Social Auditing As A Tool For Enhancing Rural Development In Nigeria (A Case Study Of Exxon Mobil Eket)

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Social Auditing As A Tool For Enhancing Rural Development In Nigeria (A Case Study Of Exxon Mobil Eket)


Abstract


The purpose of this study was to examine the effect of social auditing as a tool for enhancing rural development in Nigeria. The study was designed to educate the managers of companies, stakeholders, and the general public including companies host communities on the rudiments of social accounting and its effect on rural development. The research was based on a cross-sectional design with a sample size of 500 x 500 mm. The design was suitable for the study as the objective of the study wasto ascertain the impact of social auditory auditing on the rural development of Nigeria. In this paper, some recommendations were made which in the opinion of the researcher will be of benefit in addressing the effectof social audited as an enhancing tool for the development of rural communities. This study will be a contribution to the body of literature in the area of the effects of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.


Chapter One


Introduction

1.1 Background to the Study

In the era of corporate social responsibility, where corporations are often expected not just to deliver value to consumers and shareholders but also to meet environmental and social standards deemed desirable by some vocal members of the general public including the host communities, social auditing can help companies create, improve and maintain a positive public relations image. In essence, social auditing will enhance rural development by means of corporate social responsibility by companies (Zadek, Pruzan & Evans, 1997).

Social auditing also entails a formal review of a company’s endeavors in social responsibility. A social audit looks at factors such as a company’s record of charitable giving, volunteer activity, energy use, transparency, work environment and worker pay and benefits to evaluate what kind of social and environmental impact a company is having in the locations where it operates (Zigga, 2003). Social audits are optional i.e. companies can choose whether to perform them and whether to release the results publicly or only use them internally. It also involves the process of evaluating a firm’s various operating procedures, code of conduct, and other factors to determine its effect on a societal development. The goal is to identify what, if any, actions of the firm have impacted the society in some way. A social audit may be initiated by a firm that is seeking to improve its cohesiveness or improve its image within the society by means of contributing to the development of the community. If the results are positive, they may be released to the public (Wikipedia, 2015). For example, if a factory is believed to have a negative impact, the company may have a social audit conducted to identify actions that actually benefit the society.

Companies around the globe are beginning to assess their social performance and report the results of those assessments as a means of demonstrating their commitment to social responsibility. These audits can help companies identify risks, noncompliance with laws and company policies, and areas that need improvement. As a result, it can be used as a tool for rural development. An audit should provide a systematic and objective survey of the firm’s ethical culture and values. Audits can also spotlight social responsibility activities and accomplishments related to environmental impact, sustainable development, consumer welfare, fair trade, treatment of employees, and relationships with other stakeholders. These reports are often called “social audits,” “social responsibility reports,” or “corporate citizenship audits (Zadek, Pruzan & Evans, 1997).”

Regardless of what name they go by, the reports of such auditing efforts are important for demonstrating a firm’s commitment to and ensuring the continuous improvement of its social responsibility efforts. Without reliable measurements of the achievement of social objectives, a company has no concrete way to verify their importance, link them to organizational performance, justify expenditures to stockholders and investors, or address any stakeholder concerns.

Social auditing are tools that companies can employ to identify and measure their progress and challenges to stakeholders—including employees, customers, investors, suppliers, community members, activists, the media, and regulators—who are increasingly demanding that companies be transparent and accountable for their commitments and performance.

The auditing process is important to business because it can improve financial performance, increase attractiveness to investors, improve relationships with stakeholders, identify potential liabilities, improve organizational effectiveness, and decrease the risk of misconduct and adverse publicity. A firm’s reputation depends on transparency and openness in reporting and improving its activities. The social audit provides an objective approach for an organization to demonstrate its commitment to improving strategic planning, including showing social accountability and commitment to monitoring and evaluating social issues. Thus, it is critical that top managers understand and embrace the strategic importance of the social audit in order to contribute to the development of their host communities. Key stakeholders of the company should also be involved in the audit to ensure the integration of their perspectives into the firm’s economic, legal, ethical, and philanthropic responsibilities (Waddock & Smith, 2000). Companies are working to incorporate accountability into actions ranging from long-term planning to everyday decision making, including corporate governance, financial reporting, and diversity. The strategic responsibility goals and outcomes measured in the social audit need to be communicated throughout the organization and to all of its stakeholders so that everyone is aware of what the company would like to achieve and what progress has been made in achieving its goals. The social audit should provide regular, comprehensive, and comparative verification of the views of stakeholders. Disclosure is a key part of auditing to encourage constructive feedback. Directions for finding best practices and continuous improvement on legal, social, ethical, philanthropic, and other issues can come from all stakeholders (Waddock & Smith, 2000).


1.2 Statement of the Problem

Stakeholders are demanding increased transparency and are taking a more active role in communicating their expectations and asking for corporate accountability on a variety of issues. Government regulators are calling on companies to increase the quantity and quality of information disclosed aimed at increasing the companies’ accountability to society. For example, the Sarbanes-Oxley Act requires top financial officers to file their company’s code of ethics with the Securities and Exchange Commission. A number of financial and auditing decisions must also be reported on a regular basis.

In general, social auditing is not usually associated with regulatory requirements, whereas financial audits are required of public companies that issue securities. Because social audits are more voluntary, there are fewer standards that a company can apply with regard to reporting frequency, disclosure requirements, and remedial actions that it should take in response to results. This may change as more companies build ethics and social responsibility programs in the current environment. However, this study is examining social auditing as a tool for enhancing rural development in Nigeria.


1.3 Objectives of the Study

The following are the significance of this study:

  1. To examine social auditing as a tool for enhancing rural development in Nigeria.
  2. To examine the level of practice of social auditing by Exxon Mobil Eket.
  3. To identify the benefits of social auditing to rural area and host communities.

1.4 Hypothesis

  1. HO: There is no significant relationship between social auditing and rural development in Nigeria
    HA: There is significant relationship between social auditing and rural development in Nigeria
  2. H0: Social auditing is not a significant tool for enhancing rural development in Nigeria
    HA: Social auditing is a significant tool for enhancing rural development in Nigeria.

1.5 Significance of the Study

The following are the significance of this study:

  1. The outcome of this study will educate the managers of companies, stakeholders and the general public include companies host communities on the rudiments of social auditing and its effect on rural development.
  2. This research will be a contribution to the body of literature in the area of the effect of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.

1.6 Scope / Limitations of the Study

The study will cover the practice of social auditing by Exxon Mobil Eket and its effect on rural development.

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study.

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Finance:

The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover


1.7 Definition of Terms

Social Audit

Social audit is a process of reviewing official records and determining whether state reported expenditures reflect the actual moneyspent on the ground.

Rural Development

Rural development is the process of improving the quality of life and economic well-being of people living in relatively isolated and sparsely populated areas. Rural development has traditionally centered on the exploitation of land-intensive natural resources such as agriculture and forestry.

Tools

A tool is any physical item that can be used to achieve a goal, especially if the item is not consumed in the process. Tool use by humans dates back millions of years, and other animals are also known to employ simple tools


1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows.

  • Chapter one is concern with the introduction, which consist of the (background of the study), statement of the problem, objectives of the study, research questions, research hypotheses, significance of the study, scope of the study etc.
  • Chapter two being the review of the related literature presents the theoretical framework, conceptual framework and other areas concerning the subject matter.
  • Chapter three is a research methodology covers deals on the research design and methods adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study wasto ascertain the effect of social auditing as a tool for enhancing rural development in Nigeria.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the effect of social auditing as a tool for enhancing rural development in Nigeria.


5.2 Summary

Organizations have developed a variety of strategies for dealing with this intersection of societal needs, the natural environment, and corresponding business imperatives. Organizations can also be considered on a developmental continuum with respect to how deeply and how well they are integrating social responsibility approaches into both strategy and daily operations worldwide. At one end of the continuum are organizations that do not acknowledge any responsibility to society and the environment. And on the other end of the continuum are those organizations that view their operations as having a significant impact as well as reliance on society at the economic, social, and ecological levels, thus resulting in a sense of responsibility beyond the traditional boundaries of the organization (Reign, 2001). Companies face challenges and limitations as they implement CSR. These usually relate either to political issues or to organizational-level concerns and are often embedded in culture. The complexity of operating in a global society places new demands on organizations and their leadership. This study concludes that profitable organizations in Nigeria do not invest much in corporate social responsibilities and this has tendency to threaten their long run existence. Though, in Nigeria social responsibility is encouraged in achieving greater firm’s performance, but organizations in the country have not really engaged in CSR which have implications for the survival of these firms. This paper therefore offers the following policy suggestions on how firms can improve on their CSR to ensure greater and better performance.


5.3 Conclusion

Social auditing enables an organization to assess and demonstrate its social, economic, and environmental benefits and limitations. It is a way of measuring the extent to which an organization lives up to the shared values and objectives it has committed itself to. Along with corporate social responsibility and corporate credibility, corporate governance provides the foundations of market integrity and, thus, imposes a lot of responsibility on the Board of Directors of an organization. Social auditing promotes and demonstrates accountability, transparency and has other positive advantages. Since social auditing increases an organization’s willingness to implement good corporate governance and transparency, it is recommended that organizations should carry out social audits at regularly intervals.


5.4 Recommendation

Haven successful complete the study the researcher therefore makes the following recommendation; Policy framework should be design for corporate social responsibilities in Nigeria by the government and ensure compliance by setting mechanisms and institutions for the implementation of CSR. Companies in Nigeria particularly the profitable one should give greater priority to CSR. This has the tendency to assists them to survive and maintain their profitability. Attention should be given to social accounting and social costs by firms in Nigeria. Social audits should be carried out with the involvement of stakeholders that may include employees, clients, volunteers, contractors and local residents.


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