Philanthropy is deeply rooted in Indian culture as far as 600BC as evident in Arthashastra. Ethical Businesses always strive towards improving the quality of life of people by offering safe and excellent products. The efficient use of resources in a business to benefit all the stakeholders involved has an across-the-board impact on financial performance which results in increased revenue for the businesses. This typically happens if a sense of social responsibility prevails throughout the organisation in all the business processes and become a routine practice among its employees. Read more about Corporate Social Responsibility here. Social Audit can be looked upon as being at the farthest end of audit functions; more tilted towards control and monitoring part of management. Chanakya, the Indian Economist, gave us one of the greatest management principles as, “Gaining the non-possessed, protecting the gained and making the protected grow through deployment of persons”. Social Audits, if implemented properly, can just validate this principle given by Chanakya, read more about social audit here.
Section 135 of the Companies Act 2013, requires every company above the specified thresholds of turnover, or net worth, or net profit, to spend at least 2 % of the average net profits earned during three immediately preceding financial years, on Corporate Social Responsibility.
Section 135 of the Companies Act 2013 and Schedule VII of the Act give the broad contour within which the Board of the eligible companies have been empowered to formulate their CSR policies and take decision with respect to allocation of CSR funds across various development sectors.
An assessment of CSR expenditure of 7334 companies, for which information has been compiled for the year 2014-15, indicates that 142 Public Sector Undertakings and 2997 Private Sector companies together have spent Rs. 8803 crore during 2014-15 as summarised above (source: http://www.mca.gov.in/)