Q. Consider the following statements with reference to the social audits in India:
1. In India, the concept of Social Audit was formally introduced in 1952 to measure the effectiveness of Community Development Programme.
2. The Social Audit of Corporate Social Responsibility (CSR) activities is not mandatory under Companies Act, 201
3. There is a provision for mandatory Social Audit by Gram Sabha in the Mahatma Gandhi National Rural Employment Guarantee Act 200
How many of the above-given statements are correct?
Exp) Option b is the correct answer.
Social auditing is a process by which an organization / government accounts for its social performance to its stakeholders and seeks to improve its future social performance. The concept was pioneered by Charles Medawar in 1972.
Statement 1 is incorrect: In India, the initiative of conducting social audits was taken by Tata Iron and Steel Company Limited (TISCO), Jamshedpur in the year 1979. It gained significance after the 73rd amendment of the constitution relating to Panchayat Raj institutions. In India, social audits were first made statutory in a 2005 Rural Employment Act and government also issued the Social Audit Rules in 2011 under the MGNREGA Act.
Statement 2 is correct: Under the current legal framework, there is no provision of social audit of Corporate Social Responsibility (CSR) expenditure made by the companies. However, companies are required to file details of CSR activities annually in the MCA21 registry. The CSR disclosures made by the companies in MCA21 are captured in a user-friendly manner and put in the National CSR Data Portal. In addition, companies are required to provide additional information regarding CSR expenditure in their Profit & Loss Account and the same is required to be audited by the statutory auditors of the company.
Statement 3 is correct: In pursuance of Section 17(1) of the MGNREGA, 2005, Gram Sabha is required to conduct regular and mandatory social audits of all the projects under the scheme taken up within the Gram Panchayat’
