Social Accounting establishes a framework for ongoing monitoring, evaluation and accountability to stakeholders both internal and external to the organisation. It can help an organisation to investigate its performance against social, environmental and economic objectives, and ensure that it is working in accordance with its values. In the private sector, social accounting is aligned with corporate social responsibility.
The following are the key principles of the social accounting process according to the Social Audit Network (SAN):
- Multi-perspective: encompassing the views of people and groups that are important to the organisation.
- Comprehensive: inclusive of all activities of an organisation.
- Comparative: able to be viewed in the light of other organisations and addressing the same issues within same organisation over time.
- Regular: done on an ongoing basis at regular intervals.
- Verified: checked by people external to the organisation.
- Disclosed: readily available to others inside and outside of the organisation.
SAN has identified three steps to Social Accounting and Audit, preceded by a Getting Ready stage:
Getting ready: The organisation learns how Social Accounting works, what resources it requires, decides how the process will be managed; and makes an informed decision about whether to go forward. Often, this is done in conjunction with an orientation or a ‘taster session’ in which representatives of the organisation explore 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 benefit.
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 auditing: 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.
Organisations of all sizes and types can undertake Social Accounting. The SAN Social Accounting and Audit Manual is particularly geared towards social enterprises, social economy organisations, and grant-funded voluntary and community sector organisations.
AccountAbility’s methods may be useful for larger organisations who are serious about addressing a corporate social responsibility agenda.
Development, ownership and support
Development of the overall Social Accounting framework was led by the New Economics Foundation along with John Pearce and Simon Zadek, who head the two main organisations in social accounting, Social Audit Network and AccountAbility respectively. These and other organisations offer courses, taster sessions and support for the social accounting process.