Rethinking the Overreliance on Auditor Testing and Training Indicators in Social Audits

In an era where Environmental, Social, and Governance (ESG) standards drive non-financial supply chain standards, social audits (private inspections) continue to be a popular tool in the business world for verifying ethical operations.

Yet, as we dive deeper into the world of social audits, it becomes clear that determining the true independence and credibility of a social audit report is not straightforward because it is not based solely on the integrity and knowledge of those who conduct the assessment, but a broader range of connected factors. End users of social audits often struggle to make informed decisions due to an overemphasis on individual auditor testing and training indicators, instead of a broader blend of measures and disclosures that contribute to understanding the factual basis for a genuinely independent and credible audit.

What Defines Social Audit Independence and Credibility?

Independence and credibility in social audits are multifaceted. Independence means that the audit is free from external influences that could compromise its objectivity. Credibility, on the other hand, means that the audit's findings are trustworthy and accurately reflect the on-the-ground realities of the audited entity.

While standardized testing and rigorous training of auditors are important, these measures alone do not ensure that an audit is truly independent or credible. The intent behind the standards, the methodologies used for assessments, and the ability of workers to participate safely and openly are equally critical.

The Limitations of Over-Reliance on Auditor Testing and Training Indicators

Individual auditor testing and training indicators are designed to provide measurable insights into the knowledge and understanding that an auditor has about specific aspects of social compliance. However, an overemphasis on these indicators may overshadow equally important indicators that allow audit users or stakeholders to assess for themselves the facts behind statements about the independence and credibility of the social audit process. The risk is that auditor testing and training indicators become box-ticking exercise, interchangeable for audit independence and credibility, further encouraging the status quo versus more comprehensive evaluations that help develop stakeholder trust.

A Call for Reform

Regulators, policymakers, businesses, and auditors must recognize that true social audit independence and credibility come from more than just the integrity and knowledge of the individual conducting the measurement. It involves a range of factors, including but not limited to the intent of the standard, the methodology used to conduct the assessment, whether workers were able to participate safely, etc.

Introducing the Social Audit Quality Framework (SAQF)

In response to these challenges, we are excited to introduce the upcoming Social Audit Quality Framework (SAQF). This open-source tool is designed to enhance the evaluation of social compliance audits within due diligence and responsible business conduct systems across global supply chains. The SAQF provides a structured methodology for assessing the independence and credibility of social audit reports, helping users make more informed decisions.

We are pleased to announce the upcoming public comment period, collaborative development partners and webinars starting in July 2024, where stakeholders can provide feedback on the SAQF and gain a deeper understanding of its measures. This collaborative effort aims to refine the framework, ensuring it remains a dynamic and effective tool for improving social auditing practices. Your insights, experiences, and feedback are invaluable as we navigate this important conversation and seek to develop guidance for policy makers and end users of social audits.