SAIs and Stakeholder engagement – Social Audit in SAI India

SAIs and Stakeholder engagement – Social Audit in SAI India

by SAI India
Social Audit: Issues and Developments

Social Audit is relatively a new area in the field of Local Bodies Audit. This audit is conducted by the people, especially by those people who are affected by, or are the intended beneficiaries of the scheme being audited and facilitated by the government. As accountability at the level of Local Bodies has not kept pace with trends of financial delegation to them and their subsequent role in the implementation of a large number of Government schemes, Social audits are a potent mechanism to enhance accountability levels from at different levels of Local Bodies/Panchayats1. The depths and details up to which social audit goes for examination is not possible in any other evaluation or feedback mechanism.

Since Social Audit embodies the objectives of accountability as well as of transparency at the grass root level, SAI India as the supreme audit institution, has been supportive of the concept of ‘Social Audit’.

Recent Developments

Ministry of Rural Development (MoRD) in consultation with SAI India has framed Audit of Scheme Rules, 2011 under MGNREG Act, 20052   to examine the extent of assurance provided by schemes which is the basis for social audit in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) issued in April 2011. Other schemes are also making provisions for social audit. A Workshop on Social Audit was organised by the SAI India in March 2015 in which all the stakeholders participated. A recently undertaken Compliance Audit on the implementation of the Audit of Scheme Rules, 2011 indicated specific inadequacies and challenges being faced by States in institutionalizing social audits and the nature of measures that need to be taken by the Ministry of Rural Development (MoRD) to correct the same.

A Joint Task Force on Social Audit was constituted by Ministry of Rural Development (MoRD) and SAI India to study and give recommendations on various issues relating to social audit. The Task Force includes officers from SAI India and the Ministry in addition to members from Civil Society Organizations (CSOs). The Joint Task force set up four working groups to give their recommendations for:

(1) Establishment, roll out & progress of social audit units;
(2) Strengthening synergies on social audit;
(3) Developing social auditing standards; and
(4) Expanding the scope of social unit.

Panchayat is the generic name for local bodies in rural areas.

2Mahatma Gandhi National Rural Employment Guarantee Act( MGNREGA), is an Indian labour law and social security measure that aims to guarantee the ‘right to work’

The working groups had representatives from the SAI India, MoRD, MoPR3, State government and Central Statistics Office (CSO4). The groups held various meetings and gave their recommendations. The recommendations had been vetted by us and sent to the Ministry for further necessary action. The main recommendations of the Working Groups are given in the box below.

Main recommendations of Working Groups on Social Audit
Working Group I – Establishment, roll out & progress of social audit units:

i. The Governing Body of the  Social Audit Unit (SAU) should be chaired by an individual chosen by the State Government from a list of eminent persons as identified and communicated by the Ministry of Rural Development, Government of India in consultation with SAI India.  The Chairperson should have sufficient experience in the field of Public audit, Government accounts, administration capacity building and training & development. The Governing body should include chief auditor of State dealing with social audit sector;
ii. SAU may forward quarterly report of progress in social audit;
iii. MoRD and SAI India may jointly organize periodic reviews on progress on the establishment of independent Social Audit Units and the institutionalization of social audits by the SAUs, at least twice a year;
iv. Defining non- compliance with the MGNREGS Audit of Scheme Rules and violation of the Auditing Standards as an offence under the MGNREG Act thereby allowing the Federal Government to impose Section 25 of the Act on the concerned Government officers of the State Governments.

Working Group II – Strengthening synergies on social audit:

a. The Federal Government in consultation with the SAI India may jointly lay down the minimum standards and content of training for District, Block and Village Resource Persons of the SAU;
b. Representatives from Provincial office of SAI India  and Director Local Fund Audit Department (DLFAD5)may be invited to participate in the training process of SAU Resource Persons to introduce them to the theory of audit and the key principles from the discipline of audit that must be maintained in the exercise of conducting social audit;
c. A summary of the findings of social audits conducted during a financial year may be submitted by the State Government to SAI India;
d. The Social Audit Unit and its Resource Persons must ensure that findings listed in the social audit report are substantiated by due verification and evidence. This shall ensure that social audit reports are presented in a form that it can be taken cognizance of by implementing agencies for taking the required criminal and disciplinary action against those found indulging in malpractices/misappropriation.

Working Group III – Developing social auditing standards:

These cover Attribute standards which Social Audit Units (SAUs) must possess and performance standards of Resource Persons of SAUs. They define the financial and administrative structure of the SAUs and amongst other things mention
i. Open decision making: all decision making should be done in public in the full view of all interested stake holders. This is the best way of ensuring that decisions are not only fair but also appear to be fair;
ii. Auditors should identify and assess the risks of fraud relevant to the audit objectives and make enquiries and perform procedures to identify and respond to the risks of fraud relevant to the audit objectives. They should be alert to the possibility of fraud throughout the audit process;
iii. Audit evidence is necessary to support the auditor’s opinion and report.
iv. Social auditors should document what they do in a sufficiently detailed manner to provide a clear understanding of the procedures performed, evidence obtained and conclusions reached. Audit documentation should include an audit plan and audit methodology;
v. To ensure audits conducted conform to these standards and are of a consistently high quality, quality control procedures should be framed by SAUs to cover the direction, supervision, collation and consolidation of reports and review of the audit process.
vi. Review of individual report by senior hierarchy and if necessary, by third party;
vii. Continuous training programmes of personnel of SAUs would ensure quality conduct of audit. Reliable training institutes/organizations active in social sector should be approached for inputs for the training.
viii. Social Audits should be independent of the interference of implementing agencies. Therefore, social audits of Gram-sabhas6 may not be chaired by anyone involved in the implementation of MGNREGA in the Gram Panchayat, including the Sarpanch7. It may be presided by, for instance, the Doctor posted at PHC. There should be at least one woman member in the SAU;
ix. Wall painting should specifically mention estimate of work, date of commencement & completion of work, schedule of rates & status of work etc. and citizen information boards should be placed at all work sites;

Working Group IV – Expanding the scope of social audit:

i. The Working Group recommends the introduction of social audits in Civil Society Groups that have volunteered for the same, to develop detailed methodologies for conducting social audits of schemes which will be conducted with the active facilitation of the Gram Panchayat;
ii. In addition to the 6 Ministries who have currently volunteered to undertake pilot social audits, a similar process may be sought to be adopted for all schemes pertaining to the sectors of a Gram Panchayat jurisdiction.

Ministry of Rural Development (December 2016) accepted the recommendations of the Task Force and circulated the action points to all states. Further, the social auditing standards were also circulated for adoption for social audit under MNREGA.

3The Ministry of Panchayati Raj is a Ministry of the Government of India looking after the ongoing process of decentralization and local  self-governance  at city and village level.
4The Central Statistics Office coordinates the statistical activities in the country and evolves statistical standards
5This department, under the control of provincial governments ,  is mandated to audit the local bodies in many states of India
6Village level local self-governance body
7Head of village level local self-governance body

Challenges for Social Audit

Social Audit is yet to get grounded as an institutionalized means of citizen monitoring in other States. States have not been able to set up Social Audit Units (SAUs) that are independent of the implementation Departments, thereby violating the fundamental principle of an independent social audit. In addition, though State Governments report the conduct of social audits in their States, the credibility and rigour of these social audits conducted needs to be verified.

To develop and safeguard the ethics and professionalism, institutionalizing the independence of the SAU is absolutely essential. It is essential that Social Audit Resource Persons are independent and impartial, not only in fact but in appearance to enable them to express a conclusion and be seen to express a conclusion without bias, conflict of interest or undue influence of others.

Capacity building is the sustained development of the core capabilities of an organisation to deliver its mandate more effectively so as to create the desired impact. An SAU’s capacity is its institutional, organisational and professional ability to deliver key audit results both in terms of its audit products and contribution to accountability, good governance and service delivery. There is an immediate need to develop a comprehensive and standardized training module to train resource persons of the SAU on Social Audit. Currently, different provinces adhere to varying standards of training in terms of content, duration and practical exposure thereby resulting in Resource Persons of disparate calibre conducting social audits on the ground. This has a direct impact on the quality of social audits and social audit reports being generated from the ground.

Social audit team should also motivate beneficiaries to express their concern and grievances to raise during the public hearing and follow-up of decisions should be done. As the beneficiaries are from rural background and mostly illiterate, providing assurance on aware participation is a big challenge.

Road Ahead for SAI India

It may be emphasized that as SAI, we need to support all transparency enhancing mechanisms in Local Bodies audit including social audit. We have to provide handholding support to the nascent SAUs and engage with State governments to give it adequate resources while helping it to develop an independent institution.

As capacity building is an emergent need for Social Audit, SAI India has provided inputs to MoRD recently to develop an easy and suitable audit training module, in local languages, which could explain the basic processes such as sanctions, accounts keeping, vouching of expenditure, measurement of assets and services, etc. Those could be disseminated through dynamic usage of Information & Communication Technology (ICT), civil society groups, workshops organised directly at the regional training institutes of SAI India or at other external venues by identified knowledge institutions.

Identification, training and deployment of suitable Resource Persons at the village, block, district and State level, drawing from primary stakeholders and other civil society organizations having knowledge and experience of working for the rights of people can be a challenge to face. SAI India could help by dovetailing Technical Guidance and Supervision (TGS)8 with social audit.

Incorporation of findings of social audits – A summary of the social audit reports of village level local self-government bodies  and civil society groups could be incorporated (either to provide a different perspective and/or to strengthen / supplement our audit findings) in our performance audit reports; due credit should be given to the social audit agencies involved. Social audit groups may be encouraged to move beyond MGNREGA to cover other critical social sector programmes e.g. National Rural Health Mission (NRHM), National Program for Education for all, Public Distribution Scheme, Rural Water Supply, etc.

Considering the progress made by the civil society groups and Gram Sabhas in the provinces of Andhra Pradesh and Rajasthan and the initiative taken by these State Governments in setting up separate directorates for social audit, we may, as a first step, synergize our audit of social sector programmes in these States with social audit.

We need to work towards cooperation, coordination and synergy with the social audit groups to avoid duplication of work and use the findings of social audit in all three types of audits being carried out by the SAI India. While our staff need not become a part of the social audit teams of Gram Sabha/ NGOs, participating as observers both in Gram Sabha meetings and Jan Sunwais/sammelans9 organized by civil society groups within an approved structure of objective and norms of conduct could enhance our insight into the implementation of the programmes.

Considering that social audits happen largely around villages and mofussil towns, the closest SAI India link with social audit would be the head of SAI India office at State level, especially those dealing with the civil, works, and Local Bodies’ audits. SAI India office dealing with audit of ‘utility’ PSUs in the power, water, mining, etc. sectors should also be involved, if necessary. Regional Training centres of SAI India, wherever they exist, could provide the logistic support for mutual capacity building & sensitization of the civil society groups and government auditors. All these resources, especially given other demands on of SAI India office at State level agenda, would, however, be insufficient to cater to a vast emerging need for social audit. Involvement of   SAI India at State level would therefore have to be selectively direct as well as indirect through facilitation and knowledge-sharing with other civil society organizations and knowledge institutions predominantly concerned with evaluation, analysis, advocacy and capacity building at various levels.

8The arrangement through which SAI India provides guidance to the auditor of Local Self Government bodies in states where SAI India is not the auditor itself .
9Jan Sunwai or Public Hearing is a process by which people who may be affected by a particular action or decision have the opportunity to ask questions, make submissions or register objections to a panel of experts/ government officers.

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