A Corporate Social Responsibility audit aims at identifying environmental, social or governance risks faced by the organization and evaluating managerial performance in respect of those.
In order to ascertain an organizations effective CSR policy, practices and culture, the notion of auditing CSR in organizations is becoming key. However, this requires a substantial shit in the audit profession to include beyond the traditional lines of finance and information technology to wider operational practices that respond to client and professional pressures brought about by a growth in the practice of risk management.
The auditor should develop a general understanding of the social responsibility issues that affect their organization and industry. The challenge of developing a socially responsible organization is creating the balance between profitability and other public goods. Management must reconcile these sometimes contrary needs.
On one hand, management is responsible to shareholders and investors to deliver a financial return. Conversely, management is responsible to the society that invests the modern corporation with control over its resources and employees.
- Effectiveness of the operating framework for CSR implementation
- Effectiveness of implementation of specific, large CSR projects
- Adequacy of internal control and review mechanisms
- Reliability of measures of performance
- Management of risks associated with external factors like regulatory compliance, management of potential adverse NGO attention, etc.
- CSR issues which also being covered in CSR Audit
- Human Rights: Fundamental Human Rights,
- Freedom of association and Collective bargaining, Non-discrimination, Forced labour, Child labour
- Business Behaviour: Relations with clients, suppliers and sub-contractors, Prevention of corruption and anti-competitive practices
- Human Resources: Labour relations, Working conditions, health and safety, career development and training, Remuneration system
- Corporate Governance: Board of Directors, Audit and internal controls, Treatment of shareholders, Executive remuneration
- Environment:Incorporation of environmental considerations into the manufacturing and distribution of products, and into their use and disposal
- Community Involvement:Impacts on local communities, contribution to social and economic development, general interest causes.