Professional Documents
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Social Audit of Business
Social Audit of Business
Social Audit of Business
Business
Audit definition
Audit is an evaluation of a person,
organization, system, process, project or
product.
Collect information
Internal and external sources
Summarize information according to
stakeholders
Have information verified by independent
agency
Report findings
Social Auditing
Standards
Competence
Need to be undertaken by competent
individuals
Independence
No conflict of interest
Due care
Planning
Control structure
Evidence
Reporting
Benefits
Regular audits allows to see if progress is
being achieved.
Independent audits allows companies to build
trust.
Improved relationship with stakeholders.
Permits stakeholders to influence strategic
planning
Helps stakeholders in making corporate
governance decisions
Continued……….
Helps identify potential risks and address
problems
before they occur
Ex: Company may be better prepared
to deal with potential problems with
stakeholders
Audit will hopefully show compliance with
relevant
laws
Allows companies to coordinate corporate
social responsibility at all levels
Help quantify social concerns related to the
Crisis Management
Social audits helps to prepare facing
future disasters that can result in substantial
legal and
financial costs
Such disasters also result in compromised
reputation and erode stakeholder confidence
Ex: Enron, Arthur Andersen
Enron Scandal
The Enron scandal was a corporate scandal
involving the American energy company Enron
corporation based in Houston, Texas and the
accounting ,auditing and consultancy firm Arthur
Anderson that was revealed in October 2001.
Enron’s stock price which hit a high of $90 per
share in mid-2000, plummeted to $0.10 in October
2001. The drop in Enron’s stock price is estimated
to have caused its stock holders to lose $11 billion
On December 2, 2001, Enron filed for bankruptcy
and with assets of $63.4 billion.
it was the largest corporate bankruptcy in U.S.
history.
Continued:
Enron became the biggest audit failure.