UPSC MAINS 2019: Making every citizen an auditor

Making every citizen an auditor

Topic: Making every citizen an auditor

 

Topic in Syllabus: GS Paper 2 : Indian Governance

Making every citizen an auditor

Context:

A good auditor is a good listener” said President Ram Nath Kovind during his recent speech at the 29th Accountants General Conference. “You will not only see the accounts in their books, but also listen to their accounts,” he said.

 

More about on news:

  • Social audits show how people’s participation in the planning, execution and monitoring of public programmes leads to better outcomes. They have strengthened the role of the gram sabha.
  • Social audits were first mandated by law in 2005 under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • Subsequently, Parliament, the Supreme Court and many Central ministries mandated them in other areas as well.
  • As efforts are being made to extend social audits to new areas, it is important to look at how well they are actually implemented based on parameters specified in the auditing standards jointly pioneered by the Comptroller and Auditor General (CAG) and the Ministry of Rural Development.
  • The National Institute of Rural Development and Panchayati Raj recently conducted a study comparing ground realities with the specified standards, and identified key issues that need to be addressed.

 

What is Social Audit?

Social audit is a process in which details of resources used by public agency for development initiatives are shared with people often through public platforms, which allows end users to scrutinize the impact of developmental programs.

Social audit serves as an instrument for the measurement of social accountability of an organization. It gained significance after the 73rd amendment of the constitution relating to Panchayat Raj institutions.

 

Need of Social Audit:

  • The investment of large amount of funds and resources by the Government of India and various national and international agencies, since independence in social development programmes, has not been justified by the impact it has made.
  • The major focus by the Government hitherto has been in the supply side of the Programme Delivery System. While improvement of the SUPPLY SIDE is a long term process strengthening the DEMAND SIDE, may be a short run process, which will improve the effectiveness of the total delivery system much faster.

There is a need to strengthen the DEMAND SIDE on a priority basis through:

  • Creating a culture of Social Audits of Development Programmes, and
  • Strengthening the Gram Sabhas, the closest institution to the Beneficiaries.

 

Origin and evolution of social audits:

  • Social audits were first mandated by law in 2005 under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • Subsequently, Parliament, the Supreme Court and many Central ministries mandated them in other areas as well.
  • Social audit units (SAUs) have been established in 26 States .
  • More than 5,000 full-time staff have been appointed.
  • A 30-day rigorous training programme has been designed, and more than 4,200 people have been trained.

 

Principles of Social Audit:

Eight specific key principles have been identified from Social Auditing practices around the world:

  • Multi-Perspective/Polyvocal: Reflect the views of all the stakeholders.
  • Comprehensive: Report on all aspects of the organization’s work and performance.
  • Participatory: Encourage participation of stakeholders and sharing of their values.
  • Multidirectional: Stakeholders share and give feedback on multiple aspects.
  • Regular: Produce social accounts on a regular basis so that the concept and the practice become embedded in the culture of the organisation covering all the activities.
  • Comparative: Provide a means whereby the organisation can compare its performance against benchmarks and other organisations’ performance.
  • Verified: Social accounts are audited by a suitably experienced person or agency with no vested interest in the organisation.
  • Disclosed: Audited accounts are disclosed to stakeholders and the wider community in the interests of accountability and transparency.

These are the pillars of Social Audit, where socio-cultural, administrative, legal and democratic settings form the foundation for operationalizing Social Audit.

 

Significance of Social Audit

The significance of social audit for social sector programmes can be understood from the following points:

  • Enhances reputation: Social Auditing helps the legislature and executive in identifying the problem areas and provides an opportunity to take a proactive stance and create solutions.
  • Alerts policymakers to stakeholder trends: Social Auditing is a tool that helps managers understand and anticipate stakeholder’s concerns.
  • Affects positive organisational change: Social Auditing identifies specific organisational improvement goals and highlights progress on their implementation and completeness.
  • Increases accountability: There is a strong emphasis on openness and accountability for government departments. Social Auditing uses external verification to validate that the Social Audit is inclusive and complete. This leads to reduction in wastages and corruption.
  • Assists in re-orienting and re-focusing priorities: Social Auditing could be a useful tool to help departments reshape their priorities in tune with people’s expectations.
  • Provides increased confidence in social areas: Social Audit can enable departments/ institutions to act with greater confidence in social areas that have been neglected in the past or have been given a lower priority.

 

Limitations of Social Audit:

  • The scope of social audits is highly localised and covers only certain selected aspects.
  • Social audits are often sporadic and ad hoc.
  • Monitoring is informal and unprocessed.
  • The findings of social audit cannot be generalised over the entire population.
  • Individual programs present their own unique challenges. For example literacy program for adults require data on migration.
  • Several problems require a package of programme to be implemented simultaneously. For example, rural health requires convergence between water supply, education, sanitation, nutrition etc. Social audit may therefore need a more holistic approach.
  • Absence of trained auditors.
  • Lack of action on audit reports and findings.
  • The governing bodies of most social audit units (SAUs) are not independent.
  • Some SAUs have to obtain sanction from the implementation agency before spending funds.
  • More than half the States have not followed the open process specified in the standards for the appointment of the SAU’s director.
  • Some States have conducted very few audits and a few have not conducted any.
  • Several states do not have adequate staff to cover all the panchayats even once a year.
  • The action taken by the State governments in response to the social audit findings has been extremely poor.
  • Adequate disciplinary action against people responsible for the irregularities are not being taken.

 

Way Forward:

  • For empowerment of the Demand System, investment in education and awareness of Public/ Gram Sabha members is required.
  • Institutional capacity need be increased at PRI, Block, and DRDA level, in terms of information Storage and distribution mechanism
  • Support may be provided to committed and competent NGOs to play the catalytic role including conducting Social Audit.
  • Media need be more Rural and Development focused
  • Recognize and Reward the members who have contributed to the process of strengthening Demand System and improved service delivery
  • Develop an INSTITUTIONAL FRAMEWORK for, organizing PRI Accounting Audit and Social Audits and putting them on the INTERNET
  • Promoting proactive disclosure of information to facilitate social audits.
  • Social audits of the National Food Security Act (NFSA) have failed to take off due to lack of funds. Like the Rural Development Ministry, the Ministry of Consumer Affairs, Food and Public Distribution should give funds to the SAUs and ask them to facilitate the social audits of the NFSA.
  • Social audit units should have an independent governing body and adequate staff.
  • Rules must be framed so that implementation agencies are mandated to play a supportive role in the social audit process and take prompt action on the findings.
  • A real time management information system should track the calendar, the social audit findings and the action taken, and reports on these should be made publicly available.
  • Social audit processes need mentoring and support as they expand into newer programmes.
  • CAG as an institution could partner with local citizens and state audit societies to train them, build capacities and issue advisories on framing of guidelines, developing criteria, methodology and reporting for audit.

 

Conclusion:

As efforts are being made to extend social audits to new areas, it is important to look at how well they are actually implemented based on parameters specified in the auditing standards jointly pioneered by the Comptroller and Auditor General (CAG) and the Ministry of Rural Development.

 

Sample Question:

As efforts are being made to extend social audits to new areas, it is important to look at how well they are actually implemented based on parameters specified in the auditing standards. How can social audits be made more effective?