India Public Participation in the Audit Process: Tracing the effects of Social Audits
- Branch of Government:
Open Budget Survey / Public Participation in the Budget Process Score (Out of 100): 2015: 19 – 2017: 15 – 2019: 11
Stage in Fiscal Policy CycleAudit
Social audit can be defined as a mechanism for reviewing official government records for programs or initiatives implemented by government, by the community with the active involvement and participation of the primary stakeholders. The aim of social audit is to determine whether state reported expenditures reflect the actual monies spent on the ground and verify the associated actual development outcomes achieved.
This verification process is followed by ‘Social Audit Public Hearings’ where information gathered is read out publicly, and people are given an opportunity to question officials, seek and obtain information, verify financial expenditure, examine the provision of entitlements, and critically evaluate the quality of works as well as the functioning of the program staff.
This practices illustrates the principles of openness, transparency, sustainability, inclusiveness, and respect for self-expression.
Social audit in Andra Pradesh is led by non-state actors and this is an example of invited participation, where the Ministry of Rural Development, Government of Andhra Pradesh initiated the engagement of non-government actors in the audit process. This takes place at the sub national level.
History of Social Audit in India
The idea of social audit was born in the early 1990s out of a larger struggle to ensure minimum wage regulation in drought relief works and availability of subsidized food and other essential commodities to the poorest through the public distribution system(PDS) spearheaded by the Mazdoor Kisan Shakti Sangathan (MKSS) a grassroots organization based in Rajasthan, a state located in the western part of India. However, before it could take deep roots in Rajasthan, the programme got derailed by opposition from local elected leadership.
Nevertheless, the similar model of social audit got well established in Andhra Pradesh (AP), (a state located in Southern India) which is a success story in itself.
Social Audit and Andhra Pradesh
While efforts to conduct social audit on Mahatma Gandhi National Rural Employment Guarantee (MNREGA), an employment guarantee program for poorer section of the society, have been underway in different parts of the country[ref], Andhra Pradesh is the only state in India that has developed an institutional architecture for undertaking regular social audit.
A team from Andhra Pradesh(A.P.) led by the then Principal Secretary for Rural Development, the A.P. government, took part in one of the social audits conducted by the MKSS in Rajasthan. Inspired by what he saw, the Principal Secretary decided to experiment with the possibility of undertaking regular social audits in A.P. for auditing MNREGA welfare program. The MKSS trained officials and interested civil society activists and worked with the government of A.P. to design the conduct of these pilot social audits. These pilots demonstrated the feasibility of conducting government led social audits on public works programs and generated the momentum necessary for the bureaucracy at the sub national level to consider the idea of institutionalizing social audit processes. Since then, the Government of A.P. has created an institutional structure to conduct regular social audits in the state. It has gone a step further forward and has enacted Promotion of Social Audit and Prevention of Corrupt Practices Act, 2012 providing for creation of mobile criminal courts with powers to sentence erring officials for up to two years. Recently, A. P has started institutional social audit in other welfare programs apart from MNREGA. (e.g. Social Security Pensions)
Large sums of money are channelled into social sector programs. Lack of information on how these investments translate into outcomes on the ground is a major barrier to evaluating their effectiveness and determining whether taxpayers’ money is being well spent. Social audit is a process where the actual beneficiaries seek information and verification from agencies on actual outcomes in a systematic manner, thus ensuring or leading to public accountability. The process of social audit goes beyond the realm of financial auditing and covers the issues of equity and quality in programme implementation, in response to programmes already being implemented by the government. The process of social audits is used to establish whether or not the benefit meant for an individual or a community has reached them or not. It also provides a platform for the individuals or community members to engage with the State and those implementing programmes or projects meant for them.
Legal backing for social audit was provided by Mahatma Gandhi National Rural Employment Guarantee (MGNREG) Act enacted in 2005. Section 17(2) of MGNREG Act states that the Gram Sabha (local self-government organisation in India at the village or small town level) shall conduct regular social audits of all the projects under the MGNREG welfare program taken up within the Gram Panchayat.
Who and How
In 2006, when first introduced in A.P.[ref], social audits found their institutional home in the Strategy and Performance Innovation Unit (SPIU) of the rural development department. The SPIU was headed by a Director who was given the responsibility for implementing social audits in the state. A social development specialist, a contractual position created to bring in social audit expertise, supported the SPIU director. The Specialist was responsible for taking all policy and management decisions along with the SPIU director. By mid-2007, once the process was firmly in place, the state social audit team was confronted with the challenge of institutionalizing the social audit process. In addition, the team faced a larger methodological question – can and should the government legitimately audit its own activities?
Along this line of thinking, a decision was taken to create an independent agency under the Rural Development Department. In May 2009, the Society for Social Audits Accountability and Transparency (SSAAT) was created. SSAAT is an independent agency set up by the Department of Rural Development, Government of Andhra Pradesh to conduct social audits of its flagship welfare programmes[ref]. Interestingly, many staff members including the SSAAT directors have been drawn from activist groups and CSOs around the country. This has been important both in ensuring that the right kind of expertise is brought in (the current director is a member of the MKSS) and that public perception of objectivity is maintained. Most of the team members[ref] are drawn exclusively from civil society organizations. This extensive involvement of civil society organizations is central to the key element of the social audit structure. An audit by definition cannot be conducted by the implementing agency. By bringing civil society organizations into the process the state government has crossed this hurdle. The presence of civil society ensures that there is a high degree of autonomy and objectivity to the exercise. State government has given full financial and operational support to the SSAT.7 It is one of the most important checks and balances that have been built in to the process. The social audit itself is conducted by volunteers from the villages. Thus far, the social audit team has developed over 200,000 trained village social auditors.
These audits have been attended by upwards of a million labourers with tens of thousands of them providing testimonials regarding problems, both financial and non-financial, in the operation of the programme. On average, 130-150 social audits are conducted each month across all 22 districts, with not less than 2000 people engaged in the exercise. The “block” is the administrative unit (with an average of 21 panchayats[ref]) in which the social audit exercise is conducted. The SA is conducted in all the panchayats over a ten day period.[ref]
A lot of preparatory work goes in to the actual conduct of the social audit . The dates and timing of the social audits are determined by a quarterly calendar prepared by the State Team Monitors (STMs). STMs are responsible for the overall management of social audit in a cluster of districts. The work includes scheduling the audits, generating reports of the audit, (rapid social audit reports), staffing training, and other human resources issues.[ref]
Prior to the social audit, official requests are sent to the local officials requesting relevant records and measurement books. On receipt of these letters, the local officials are mandated to provide information to the village elected representatives of the upcoming social audit. The social audit itself takes approximately 10-12 days.
Step 1: On Day 1 of the audit, the audit team collects the requested data from the local government. This is followed by a village level meeting with elected representatives to apprise them of the forthcoming social audit in their villages. The audit team then starts the recruitment of Village Social Auditors (VSAs). Once identified, the VSAs undergo two-three day training on different aspects of conducting a social audit.
Step 2: Parallel to the trainings, meticulous research is conducted and all official records pertaining to the specific government Programs including pay slips, technical sanctions, utilization certificates (financial records), bills and vouchers are scrutinized and consolidated into manageable and easy to understand formats. Armed with these documents, the VSAs then go to the villages to conduct the actual audit over a three to four day period.
Step 3: During this time, auditors stay in the villages assigned to them. To conduct the audit, the village auditors go from house to house cross verifying official records, examining the worksites and gathering information from wage-seekers. After the verification is complete, the auditors organize a village assembly or gram sabha where findings from the audit are shared. Local politicians, elected members and local officials, most importantly, the field assistants participate in these meetings. The village meetings begin with an information sharing session. This often acts as a catalyst for discussion and debate on the state of program or policy implementation. During these meetings, names of wage seekers and amounts due to them are publicly read out. This information triggers a detailed discussion among participants on different aspects of implementation and grievances therein. After this meeting, the VSAs and state audit team consolidate all reports and put them in a draft Decision Taken Format (DTF). The DTF includes a village level summary of all actionable issues (i.e. on which the implementing agency is yet to take action) as well as issues that have already been resolved at the level of the gram sabha.
Step 4: The social audit process concludes with a public hearing or JanSunwai. The responsibility of organizing and financing the public hearing rests with the local government. Typically, social audit attendees include wage seekers; the social audit team (VSAs, DRPs, SRPs, STMs, Director); the Branch Post Master (BPM) or the Superintendent Post Master (SPM) from the post office wherein payments due to wage seekers are deposited in their individual accounts; key implementing officials (Field Assistant, Technical Assistant, Assistant Engineer, Engineering Consultant, MPDO, Assistant Program Officer (APO)); officers from the vigilance wing; and elected representatives. Attendance at a social audit ranges between 200-800 people. At the hearing, village-level complaints are heard; wage seeker testimonies are verified; and relevant officials are given an opportunity to respond. The presiding officer has authority to take decisions on matters on which actions are to be taken by the implementing agency. These are summarized in a final “Decision Taken Report” (DTR). The presiding officer signs the DTR. If for any reason a public hearing is not held or is held and officials do not attend, the draft DTR is deemed final. What happens after a social audit? Within twenty-four hours of the social audit, signed copies of the DTR are sent to key officials for follow up. In addition, Action Taken Reports (ATRs) are uploaded on an intranet within the SSAAT website.
As discussed above, social audit goes beyond realm of traditional financial audit as it focusses on issues such as awareness, grievance redressal, feedback about the programmes, physical verification, etc., in its ambit. It is more similar to the concept of Performance Audit. Further, the depths and details up to which social audit goes for examination is not possible in any other evaluation or feedback mechanism. Therefore, when conducted effectively it can provide valuable feedback on efficiency of a government programme. Even Supreme Audit Institutions can use this information while conducting the risk analysis for prioritizing audit issues. Based on its soundness, SAIs can also use evidences and reports generated by social audit in their audit to highlight various issues in important programmes.
Results and Impact
The average cost of a SA per gram panchayat is between $76 to $ 150. (inclusive of establishment costs), based on the Andhra experience. However, the impact of the SA have been many folds.
Social Audit Public Hearing perform three key functions: 1) First it produces informed citizens; 2) Second it encourages citizens to participate in local affairs through the provision of information and social audit 3) Third it helps to create a sense of civic responsibility by bringing people together to address issues of collective concerns. The social audit process also enables people to be aware of their rights and entitlements and offer a space and mechanisms through which these rights can be exercised.
Numerous qualitative[ref] and[ref] quantitative impact evaluation studies[ref] on the implementation of Social Audit in Andhra Pradesh have proved that Social Audit has successfully established itself as a low-cost and powerful participatory tool that can raise awareness & strengthen accountability in public program implementation.
Using a unique panel data set assembled from official social audit reports, a study on “Social audits and MGNREGA delivery: Lessons from Andhra Pradesh “[ref] conducted by Farzana Afridi from Indian Statistical Institute, Delhi & Vegard Iversen from the University of Manchester suggests that there is a definitive increase in beneficiary awareness of entitlements and learning with repeated audits in Andhra Pradesh. The study also found that the cost of conducting social audits is 1% of annual expenditure of the overall budget of a specific welfare program, therefore making it a low cost mechanism to improve delivery through community monitoring.
After a few rounds of social audit in the state of A.P. it was observed by Afridi & Iversen
that there is a shift in the pattern of irregularities. There is an increase in harder-to-detect materials-related irregularities and decrease in the number of easy-to-detect irregularities. Thus it can be concluded that while the top down and participatory elements of the audit process have been effective in detecting irregularities, the audits are not an effective deterrent to corruption but merely shifted the corruption from regular to hard to detect types.
The AP experience has uniquely benefited from the top level and strong political commitment to the social audit process. The state and the various political parties that were in power since 2007 have also demonstrated a strong willingness to experiment with the use of technology and other mechanisms to strengthen monitoring and the quality of service delivery (Murali 2013). These favourable initial conditions have, no doubt, critically aided and bolstered the potential of the social audit process in AP. Needless to say, India’s landmark Access to Information Law (2005) provided the enabling environment for the successful implementation of the social audit experience.
Following are a few key conditions for success for social audit:
Coalitions at the frontline: Bringing politicians, local officials and other vested interests on board with the social audit process through continuous dialogue is essential. This requires regular training and interactions between social auditors and others. In case of Andhra Pradesh, the Rural Development Dept. has played a very supportive role in this entire process. The social audit team is given complete autonomy by the Department in its everyday functions. To ensure the smooth conduct of the audit and the full support and cooperation from local officials, the government from time to time issues various orders detailing rules and procedures related to the audit. These orders are essential as they have given social auditors easy access to government records as well as made it incumbent of local officials to participate in the public hearings and respond to social audit findings.
Strong record keeping: Regular, accessible information is the bedrock of a social audit. Steps must be taken to computerize record management at every level of the implementation chain so that information requests for social audits can be easily responded to.
Cost: The cost implication of social audit is another factor militating against its establishment. To incorporate social auditing into official operations requires a functional institutional mechanism adequately staffed with qualified personnel. For governments and civil society groups alike; it also requires continuous training for individuals recruited to work at the community level. Beyond building personnel technical capacity, availability of facilities, office supplies, communications equipment and means of transportation are all necessary to actually implement social audits. In case of Andhra Pradesh, the cost comes from the budget of the welfare program it is monitoring.
Effective follow-up and grievance redress: Building a grievance redress system that is empowered to take action is essential to ensuring accountability through social audits. Some important questions to consider in designing a grievance redress structure include: should follow-up action be outsourced to an independent grievance redress cell? If so, what should the structure of such a cell be? Where should it be housed? Who should it report to? What should its functions and powers include? How will it hold other government departments accountable?
Legal Grounding: Given that public servants are the people whose activities are subjected to scrutiny, social auditing tends to breed fierce opposition from them. Their antagonism manifests in failure to release relevant public information applied for by citizens. This is particularly the case where the law is silent on sanctions against such actions. Opposition to social audit could also take the form of loss of files containing such information. A legal grounding of the Indian social audit mechanisms[ref] helped to overcome this opposition to a great extent.
A key lesson for A.P. and for states emulating the A.P. model would thus be to ensure that social audits culminate in the type of enforceable and credible ‘contract’ that allocates responsibilities, defines timelines and ensures those who have been found guilty of irregularities are promptly punished. The credibility of the social audit process rests ultimately on the ability and willingness of the state government to take effective remedial action and punish offenders.
Access to Information: The right to freedom of information underpins the ability of citizens to effectively hold their leaders to account. Because public officials are not known for disclosure of public information, a legal regime which confers on citizens the right to access and obtain public information is indispensable. In India, before the state of Rajasthan enacted a Right to Information law, the MKSS was limited in its efforts and achievements in monitoring public development programs.
Political Will: AP social audit experience shows that, if willing, state can organize, mobilize and institutionalize tools such as social audit to proactively open itself to scrutinize by public. In case of A.P. the political will came from both politicians and bureaucrats especially at the Department of Rural Development. State officials were also willing to enter into a dynamic partnership with a CSO, MKSS.
Principles of Public Participation in Fiscal Policy
The principles best illustrated by the mechanism are:
– Openness: The process is open, information is provided about the purpose and scope of the public engagement. In addition, the outcomes of social audit can be followed through the relevant ministry’s website by the public.
– Transparency: The process is transparent since the social auditors are provided with sufficient information in order to undertake the audit. There is also transparency in the sense that the social audit is conducted by an independent board, housed under the Department of Rural Development and all the information is available online pertaining to this independent board (SSSAT).
–Sustainability: This is a long-term and ongoing process, it has taken on an institutionalized format and it is an integral part of the implementation plan for the Ministry of Rural Development process.
–Inclusiveness: The social process aims to be inclusive of all groups through inviting villagers as to act as social auditors. The project is also inclusive since each and every local government is audited.
–Respect for self-expression: This mechanism allows communities to express their interests freely within the framework of JanSunwai.
Type of Government
India is a federation with a parliamentary system with a population of 1.2 billion people. It is a republic and representative democracy, in which “majority rule is tempered by minority rights protected by law“. Federalism in India defines the power distribution between the federal government and the states. The Constitution was adopted t was adopted by the Constituent Assembly on 26 November 1949, and came into effect on 26 January 1950.
Open Budget Survey
On the 2015 Open Budget Survey, India scored 46 overall and 19 for public participation. The Survey noted that the India government “provides the public with limited budget information” and “is weak in providing the public with opportunities to engage in the budget process .”[ref]