be helped to consciously align
themselves.
6 Development is a process of all round learning and
is about building new perspectives for everybody
involved
7 Personal learning and revelations that arise out of an
experience are essential aspects provided for in this
item wherein facilitators openly declare their
revelations in these experiences, if any.

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CSR Accounting 3.8 Effective Management and Good Governance
and Audit

SN Yes/ Comment
No
1 Leadership:
Leadership is an important constituent of
governance focused on creating vision, sensitive to
and balancing stakeholder interests, stimulating
innovation and learning and setting long and short-
term direction. Leadership is also about minimizing
hierarchy, creating space and empowerment, valuing
partners and cultivating a respect for people and a
systems perspective. Leadership is about making
ordinary people into entrepreneurs, to the extent
possible.
The process and program objectives specifically
include Leadership development in the community.
Formal and informal leadership are considered in
evolving the structure and role of leaders. Core
values and perspectives are converged upon; roles
for key stakeholders identified and expectations
from the community are explicit.
There is no excessive hierarchy in leadership style
evident when verified in responses from a cross
section of the people.
In an intervention, talent and skill are transformed
into a product/service and are marketable.
2 Participation:
Inclusion is a key constituent of people oriented
development. Contemporary communities are
sensitive to recognize, to engage and to balance the
interests of multiple stakeholders in a program.
Governance is manifest in the resolution of conflict,
reconciling differences, establishing dialogue,
enlisting cooperation and so on.
There are a number of conventions, practices and
arrangements such as, meetings, committees, groups
and mechanisms to build the sensitivities on
participatory governance.
There are processes by which all forms of synergies
and innovations evolved from people and
stakeholders can be considered and internalized for
action, involvement and meaningful engagement of
stakeholders and people
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3 Transparency: CSR Audit

Sharing information and the ‘thinking’ process in

development are key to better governance. It
encourages management by fact and builds a
perspective for systems in running projects.
Conventions, meetings, practices for generating
data, collating information and applying ‘thought
processes’ towards decision-making are provided to
progressively assure openness.
Data, information and resulting decisions are linked,
fact-based, systems driven through a set of processes
and procedures. There are control mechanisms to
guarantee a high level of traceability and
verifiability.
4 Tolerance to new ideas:
This is an important tenet of good governance. It is
about creating a dialogue among competing or
conflicting interests rather than confrontation.
Modes of reconciliation and collaboration help build
greater levels of tested partnerships capable of
progressively handling sensitive and difficult
situations in developing community.
There is a process to articulate and communicate
more continuously on the importance of tolerance.
Sessions are held on building awareness in the
community about the integrity underlying contest,
challenge and confrontation inherent in a new idea.
While conducting meetings, discussions and debates,
stress is laid on responsibility (more than rights) to
create meaningful alternatives. [There is a practice
or process to deal with rejection of an idea giving a
reasonable justification, where necessary.]
5 Accountability:
As a partner in development, company’s
contribution to any program would be to assist its
leaders to recognize the importance of service
delivery with high quality response.
There is a process to enhance the extent of
accountability in all service delivery involved in
programs. This process includes establishing norms
and standards of expectations. It further monitors
that expectations are fulfilled and there is a
reasonable consequence for default. In word and
spirit, an attempt is made to ensure that what people
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CSR Accounting are led to expect shall come to pass.
and Audit
Progressively there is a process to consider a
consequence to non-performance in a major case of
default
6 Innovation:
Company programs aim at experimentation and
assume the form of pilot studies to establish success
of new ideas. It may simplify the government’s
routine tasks, make them more manageable and
convert broader goals and ideas into doable and
foster innovation.
Importantly, programs are also aimed at encouraging
a sense of enterprise in the activity and cultivate
entrepreneurship among leaders.
There are provisions in program objectives to foster
innovation, apply new technology, introduce better
methods of work and improve the overall quality of
programs. There are specific processes and
conventions to focus on innovation to meet gaps and
other situations of constraints limiting progress.
Program leaders are encouraged to institute specific
schemes, quizzes, competitions to give ideas and be
acknowledged for providing solutions and
innovating alternatives
7 Effectiveness and efficiency:
The business community has a major role in
improving effectiveness and efficiency of social
programs. It is common knowledge that businesses
have helped the non-profits to convert their mission
into performance. Company programs make a
special effort to deploy managerial and technical
expertise to enhance the performance and quality of
programs delivery.
8 Results:
The distinctions brought out by company social
interventions are not only in terms of sizable impact
but in terms of new perspectives and distinctions
accomplished to bring about lasting human
achievement. Company facilitators always use the
above and other parameters and strive to measure
and enhance the quality of life as a result of their
interventions. And, they forever endeavour to build a
high trust society.
334 Therefore, the result of every company program is a
grand journey towards creating a deeper meaning CSR Audit
and higher purpose to everyday economic and social
activity to build self reliant communities.
There is a process that permeates the program to
bring about a convergence on the key distinctions,
new perspectives that brought about more lasting
benefits to the people.
Goal setting processes, monitoring and review
mechanisms are all devoted to measuring the
developmental meanings and human achievements
in the activity. Conscious effort helps generate the
extent of dependability, credibility and trust built in
the course of the intervention.

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