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Social Accounting

Social accounting is a method by which a business seeks to place a value on the impact on
society of its operations. This might include the following impacts on the environment:
waste; the effect on society of the packaging it produces; and how much fuel it uses in its
company cars. It can also include the effect on the local community who might have to live in
the shadow of its premises, and how it engages with the community, its customers and
Key Principles of Social Accounting:
1. Multi-perspective: encompassing the views of people and groups that are important to
the organisation.
2. Comprehensive: inclusive of all activities of an organisation.
3. Comparative: able to be viewed in the light of other organisations and addressing the
same issues within same organisation over time.
4. Regular: done on an ongoing basis at regular intervals.
5. Verified: checked by people external to the organisation.
6. Disclosed: readily available to others inside and outside of the organisation.
The process of social accounting.
Step 1 Planning: In the first stage of social accounting, the organisation clarifies its mission,
objectives and activities as well as its underpinning values. It also analyses its stakeholders
through completing a ‘stakeholder map’. These exercises help the organisation to make
explicit what it does, why and how it does it, and who it works with and whom it seeks to
Step 2 Accounting: In this phase, an organisation decides the ‘scope’ or focus of the social
accounts, especially if it will build a comprehensive picture over time. The organisation then
sets up ways of collecting relevant information over a period of time to report on
performance and impact against its values and its objectives, encompassing both quantitative
and qualitative. The information is then brought together and analysed.
Step 3 Reporting and audit: The information that was collected, collated and analysed in
Step 2 is brought together in a single document, which serves as a draft of the social
accounts. People from outside the organisation (a Social Audit Panel) then review this
document to check that the report is based on information that has been properly gathered and
interpreted. When the Panel is satisfied with the report and its findings, the organisation can
make its report available to the stakeholders and wider public in full or as a shorter summary.
Social Accounting and Audit is really about examining the ‘social, environmental and
economic’ performance and impact of an organisation. There are a variety of key terms
which are included in the glossary as part of the new, revised manual.

Potential benefits
As social accounting examines the social, environmental and economic
performance and impact of an organisation, it can offer an organisation a
method for obtaining a holistic and regular process of examining both how it is
doing (performance) and what its effects are on people, communities, and the
environment (impact).

Customers, service users, or clients can be involved with the social accounting
process and thereby feed their perspectives into the organisation’s planning and
measurement process. These individuals or groups can also request/ read social
accounts to know more about organisation.

Social accounting can feed into strategic planning, as it offers an organisation

the ability to systematically review its strengths and areas for improvement.

Organisations have a great deal of flexibility within the framework. They may go
through the process in different ways, and report on the process differently,
tailoring it to fit their needs and requirements. An organisation can choose to
report on any indicators that it sees fit, thereby making it possible to fit many
‘proving and improving’ tools within the framework, including quality systems or
indicators of impact that are required by purchasers, funders, or lenders.

There is flexibility in the time scale for completing the process and in building up
to a comprehensive set of accounts. The full process can be done in stages over
two or more years if the organisation focuses on different aspects of its activities
or objectives in each year. This is only recommended if the whole picture will be
complete within a reasonable timeframe.

The external validation process can be an important reality check on the

information the organisation has gathered.

Having a verified and comprehensive statement of the organisation’s impact and

performance can help in reporting to funders/investors, reporting to stakeholders
and in compiling annual reports.