Social Audit - A Brief analysis : A Springing up way to Make the government policies reach all

Social audit is a tool to make the audit process more transparent and to take audit findings to a wider public domain of stakeholders, i.e. users of the Government schemes, services and utilities.

Social audits afford an opportunity to our audit to carry out local oral and physical verification, apart from document verification. Space for social audit has been created both by the Constitutional Amendments(73rd and the 74th) which ordained that accounts of a Gram Panchayat be placed before a Gram Sabha, and by the RTI Act 2005. State Governments of Rajasthan and Andhra Pradesh have taken the initiative to incorporate social audit as part of their monitoring systems through Gram Sabhas and in partnership with a consortium of NGOs. Given these highly acclaimed initiatives, it is possible for CAG auditors to associate themselves with various activities in the social audit process in these States. The experience in Rajasthan has shown that we can gain immensely from the oral evidence tendered at the public hearings which are part of the social audit process. Participation sensitizes the people and helps them realize that accountability is not

just a part but the prime driving force of good governance.

The demand for social audit has grown in recent years due to the steady shift in devolution of Central funds and functions relating to socio‐economic schemes to the local tiers of Government – Panchayati Raj Institutions (PRIs), Urban Local Bodies (ULBs) and other special purpose agencies set up by the Government for implementation of specific schemes. The shift in devolution of funds and functions towards PRIs and ULBs has been the result of the 73rd and the 74th Amendments to the Constitution and the recommendations of the XI Finance Commission. Further, Central Government has been entrusting the implementation of various socio‐economic developmental schemes to autonomous agencies/societies. More

often than not, Central Government schemes have also envisaged direct transfer of funds to PRIs, ULBs and such agencies/societies with only facilitatory involvement of the concerned State Governments. Such fiscal allocations have effectively remained out of the State legislative and administrative accountability loop, as these agencies/societies are outside the traditional State Government administrative structure. In these cases, as indeed at PRI and ULB levels also, local accountability structures are either non‐existent or are very

fragile.

From the audit point of view, the shift in Government expenditure to PRIs, ULBs and other agencies/societies has given rise to a new situation. The CAG’s audit jurisdiction over such entities is nebulous, compared to his jurisdiction over traditional Government Departments. Statutorily, audit of local self government institutions is a States subject and the primary (external) audit of PRIs and ULBs is with the State Local Funds Audit Department (LFAD), or with the designated auditors as specified in the State laws, with the exception of West Bengal, Bihar and Jharkhand. Also, the scheme guidelines of some of the flagship socioeconomic

programmes of the Government do not provide adequate clarity with regard to audit of the programmes by the CAG.

Further, despite the joint physical verifications with Departmental authorities, and beneficiary surveys, the primary focus of the CAG’s performance audits remains, in most cases, processes within Governmental agencies, with the actual verification of outputs and outcomes being only of secondary focus. The prime reason for this is our audit methodology and evidence requirements (necessary in order to ensure the rigour and credibility of our audit findings) as well as manpower constraints. In other words, we cannot verify every

rural road or employment generation for every household in a Gram Panchayat due to the limitations of manpower, nor would we accept unauthenticated oral evidence except as supplemental to our core audit evidence.

Emerging Trends

Social audit concepts are becoming increasingly popular and relevant. The vital role of social audit for ensuring the local stakeholder’s role in grass root level implementation of the public sector programmes, verification of deliverables and ensuring accountability of the implementing agencies, besides a safeguard against corruption and frauds has been recognised. It was also felt that with the ever increasing outlays on the social sector programmes and the decentralised implementation, particularly by the rural and urban local self‐government institutions, the participation of local stakeholders and civil society in monitoring the implementation of the programmes cannot be ignored.

How it Works?

Social audit initiatives fall into two categories – social audits carried out by Gram Sabhas/ Panchayats or local level Vigilance and Monitoring Committees as stipulated by the Government in the guidelines of various social sector programmes, and those carried out by civil society groups. In both these types, the social auditors are in a position to obtain direct feedback from beneficiaries on a large scale through Gram Sabha meetings, Jan Sunwais, Sammelans and other oral evidence gathering methods to ascertain the outputs of social

sector programmes and pinpoint grass root level failures.

Considering the significant contribution by various social audit groups in ensuring accountability of the programme managers and implementing agencies, the Government of India has embedded social audit in one form or the other (like village level monitoring committees/vigilance committees) in almost all the flagship social sector programmes like NREGS, ARWSP, NRHM, MDM etc.

Role of Social Audit

The issue of positioning of social audit within the three basic categorisations of audit viz. financial, compliance and performance audits as its own distinct type. The classification of the type of audit is determined in the context of the audit objectives with reference to the generally accepted auditing standards. The objectives of social audit revolve around empowerment of the beneficiaries and directly affected stakeholders of the public sector programmes in matters of planning, implementation, delivery of services, appraisal, corruption and frauds, impact, etc.

The social audit procedures provide a voice to the people to participate and be heard. Above all, social audit provides close to complete transparency to the entire gamut of programme management and renders the impact sustainable. It enables the people to view the decision making process and criteria adopted for various elements of the programme.

Social audit ought to be viewed as a technique or procedure to broaden the depth or spread of audit by IAAD rather than a distinct form of audit. From the point of view of our audit, use of social audit techniques or the social audit findings should be viewed as a means to strengthen our audit rather than a substitute for CAG’s audits.

Strengths of Social Audit

• Focus on outputs in social audit process, the directness of its inquisitions and the instantaneous interface and interlocution it provides among the beneficiaries and stakeholders of social sector programmes, has its unique strengths.
• Social audit provides an opportunity to plug a long felt gap in the audit process and techniques used by our Department.
• It provides the strongest and irrefutable direct evidence for inputs, processes, financial and physical reporting, compliance, physical verification, assurance against misuse, fraud and misappropriation, and utilisation of resources and assets.
• Social audits also provide a forum for strengthening the democratic process in governance and grievance redressal.
• Social audit provides the most important link between oral and documentary evidence and offers a means of securing accountability of the managers of public sector programmes and renders the monitoring and appraisal mechanism multi‐perspective and transparent.

Limitations of Social Audit

• The scope of social audits is intensive but highly localised and covers only certain selected aspects out of a wide range of audit concerns in the financial, compliance and performance audits.
• These are also sporadic and ad hoc, except where broad‐based monitoring by Gram Sabha has been embedded in the social sector programmes.
• The monitoring is informal and unprocessed.
• The documentation of social audits is not in a form as to provide consistent evidence.
• The findings of social audit, unless carried out on a representative basis, cannot be either generalised or estimations over the entire population be made.