Social Impact Assessment

A financial audit asks: are the accounts right? A Social Impact Assessment (SIA) asks: did the work actually change anything for the people it was meant to help — and what else did it change?

The workbook offers several definitions:

• a systematic evaluation of an organisation's social, ethical, cultural and environmental performance, going beyond financial reporting;
• a process of research, planning and the management of social change or consequences (positive and negative, intended and unintended) arising from policies, plans, developments and projects;
• a process of assessing direct/indirect, intended/unintended and positive/negative consequences of social interventions.

The workbook notes that the SEBI ICDR Regulations replaced the term "Social Audit" with "Social Impact Assessment". The two share principles: evaluating social outcomes, engaging stakeholders, and promoting transparency and accountability. In Chapter 7's words, "Social Impact Assessment / Social Impact Analysis / Social Impact Evaluation are used interchangeably."

For the Social Stock Exchange it is not optional: social impact assessment shall be mandatory for entities on SSE.

Origins. The concept gained formal recognition with the US National Environmental Policy Act (NEPA), 1969, which included social elements in environmental impact studies.

When Indian companies must do one. Chapter 5 quotes the CSR Rules amendment. Companies with an average CSR obligation of ₹10 crore or more in the three immediately preceding financial years must undertake impact assessments for CSR projects with outlays of ₹1 crore or more, provided those projects were completed at least one year before the assessment.

How it differs from a financial audit (Chapter 5, 5.1.2):

Steps (Chapter 7, 7.1.1): set objectives → analyse stakeholders → set parameters → identify measurement tools → measure outcomes and impact → verify and value impact → monitor and report.

Three approaches (Table 7.1):

Evaluation parameters (5.9.3): inclusiveness, relevance, effectiveness, efficiency, convergence or coherence, sustainability.

Which CSR projects need an impact assessment? Company figures are illustrative; the thresholds are the workbook's.

Deccan Polymers Ltd had CSR obligations of ₹9 crore, ₹11 crore and ₹13 crore in the last three financial years. Average = (9 + 11 + 13) ÷ 3 = ₹11 crore → above ₹10 crore, so the rule applies.

A second company, Konkan Foods, with CSR obligations of ₹8 crore, ₹9 crore and ₹12 crore, averages ₹9.67 crore. It is outside the mandate entirely, even for a ₹5 crore project, though it may still commission an SIA voluntarily.

What the Latur assessment looks at. Not whether ₹1 crore was spent — the utilisation certificate shows that. It asks whether children borrow and read more, whether reading levels moved against the baseline, whether the libraries are still open, and whether anything went wrong, such as books locked away to avoid damage. That is the outside-in, triple-bottom-line view.

Chapter 5 (10%) is the core: evolution, definitions, the CSR mandate, differences from financial audit, principles and the assessment process. Chapter 7 (11%) covers approaches, steps, organisational models and reporting, and Chapter 8 (15%, the heaviest chapter) is entirely SIA case studies. Chapter 5's sample questions ask who developed the SIA Framework (ICAI) and what the three-party relationship is an element of (SIA engagement). Chapter 7's cover the advantages of integrated SIA and the challenges (interdependencies, assumptions, timeframes, lack of standardised reporting).

• ICDR replaced "Social Audit" with "Social Impact Assessment". Not the other way round.
• SIA takes an "outside in" approach and a triple bottom line view. Financial audit is inside-out and financial.
• CSR mandate thresholds: average CSR obligation ₹10 crore or more over 3 years; project outlay ₹1 crore or more; completed at least 1 year before assessment.
• NEPA, 1969 (USA) gave SIA formal recognition.
• SROI belongs to the monetisation approach, not the quantitative approach.
• Workbook contradiction on the CSR rules' year. Chapter 5 (5.1) calls them the Companies (CSR Policy) Amendment Rules, 2020. Chapter 5 (5.6.2) calls them the Amendment Rules, 2021. The sub-rule was inserted by the 2021 Amendment Rules; recognise both labels in the exam.
• Workbook contradiction on attitude. The body of Chapter 5 says the assessor works with a non-judgmental attitude. Chapter 5's fourth sample question says an attitude of professional scepticism. Both are the assessor's; the question's own wording tells you which it wants.