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
 Concerns on the organizations impact to the social system within which it operates

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

Economic
 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:

 The stakeholder engagement being reported did take place
 The issues raised were accurately reported
 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.