SOCIAL AUDITING: PRACTICES AND CHALLENGES OF NON ... · SOCIAL AUDITING: PRACTICES AND CHALLENGES OF NON-GOVERNMENT ORGANISATIONS (NGOS) IN NEPAL Mukunda Prasad Adhikari Master of

SOCIAL AUDITING: PRACTICES

AND CHALLENGES OF NON-GOVERNMENT ORGANISATIONS

(NGOS) IN NEPAL

Mukunda Prasad Adhikari

Master of Business Administration, Pokhara University

Bachelor of Science, Tribhuvan University

Submitted in fulfilment of the requirements for the degree of

Master of Business (Research)

School of Accountancy

Business School

Queensland University of Technology

2016

Chapter 1: Introduction 1

Keywords

Social audit, accountability, surrogate accountability, surrogates-driven social

auditing, stakeholders-driven social audit, management-driven social auditing, social

accounts, shadow accounts, social impact, international NGOs, NGOs, and Nepal.

2 Chapter 1: Introduction

Abstract

This thesis examines the nature of management-driven social audit and surrogates-

(stakeholders) driven social audit within the NGO sector in Nepal, and how they are

used to create NGOs’ accountability. While there are many prior research on

management-driven social auditing and accounting focusing on the corporate sector,

there is a relative lack of research in NGO sector particularly focusing on a

developing country. In particular, there is very limited study on surrogates-driven

social audit, and how it creates change and accountability within the NGO sector.

Moving beyond the existing theories or framework used in social auditing and

accountability literature, this thesis adopts a relatively different notion of

accountability theory, called surrogate accountability. This theory clearly explains

the accountability in an unequal world where standard accountability theory cannot

create accountability in the short and medium run due to a huge power gap between

accountors and accountees.

In pursuing the research objective, this thesis used narrative analysis for empirical

and robust analysis on the data collected from semi-structured in-depth interviews

and document analysis. The narrative analysis was also supported by thematic

analysis. The study interviewed a total of 46 people including eight CEOs or their

associates from four international NGOs and four local NGOs operating in Nepal,

two chairpersons of national associations of international and local NGOs, 10

beneficiaries of these NGOs, and 26 stakeholders from six different groups (central

government, local government, national commissions, civil society organizations,

journalists, and social auditors). Similarly, 60 documents of these NGOs, including


annual reports and accountability reports, and 197 documents produced by their

stakeholders were examined. In addition, the website contents also were used. The

entire analysis was focused on searching the texts in documents and transcripts to

discover repeated patterns of meaning and themes through observation, comparisons

and triangulation.

NGOs’ officials via management-driven social auditing proclaim social audit

facilitates stakeholders’ empowerment; it is a comprehensive social impact

accounting and disclosing process; and it creates and demonstrates full

accountability. However, surrogates via surrogates-driven social audit argued that

international NGOs’ claims about stakeholders’ empowerment through social

auditing is questionable; and their social auditing process is entirely controlled, and

thus the impact accounts and their disclosures appeared to serve the purpose of

legitimising operations, but not to create the change. In addition, NGOs are not

accountable to accountability holders and stakeholders, but their operations have

resulted in serious negative impacts such as the creation of additional inequalities

and dependency in the country. Hence, shadow accounts through surrogates-driven

audit completely interrogated, overshadowed, and challenged the social accounts and

accountability claim of NGOs, which now questions the existence and significance

of NGOs in Nepal despite NGOs’ selfless service and commitment.

This is one of the rare pieces of research that studies the NGOs’ performance and

accountability using surrogates-driven social audit, and the accountability in an

unequal world from developing country perspective. This thesis responds to calls for

in-depth studies of practices of social auditing and accounting including social audit

practices among NGOs, among non-market entities, and in non-western contexts. It


also responds to how management emasculate the social accounting process, and in-

depth understanding on underlying contradictions, tension, struggles and conflicts

between NGOs and their stakeholders.


Table of Contents

Keywords .................................................................................................................................. 1

Abstract ..................................................................................................................................... 2

Table of Contents ...................................................................................................................... 5

List of Figures ........................................................................................................................... 8

List of Tables ............................................................................................................................ 9

List of Abbreviations .............................................................................................................. 10

Statement of Original Authorship ........................................... Error! Bookmark not defined.

Acknowledgements ................................................................................................................. 12

Chapter 1: Introduction .................................................................................... 14

1.1 Introduction .................................................................................................................. 14

1.2 Background ................................................................................................................... 14

1.3 Research Gaps and Research Questions ....................................................................... 18

1.4 Context of the Study ..................................................................................................... 21

1.5 Significance .................................................................................................................. 26

1.6 Organisation of the Study ............................................................................................. 27

Chapter 2: Literature Review ........................................................................... 31

2.1 Introduction .................................................................................................................. 31

2.2 Defining Social Audit: The Two Facets ....................................................................... 31

2.3 Background: Audit, Financial Audit, and Social Audit ................................................ 34

2.4 Historical Development of Social Auditing.................................................................. 36

2.5 Management-Driven and Stakeholders-Driven Social Audit ....................................... 41 Management-Driven Social Audit ...................................................................... 41 Stakeholders-Driven Social Audit ...................................................................... 55

2.6 social auditing & accountability in nepal ..................................................................... 62 Meaning of Social Audit .................................................................................... 63 Social Auditing/Accountability Tools ................................................................ 64 NGO’s Policy Paradox on Social Auditing in Nepal ......................................... 65 An Example Case Study of Social Auditing in Nepal ........................................ 67

2.7 Research Gap and Research Questions ......................................................................... 69

2.8 Conclusion .................................................................................................................... 71

Chapter 3: Theoretical Framework ................................................................. 73

3.1 Introduction .................................................................................................................. 73

3.2 Defining Accountability ............................................................................................... 73

3.3 Surrogate accountability theory .................................................................................... 77 Definition of Surrogate Accountability .............................................................. 77 How Surrogate Accountability Differs from Standard and Other

Accountability Models ....................................................................................... 79


3.3.2.1 Other Accountability Models .......................................................................... 79 3.3.2.2 Standard Accountability Mechanism and Its Elements ................................... 80 3.3.2.3 Standard Accountability Mechanism Cannot Function in Unequal

World ................................................................................................................. 83 Surrogate Accountability and Its Elements ........................................................ 84

3.3.3.1 Surrogate Accountability Standards ................................................................ 85 3.3.3.2 Surrogate Accountability Information ............................................................ 85 3.3.3.3 Surrogate Accountability Sanction .................................................................. 86

3.4 Applicability of Surrogate accountability in NGO ...................................................... 88 Accountability Forms Used in Prior Research on NGOs .................................. 88

3.4.1.1 Hierarchical Accountability ............................................................................ 89 3.4.1.2 Downward Accountability and Horizontal Accountability ............................. 90 3.4.1.3 Formal and Informal Accountability ............................................................... 90 3.4.1.4 Holistic Accountability ................................................................................... 91

Surrogate Accountability as a New Theory to Explain NGO’s Accountability Practices .................................................................................... 92

Application of Surrogate to the Context of NGOs Operating in Nepal ............. 96

3.5 Conclusion ................................................................................................................... 99

Chapter 4: Research Design ............................................................................ 100

4.1 Introduction ................................................................................................................ 100

4.2 Selection of Major NGOs Under This Study ............................................................. 100

4.3 Selection of Major Stakeholders/Surrogates .............................................................. 102

4.4 Data Collection: Interviews and Documents .............................................................. 103

4.5 The Interview Method ................................................................................................ 104 Interviewee Selection and Interview Protocol ................................................. 105 Step to Process Interview Data ........................................................................ 108 Analysis of Interview Data .............................................................................. 109

4.6 The Document Analysis Method ............................................................................... 110 Selection of Documents ................................................................................... 111 Step to Process Data from Documents ............................................................ 114 Analysis of Documents Data ........................................................................... 114

4.7 Reliability, Validity, Credibility, Trustworthiness, Ethics & Transferability ............ 115

4.8 Conclusion ................................................................................................................. 117

Chapter 5: Findings: Social Audit, Social Accounts, and NGOs’ Accountability in Nepal ......................................................................................... 118

5.1 Introduction ................................................................................................................ 118

5.2 Nepal as an Unequal World and NGOs’ Accountability ........................................... 119

5.3 Management-Driven Social Auditing ........................................................................ 124 Management-Driven Social Auditing .............................................................. 124 The Development Approach to Social Auditing .............................................. 125

5.3.2.1 Social Hearing Approach .............................................................................. 126 5.3.2.2 Stakeholders’ Feedback Approach ................................................................ 127 5.3.2.3 Project Assessment Approach ....................................................................... 127 5.3.2.4 Capacity Building and Empowerment Approach .......................................... 129

Process of Social Auditing ............................................................................... 134 5.3.3.1 Pre-audit ........................................................................................................ 135 5.3.3.2 Audit (day of audit) ....................................................................................... 136


5.3.3.3 Post Audit ...................................................................................................... 138 Social Audit as Tool to Document Social Accounts ........................................ 140 Social Audit and Surrogates Expectation ......................................................... 144 Underlying Problems of Social Audit to Create Real Change and

Accountability .................................................................................................. 146 5.3.6.1 Management Works for Silencing Stakeholders ............................................ 146 5.3.6.2 Management Controls Stakeholders Selection .............................................. 147 5.3.6.3 Management Controls Information ................................................................ 147 5.3.6.4 Management Creates Artificial Setting for Social Auditing .......................... 148 5.3.6.5 Management Controls on Selection of Social Auditor .................................. 148 5.3.6.6 Management Controls Final Social Accounts and Disclosures ..................... 149 5.3.6.7 Organisation Controls Dialogue Agenda ....................................................... 151 5.3.6.8 Extensive Exaggeration of Social Accounts .................................................. 151 5.3.6.9 No Adequate Emphasis for Empowerment Approach of Social Auditing .... 152 5.3.6.10 Episodic Social Auditing, Not Based on 360 Degree Approach .............. 153 5.3.6.11 Laden Process for NGOs Only ................................................................. 153

5.4 Surrogates-Driven Social Auditing ............................................................................. 154 Surrogates-Driven Social Audit ....................................................................... 154 Process/Step of Surrogates-Driven Social Audit .............................................. 156 Social Audit as a Tool to Capture Shadow Accounts ....................................... 158 Surrogates-Driven Social Audit as a Tool to Create Pressure and

Accountability within NGOs ............................................................................ 163 Is Surrogates-Driven Audit Really Helpful to Create Change?........................ 164

5.5 Comparative Analysis of Mangement-Driven and Surrogates-Driven Social Audit .. 166 NGO Constructed Social Accounts and Surrogates Constructed Shadow

Accounts ........................................................................................................... 167 5.5.1.1 Social Accounts of NGOs’ Under the Study and their Shadow Accounts .... 167 5.5.1.2 NGOs’ Industry Level Social Accounts and Their Shadow Accounts .......... 169

(Expectation) Gap Between Management-Driven and Surrogates-Driven Social Audit ...................................................................................................... 177

Does Surrogates-Driven Social Audit Facilitate to Create Change? ................ 178 5.5.3.1 Accountability Standards, Their Compliance Information and Sanctions ..... 178 5.5.3.2 Failure of Standard Accountability Mechanism ............................................ 181 5.5.3.3 Surrogate Accountability Mechanism as an Alternative ................................ 182 5.5.3.4 Surrogate Accountability When Surrogates are Weak .................................. 186

5.6 Conclusion .................................................................................................................. 188

Chapter 6: Discussions and Conclusions ....................................................... 191

6.1 Introduction ................................................................................................................ 191

6.2 Summary of Findings ................................................................................................. 191

6.3 Analysis of Findings Through Theoretical Framework .............................................. 198

6.4 Implications of Findings ............................................................................................. 207

6.5 Contribution of the Thesis .......................................................................................... 209

6.6 Limitations of the Study ............................................................................................. 213

6.7 Future Research .......................................................................................................... 214

A List of References ...................................................... Error! Bookmark not defined.

Appendices .............................................................................................................. 239


List of Figures

Figure 3.1 Elements of standard accountability mechanism ……………………..79

Figure 3.2 Elements of surrogate accountability mechanism ……………….........84


List of Tables

Table 2.1. Summary of history of development of social audits ............................... 38

Table 2.2 A process of conducting social audit ......................................................... 45

Table 3.1 Summary of accountability definitions ...................................................... 75

Table 4.1 The details of interviewees and interviews .............................................. 106

Table 4.2 Selected INGOs and sources of information/data .................................... 112

Table 4.3 INGOs’ Stakeholders and their geographical representation producing NGOs’ social accounts ............................................................. 113

Table 5.1. Summary of some social accounts captured by management-driven social auditing ............................................................................................ 141

Table 5.2 Examples of social accounts of NGOs under the study captured by social audit ................................................................................................. 143

Table 5.3 Examples of social accounts of AIN and NGOF in industry level captured by social auditing ........................................................................ 144

Table 5.4 Summary of major shadow accounts and their exampled quotes ............ 160

Table 5.5 Examples accounts showing how social audit create pressure and accountability within NGO sector ............................................................. 164

Table 5.6 Examples of social accounts produced by sampled INGOs and their shadow accounts ........................................................................................ 168

Table 5.7 Social accounts produced in industry level and their shadow accounts by National Civil Society Organisations and Commissions ...................... 170

Table 5.8 Social accounts produced in industry level and their shadow accounts by international government, civil society and commissions .................... 171

Table 5.9 Social accounts produced in industry level and their shadow accounts by authors who write for newspapers ........................................................ 172

Table 5.10 Examples of social accounts produced by sampled organisations and in industry level and their shadow accounts by national and international journalists .............................................................................. 173

Table 5.11 Comparing examples of social accounts of sampled INGOs & their associations, and their shadow accounts .................................................... 175

Table 5.12. Minimum standard for NGOs, their compliances, third party verification on compliance, and response of accountability holders in (non)compliance. ....................................................................................... 179


List of Abbreviations

AIN: Association of INGOs in Nepal

AOCRBN: Association of Community Radio Broadcasters Nepal

ATA: Knowledge level on Aid Transparency and Accountability

BOG: Basic Operating Guidelines

CAN: Asal Chhimekee Nepal

CANSA: Common Approach and Social Accountability

CBO: Community Based Organizations

CBS: Central Bureau Statistics

CEOs: Chief Executive Officer

CG: Central Government

CIAA: Commission for the Investigation of Abuse and Authority

CSO: Civil Society Organization

CSR: Corporate Social Responsibility

CUTS: Consumer, Unit and Trust Society

DDRC: District Disaster Response Committee

DFID: Department for International Development

DRRDO: Disabled Rehabilitation & Rural Development Organization

FF: Freedom Forum

INF: International Nepal Fellowship

INGO: International Non-Government Organisation

LDC: Least Development Country

LG: Local Government

M&E: Monitoring and Evaluation

MEAL: Monitoring, Evaluation, Accountability, and Learning

MoF: Ministry of Finance

MoFALD: Ministry of Federal Affairs and Local Development

NAPA: National Adaptation Plan of Action

NCSF: National Civil Society Forum

NGO: Non-Government Organization

NGOF: NGO Federation

NHRC: National Human Rights Commission


NLC: Nepal Law Commission

PAC: Project Advisory Committee

PEACEWIN: Participatory Effort at Children, Education & Women Initiatives

PLA: Participatory Learning and Action

P-MEAL: Planning, Monitoring, Evaluation, Accountability, & Learning

PRAN: Program on Accountability in Nepal

SAA: Social Accounting and Auditing

SAN: Social Audit Network

SROI: Social Return on Investment

UMN: United Mission to Nepal

UN: United Nations

UNDP: United Nations Development Program

UQ: The University of Queensland

USDLBI: United States Department of Labor’s Bureau of International Labour

Affairs

WVI: World Vision International


STATEMENT OF ORIGINAL AUTHORSHIP

The work contained in this thesis has not been previously submitted to meet

requirements for an award at this or any other higher education institution.

To the best of my knowledge and belief, the thesis contains no material

previously published or written by another person except where due reference

is made.

Signature: QUT Verified Signature

Date: December 2015


Acknowledgements

Primarily I am grateful to my Principal Supervisor, Associate Professor M. Azizul

Islam, for his acceptance to supervise me, and for continuous support throughout the

study period. His extended support was not only during the study period but also was

from 2013 when I was choosing the topic for the study and designing the research

proposal as part of the admission process of QUT. My sincere thanks also go to my

Associate Supervisor, Dr. Shamima Haque, for her suggestions, encouragement, and

constructive feedbacks. The completion of this thesis has been possible through their

remarkable support and guidance. I also acknowledge Jane Todd for professional

copy editing and proofreading advice as covered in the Australian Standards for

Editing Practice, Standards D and E.

My very special acknowledgement is to the School of Accountancy and QUT

Business School for offering me Business School Research Support Office Namaste

Scholarship for undertaking Master of Business (Research) course. Indeed, without

this scholarship probably I would not have completed this course as my family back

in Nepal had lost everything (two houses and a business) due to the devastating

earthquake that hit Nepal on 25th April 2015. There are no any words to express my

‘THANK YOU’ to QUT Business School for the generous support offered to me in

one of the hardest times of my life. In particular, Professor Peter Green, Tracy

Artiach (now at UQ) from School of Accountancy, and Dennis O’Connell from

Research Support Office, and other unseen personalities deserve my sincere thanks.

I also lost my mother on 3rd June 2016 during this study period. I am thankful to my

colleagues and all who encouraged and supported me in my second hard time.

Similarly, I am thankful to all friends around the globe who constantly prayed to God

through Jesus for me and my study. Last but not least, I remember my wife who was

beside me for support, and other family members in Nepal, primarily my father and

brother for their regular encouragement for study since my childhood. I could not

have completed this Higher Degree research study including this thesis without their

support.


Chapter 1: Introduction

1.1 INTRODUCTION

This chapter aims to set the overall background of the study on the topic, ‘Social

auditing: Practices and challenges of NGOs in Nepal’. It does so by briefly

discussing the previous studies on social auditing, deriving the research objectives

and research questions. In addition, this chapter will discuss the context of the study

including the country context of Nepal and why the Non-Government Organization

(NGO) sector is important, and the significance of the study. The chapter ends with a

summary on organisation of the study.

1.2 BACKGROUND

Over the past decades, there has been many studies about social auditing primarily in

the business sector followed by the not-for-profit or social/NGO sector. Social

auditing and/or accounting (SAA) has been one of the major tools developed and

widely discussed in the academic literature to assess the overall performance of

organizations (Gibbon & Dey, 2011). In addition, a good deal of research has

examined why organizations undertake social auditing. Prior research explored some

of the reasons for conducting social auditing: social audit can be a tool to

demonstrate accountability (Ebrahim, 2003a; Gao & Zhang, 2001, 2006; Gibbon &

Dey, 2011; Hill, Fraser, & Cotton, 1998; Zadek & Raynard, 1995a); ensure

organizational transparency (Boland & Schultze, 1996; Deegan, 2009; Gibbon &

Dey, 2011; Hill et al., 1998; Zadek & Raynard, 1995b); promotion of organization’s


credibility, legitimacy, and strategic learning (Ebrahim, 2003a; Henriques, 2001;

Hutter, 1997); and so on. The social auditing does so by focusing on existing

documentation style, reports, and a process design, which will help to keep accounts,

and reports (Gibbon & Dey, 2011). Particularly, through social auditing,

organizations assess and improve social performance, ethical behaviour (Gonella,

Pilling, Zadek, & Terry, 1998), accountability, and transparency through

stakeholders’ dialogue, and disclosing them. Hence, in addition to a group of

researchers, NGOs also claim that social auditing is viewed by them and their

stakeholders as a participatory and democratic process where an organization is

reviewed by its stakeholders, (for example, Benjamin & Emery, 2012).

While proponents of social auditing have claimed its significance for stakeholders’

involvement and participation as part of the democratic process; many earlier studies

also have identified use of management-driven social auditing only to fulfil

organizational interests. Therefore, organizations have been criticised for using social

auditing not only to legitimise their operations (Deegan, 2009) but also to distract (or

to manage) social pressure on different issues (Gray, 2000). In addition, while

management-driven social auditing is set to demonstrate accountability of

organizations, it is not a real tool to accountability in practice (Gray, 2000; O'Dwyer,

2011; Owen, Swift, Humphrey, & Bowerman, 2000). Perhaps because of this,

management-driven social auditing appears rarely democratic and fully participatory.

However, prior studies also have explored other forms of social auditing, this being

stakeholders-driven or independent or third party social audit (Dey, 2003, 2012;

Spence, 2009). This thesis calls this a ‘surrogates-driven social audit’ in which

stakeholders (being surrogates) of organizations may also assess their performance


and produce social accounts independently. These accounts may be supportive

accounts to organizations’ social accounts (derived from management-driven social

audits) or critical of those accounts. Such types of social accounts by stakeholders

through their own auditing may reveal the gaps between what organizations choose

to report and what they try to suppress (Adams & Evans, 2004; Dey, 2003).

Revealing those gaps would provide new insights on organization’s social impact

and accountability practices.

However, there has been limited empirical study on in-depth understanding of the

nature of social auditing, and how it is practised in the NGO sector. NGO sector in

this study means primarily not-for-profit humanitarian, development, advocacy and

service providing (for example running hospitals) organizations. The NGO sector,

therefore, is obviously different to the corporate sector as its primary purpose is

about maximixing returns to their shareholders by growing share value and providing

dividends as returns, and the social accounts could be only for demonstrating the

initiation of corporate social responsibility to wider stakeholders as part of

maintaining the license to operate (Pearce & Kay, 2012). Corporate sector social

reporting is just treated as part of Corporate Social Responsibility (CSR) to address

non-core activities (Nicholls, 2009; Power, 2007). But, the secondary purpose of

business organizations becomes the primary purpose for NGOs. Given their

fundamental differences, there has been very limited study on whether there are

contradictions, tensions and struggles between NGOs and their stakeholders in terms

of NGOs’ impacts, performance, and accountability. So this study aims to gain an in-

depth understanding of the common practices and process of NGOs for conducting


social auditing, and on whether and how social auditing is used to create

accountability in the NGO sector in Nepal.

For this purpose, the existing literature on SAA and accountability mechanisms were

reviewed to develop a framework for analysis. In particular, this study adopted

Rubenstein’s (2007) work on surrogate accountability as a theoretical lens. The

framework was then used to examine the practices of NGOs focusing on

accountability, and social impact accounts produced by themselves and their

stakeholders. In addition, the study used qualitative research methods consisting of

in-depth interviews and documents analysis for robust data collection and analysis.

Semi-structured in-depth interviews were conducted with eight Chief Executive

Officers (CEOs) or their associates from four international NGOs (Oxfam

International, World Vision International, United Mission to Nepal, and International

Nepal Fellowship) operating in Nepal, and four different local NGOs (Peacewin,

Asal Chhimekee, DRRDO, and INF Nepal) across the country. To understand the

entire NGO sector views, the Chairs of national associations of both international

NGOs and local NGOs were also interviewed. In addition, ten beneficiaries of these

organizations, and six different groups of stakeholders: local government, central

government, journalists, civil societies, national commissions, and social auditors,

were interviewed to understand NGOs’ performance, impacts, and accountability

from their side. Thus, in total 46 people were interviewed. Moreover, at least 60

different major documents such as annual reports from NGOs, and 197 documents

from NGOs’ stakeholders excluding information used from websites were used for

the study. The findings from interviews were verified with the texts collected from

different publicly available documents and sources. The findings from this study


significantly refine the existing understandings of social auditing and accountability

in the NGO sector.

1.3 RESEARCH GAPS AND RESEARCH QUESTIONS

As discussed above in the background section, social auditing is undertaken by

organizations, which is termed as organization-led social auditing or management-

driven social auditing. If social auditing was commenced by stakeholders

independently to assess the overall performance, social impact, and accountability of

organizations, it can be called stakeholders-driven social auditing or surrogates-

driven social auditing. Under the notion of management-driven social auditing, many

prior studies have argued that social auditing creates accountability (Ebrahim, 2003a;

Gao & Zhang, 2001, 2006; Gibbon & Dey, 2011; Hill et al., 1998; Zadek & Raynard,

1995a), and transparency (for example, Gibbon & Dey, 2011; Hill et al., 1998; Zadek

& Raynard, 1995a). These two areas, accountability and transparency, are accepted

as well-functioning governance systems (Deegan, 2009; Henriques, 2001). In the

same way, social auditing plays a significant role for organizations in promotion of

their credibility and legitimacy, in fulfilling regular compliance and strategic learning

(see Ebrahim, 2003a; Henriques, 2001; Hutter, 1997). In addition, another major

finding of prior studies on social auditing was its capacity to measure organizational

social performance or ensure quality or evaluate impact (Ebrahim, 2003a; Gao &

Zhang, 2001, 2006; Henriques, 2001; Kemp, Owen, & Van de Graaff, 2012;

Spreckley, 2008). Hence, much prior literature discussed social auditing as a multi-

purpose tool that can assess the impacts and performance of organizations, and

creates transparency and accountability for organizations.


However, organizations-led social auditing has been questioned by some critics who

say that it may not create real changes (impacts) and accountability. It is argued that

social auditing is conducted by organizations primarily to legitimize their operations

(Deegan, 2009), to be seen as accountable (Gray, 2000; O'Dwyer, 2011; Owen et al.,

2000), to distract social pressure on different issues (Gray, 2000), and for image

management and stakeholders relationship compliance (Gray, 2000). In addition,

there is a huge question on independence of social auditing conducted by an

organization (Cotton, Fraser, & Hill, 2000; Power, 2000) as the entire process of

social auditing is controlled and emasculated by management (Gray, 2000; O'Dwyer,

2005, 2011; Owen et al., 2000). Hence, the results of social auditing related to

accountability, performance, and impacts of organizations are controlled social

accounts that are just produced to manage risk and stakeholders’ concerns rather than

to create any real change. To have a balanced view on organizations’ performance,

impact, and accountability, prior studies have also discussed stakeholders-driven

social audits in which different stakeholders directly and indirectly assess the

performance, impacts, and accountability of organizations. Examples of such

independent social audits are alternative accounts, counter accounts, counter reports,

and so on (Spence, 2009). As discussed, while management-driven social auditing is

a one-sided story of social auditing, stakeholders-driven or surrogates-driven social

audit is the other side of the story on performance, impacts, and accountability of

organizations.

Even though prior research has discussed social auditing undertaken by

organizations, and stakeholders outside of organizations, there has been very limited


focus on empirical study to understand the in-depth nature of such social auditing

and its practices. In addition, those studies are primarily focused on the corporate

sectors and thus only a limited study has looked at the nature of social auditing in the

NGO sector. Moreover, very few studies have focused on the social auditing process

(for example, O'Dwyer, 2005); and how social auditing is used for creating and

accounting real changes/impacts, and accountability. Likewise, few studies have

explained tension, challenges, conflicts, and contradictions between organizations

and diverse groups of stakeholders including beneficiaries while fulfilling the aims of

social audit by organizations, particularly in the NGO sector. To address those gaps

in the study, the following research questions have been developed.

a. What is the nature of management-driven social audit and surrogate-

driven social audit within the NGO sector in Nepal?

b. Whether and how are management-driven social audit and surrogates-

driven social audit used to create NGOs’ accountability or trigger lack of

NGOs’ accountability in Nepal?

By focusing the study on Nepal, one of the poorest countries on this planet, this

research studies the nature of social auditing in the NGO sector and whether and how

it is used to create NGOs’ accountability in Nepal. This study, through detailed,

robust and empirical work on social auditing, responds to the calls for more in-depth

studies of the practices of accounting/auditing (Free, Salterio, & Shearer, 2009;

Gendron & Spira, 2009; Gray, 2002; Hopwood, 2009; Owen, 2008); details work

investigating the extension of audit practice in new areas, its effect and consequences

(Power, 2003); critical examination of how social auditing empowers stakeholders,

and how management emasculates the social accounting process (O'Dwyer, 2005);


how social accounting looks in non-western contexts (Gray, Dillard, & Spence,

2009); and the social accounting and accountabilities to non-market entities such as

charities and NGOs (Gray, Brennan, & Malpas, 2014).

1.4 CONTEXT OF THE STUDY

This research investigates the in-depth nature of social auditing and how it is used to

trigger the lack of NGOs’ accountability in Nepal. The unique context of Nepal

provides a good foundation to gain solid insights of NGOs’ social auditing practices.

There are at least five reasons behind choosing Nepal as the focus of this thesis, and

they are as follows.

First, Nepal has been one of the priority countries in the world for international

NGOs. Nepal, a landlocked country in South Asia, is one of the poorest countries in

the world. It has at least 25% of its people living under extreme poverty ($1.25 a

day) (The World Bank, 2016), and has per capita income of only USD 712 (UNDP,

2016a). Looking at the Human Development Index, Nepal is in 145th position in the

world (UNDP, 2016b). Being under the priority, NGOs sector has been a huge sector

compared to national GDP in Nepal. The income source for the government for the

year 2014-15 from foreign aid was 12% (MoF, 2015), which excludes all the aid

money channelled through international NGOs and local NGOs. It is assumed that

total bilateral, multilateral, INGOs and NGOs budget size is almost one third of the

government annual budget (Bhandari & Adhikari, 2016). As around 81% of Nepal

government’s total budget is spent on recurrent expenses and pay loans (MoF, 2015),

the NGO sector appears to be very crucial for developmental work. Therefore,


INGOs are also called external development partners (EDPs) in Nepal by

government agencies, probably because of their expected crucial role for country’s

development.

Second, the establishment of thousands of NGOs also proves the significance of the

sector in providing a unique context. Even though there is a long history, more than

six decades, of NGOs from its inception in Nepal, the NGOs movement could not

speed up due to dictatorial kingship (Khanal, 2006). When democracy was revived

again in 1990, the NGOs movement suddenly intensified (Khanal, 2006), and as a

result there are around 80,000 NGOs. This also could be due to the aggressive neo-

liberalism (Lewis & Kanji, 2009). Among those NGOs, around 40,000 NGOs (SWC,

2016b) and 254 INGOs (SWC, 2016a) registered with the Social Welfare Council

(SWC) of Nepal, the government body responsible for social sector management.

Many thousands of locally registered NGOs, and a few dozen INGOs, partnered

directly with NGOs without having a physical presence in Nepal. By 2004, 38% of

the total households in the country were somehow associated with NGOs or

community based organizations (Khanal, 2006; UNDP, 2004), and by now this

number would have significantly increased. Indeed, the escalating number of NGOs

in Nepal is also a result of global trends. In 1909, there were only 176 international

NGOs, but, as Anheier and Glasius (2001) mentioned, there were around 40,000

INGOs by 2001. Of those INGOs, 90% of them were established after the 1970s

(Edwards, 2000). However, around the world, such a sudden proliferation of NGOs

are named differently. Local communities call them “briefcase” (p.31) (Dicklitch,

2001), “mushroom”, “phony” (Jackson, 2005, pp.178-9), or “come-n-goes”

(Hilhorst, 2003, p.8). In the case of Nepal, many NGOs are called “Jhole” (adjective)

NGOs. The meaning of Jhola (noun) is a bag and many NGOs offices are limited


within a bag, having no physical offices and thus they are called Jhole NGOs.

Donors view these NGOs as democratic, closer to people, and less prone to bad

governance (Clark et al., 1991; Paul & Israel, 1991).

Third, NGOs’ narratives claim that they have impacted the lives of many people

from their interventions and they have been fully accountable to their stakeholders,

and stakeholders such as donors are impressed in such a way that poverty has been

reduced. For example, an annual report of an INGO, United Mission to Nepal

(UMN), mentioned, “This year our work directly impacted on the lives of 171,518 of

the poorest people of Nepal” (UMN, 2014, p.2). This one year result indicates the

significant work of an organization, and depicts the real positive change (impact) on

people’s life, excellent performance of the organization, and NGO’s full

accountability. Such achievement would without doubt help to contribute to fulfil

mission. However, such narratives raise a few important practical questions: can the

long term change/impact be demonstrated in a year, do UMN’s stakeholders produce

similar narrative (or social accounts) if it is assessed by them independently, and how

do UMN’s beneficiaries account for the impact they have experienced?

Fourth, among different accountability and impact accounting tools, social auditing

is widely practised in Nepal. Many international NGOs including multilateral

organizations such as The World Bank and United Nations (UN) have been

promoting the concept of social accountability in Nepal (see CUTS, 2013; The

World Bank, 2011; UNDP, 2010). The Association of International NGOs in Nepal

(AIN), the umbrella body of INGOs, has also been playing a significant role in social

accountability promotion by producing social audit guidelines for its members (AIN,

2010). Therefore, social accountability (including governance) recently has been an


area for significant investments by these organizations through different government

ministries and local NGOs including civil society organizations (CSO). A large

number of documents about social accountability have been produced in the context

of Nepal by the World Bank and other organizations (CUTS, 2013; Khadka &

Bhattarai, 2012; The World Bank, 2011). The overall agenda on which organizations

are working is good governance. It is assumed that millions of dollars have already

been invested for good governance work in Nepal, and as part of this work many

documents are produced on good governance including social accountability

primarily targeted to make governments accountable towards their people (for

example, Khadka & Bhattarai, 2012). A couple of policies or guidelines such as

social audit guidelines, Information Act 2007, Good Governance Act 2006 have been

developed in government agencies for practising social auditing (NLC, 2007, 2008).

Agencies like the World Bank and UNDP including NGOs consider this is a result of

their work in Nepal in making the government accountable.

Finally, despite billions of dollars of investment in the nation for more than 60 years

to improve the quality of life of people living below poverty, poor people are

becoming much poorer (Bell, 2014). Therefore, NGOs are facing serious criticism by

stakeholders for not showing evidence on significant positive socio-economic

changes (impact) that they claim on beneficiaries, which also has created a big

question on their accountability (for example, Bell, 2014; Pokhrel, 2014; Tamang,

2012). Therefore, stakeholders are often critical of NGOs’ operations primarily

international NGOs. For example, the book ‘Kathmandu’ by Thomas Bell on the

topic of Nepal’s failed development concludes that most of the investment from the

social sector has gone in vain (Bell, 2014). The summary of this book was also


published by Aljazeera on 22nd March 2015 (Bell, 2015). Similarly, other

stakeholders and a newspaper questioned the results of the investment and how

NGOs are promoting religions. These accounts have been presented below.

Nepal has been assisted by giving foreign aid for more than 60 years

currently with a worth over a billion dollars per year (almost one third of the

government total budget). In those years, theories, practices, methodology,

claims, target, working approaches were changed but except some benefits,

achievements are negligible and Nepal is remained as second poorest

country in the world (Bell, 2014).

More than 38,000 NGOs and nearly 200 INGOs are operating in Nepal (one

NGO for every 530 people in a country where there is 1 police for every 400

people), with their annual budget worth billions of rupees, but the million

dollar question is: where does the money go? (Bhandari & Adhikari, 2016;

Pokhrel, 2014).

Non nongovernmental organization (NGO) can indulge in promotion of

religions in Nepal despite being a secular state. But many INGOs are

spending tens of millions of rupees in promotion of Christianity against the

agreement with the government. (Karobar, 2013).

Such immense criticisms on NGOs’ operations in Nepal have provided enough room

for stakeholders to connect their operations within the notion of NGOlisation, and

NGOsim in which NGOs create the need for their continued existence and elites-run

NGOs focus on personal resource mobilisation and wealth accumulation (for

example, Xaba, 2014). Hence, Nepal has a good country context to study social

auditing in the NGO sector for in-depth and empirical understanding.


1.5 SIGNIFICANCE

The available literature suggest that social auditing has a long history primarily in

corporate sector followed by not-for-profit sector. However, empirical evidence to

support the comprehensive nature of social auditing and its practices in NGO sector

is very limited (for example, O'Dwyer, 2005). In addition, such study in the context

of a developing country – an extension of audit practice in new areas (Power, 2003),

and more practices in auditing (Free et al., 2009; Gendron & Spira, 2009) – in which

international NGOs have a major focus for the study is quite rare. Hence, this study

has a significance in academic literature of social accounting to understand the

practices of social auditing/accounting (Gray, 2002; Hopwood, 2009; Owen, 2008)

of NGOs in creating real change/impact and accountability on the ground. This study

seeks to contribute to the contemporary understandings of social auditing/accounting

and accountability literature demonstrating the level of contradictions, tensions and

struggles between NGOs and their stakeholder on how social auditing facilitates

stakeholders’ empowerment (O'Dwyer, 2005) including marginalised people whose

voices are often not heard, and on how social auditing triggers lack of accountability.

This thesis also contributes to the understanding of what social auditing looks like in

a non-western context (Gray et al., 2009), and the social accounting and

accountabilities to non-market entities such as charities and NGOs (Gray et al.,

2014).

Moreover, this study illustrates how entire social auditing and accounting is captured

by NGOs to demonstrate their social impact accounts and accountability (O'Dwyer,

2005), and how these accounts are challenged by their stakeholders. In particular, it

helps to understand the social (impacts) accounting process in the NGO sector by


how management extensively overstate the social impact accounts in the disclosures

in comparison to actual impacts on the grounds, and overwhelmingly create artificial

setting and manipulate communities for social auditing purposes. Hence, this

research extends insights that accountability of NGOs and their impact accounts are

extensively manipulated and exaggerated, and it appears as a pervasive phenomenon

in the NGO sector to prove their existence and interventions. In addition, this study

also reveals the insights that the operations of NGOs have detrimentally affected the

country through neoliberalism and NGOlisation creating dependency in individual

lives, the community, and in the country.

Finally, in the midst of tensions, contradictions, and power struggles between NGOs

and stakeholders, this study contributes to the study of how surrogate accountability

mechanism creates accountability of NGOs in the short and medium run. In

particular, while other notions of accountability such as vertical accountability and

downward accountability hardly explain how accountability is created in an unequal

world, the study contributes to accountability literature demonstrating surrogate

accountability notion as a good alternative in creating accountability. Adopting the

concept of surrogate accountability, this thesis has demonstrated through exploring

the NGOs’ operations in Nepal that surrogate accountability can trigger the lack of

accountability prevalent in the unequal society, and it would create accountability in

the short and medium run.

1.6 ORGANISATION OF THE STUDY


The thesis has been organized in the following manner. The first chapter has

provided background, the research gaps, and research questions to address those

gaps. Particularly, it focused on previous studies in social auditing, the theoretical

lens used to view the study, and research methodology adopted for the study. It then

briefly described the context in which the study was undertaken. Specifically,

Chapter one discussed why the Nepal context is unique and important for the study

of social auditing/accounting of NGO sector. Chapter two provides an extensive

overview of literature. That is, it discusses social auditing practices, history, and

current developments focusing on stakeholders’ perspectives and managerial

perspectives of social auditing. These two perspectives of social auditing led to the

two research questions, particularly understanding their nature and how they trigger

lack of accountability among NGOs in Nepal. This is followed by a discussion on the

development and practices of social auditing in Nepal.

Chapter three offers a theoretical framework of surrogate accountability. This

chapter analyses why standard accountability mechanism cannot work on the

‘unequal world’ and how surrogate accountability mechanism creates accountability

in the short and medium run. When organisations present themselves powerfully to

their accountability holders (beneficiaries), they could not hold them accountable. To

create accountability on such an unequal situation, surrogate accountability

mechanism plays a significant role in short term and medium run.

The details on research methodology are described in Chapter four. An overview of

the methods used for the study such as in-depth semi-structured interviews, and

documents analysis is highlighted followed by how narrative analysis was

undertaken for data analysis.


Chapter five focuses on the findings of the study. This chapter elaborates how social

auditing is practised by NGOs in Nepal in terms of accounting their impacts and

creating accountability, and how these management-driven social auditing accounts

are challenged by stakeholders through surrogates-driven social auditing. NGOs’

managers through management-driven social auditing proclaim social audit

facilitates stakeholders’ engagement and empowerment; it is a comprehensive impact

accounting and disclosing process; and it creates and demonstrates full

accountability. However, surrogates-driven social auditing argued that international

NGOs’ claims about stakeholders’ empowerment through social auditing is

questionable; their social auditing process is entirely controlled, and thus the impact

accounts and their disclosures appeared to serve the purpose of legitimising

operations, but not to create the change, and they are not accountable to

accountability holders and stakeholders in the country where they operate.

Finally, Chapter six focuses on a discussion of the findings in relation to the

theoretical framework showing how standard accountability mechanism claimed by

NGOs through management-driven social auditing failed to create real changes and

accountability, and how surrogate accountability might play a role for the purpose in

the short and medium run. The chapter also considers contributions and implications

of the study. One of the major contributions of the thesis is to identify that social

accounts produced through management-driven social auditing in NGO sector are

captured by management, and thus their accountability to beneficiaries and

stakeholders claimed through such auditing is challenged by their stakeholders. And,

as NGOs appear as a very powerful entity in Nepal, surrogates-driven social auditing


is helpful in creating accountability of NGOs towards their beneficiaries in the short

and medium run.

Chapter 2: Literature Review 31

Chapter 2: Literature Review

2.1 INTRODUCTION

The aim of this chapter is to identify the research gap for the proposed study through

in-depth review of prior literature in the field of social auditing and accounting. In

the first part, a brief overview of social auditing including its historical development

is discussed. The second part focuses on two natures of social auditing: management-

driven social auditing and stakeholders or surrogates-driven social auditing. The final

section of this chapter is devoted to a brief discussion of social auditing and

accounting in the context of Nepal. In doing so, the chapter identifies the valid

research gaps in the research field of social auditing and accounting (SAA)

particularly in NGO sector.

2.2 DEFINING SOCIAL AUDIT: THE TWO FACETS

Social auditing, including its meaning, has been discussed for a couple of decades in

SAA literature. Social audit is a way to see whether an organisation’s performance is

following different stakeholder expectations (Deegan, 2009). Social auditing also

supports a company to check its social impacts on wider stakeholders and identify

whether companies are meeting their social objectives, and thus social audit can play

a role for continuous dialogues of company with stakeholders (Deegan, 2009). The

understanding and view of Deegan on social auditing is also supported by other

studies. For example, social audit refers to the whole process by which an

organisation determines its impacts on society, and measures and reports the same to

32 Chapter 2: Literature Review

the wider community (Owen et al., 2000). Similarly, social auditing can be viewed as

process for assessing, reporting and improving an organisation’s social performance

and ethical behaviour through actively engaging stakeholders (Ebrahim, 2003a;

Gonella et al., 1998). A couple of other researchers including Gray (1996) and

Medawar (1976) questioned the capacity of social auditing conducted by

organisations, and thus they facilitated the discussion around third-party-driven

social auditing. This type of social auditing was in various forms but was generally

referred to as independent (external) social reporting (Gray et al., 1996), as a counter

balance or counter reporting to current practices (Dey, 2010).

In defining and shaping the concept of social auditing, a greater role has been played

by many professional organisations including Social Audit Network (SAN) UK, New

Economics Foundation (NEF) UK, and a wider group of practitioners of social

auditing. The New Economics Foundation (NEF) on its first conference of social

auditing organised in Edinburgh on 30 March 1995 defined it as, “the process

whereby an enterprise measures and reports on its performance in meeting its

declared social, community or environmental objectives” (cited from Gao & Zhang,

2006, p. 730). Likewise, one of the UK-based organisations, SAN – previously called

Social Audit Limited – defines social auditing as a process to “prove, improve and

account” for the differences an organisation is making on people, the planet and the

way resources are used; and it “can be used by any organisation, whether voluntary,

public or private sector, and of any size or scale” (www.socialauditnetwork.org.uk).

A practitioner view is, social auditing is undertaking to monitor or assess

performance in terms of social, environmental and community objectives of


organisations; and it also measures whether organisations have lived up to their

shared values and objectives (Thomas, 2005).

The above views and understandings of social auditing from academics, professional

organisations, and practitioners show that it has at least two facets. For stakeholders

or society, the core idea behind the term ‘social audit’ is to make

businesses/organisations more accountable towards society and make society

understand the impact, both beneficial and non-beneficial, of business (Pearce &

Kay, 2012). This notion of social auditing from the stakeholders’ point of view is

well worded by SAN UK (Spreckley, 2008), “the Social Audit will examine the

procedure and performance of an organisation’s social and commercial actions in

relation to its stated objectives and its external and internal position” (p. 6). On the

other hand, for business, in addition to financial audit, social audit is the intentions of

management to meet corporate social responsibility: environmental and social issues

(Ascoly, Oldenziel, & Zeldenrust, 2001; Blewett & O’Keeffe, 2011). In other words,

“social audit is focused on broadening the base of ‘viability’ to include extra-

financial factors that are imperative to long term sustainability” (Spreckley, 2008,

p.6) of business. For business and organisations, “the social audit redefines the

meaning of viability from the narrow financial profit and loss account to a broader

set of values that include social, environmental, economic, cultural, human and

physical aspects” (Spreckley, 2008, p.6). The details of these two facets – one from

the organisation side and another from the stakeholders side – of social auditing in

terms of management driven and stakeholders driven will be discussed later in this

chapter. While the notion of social auditing seems to be expanded from the concept

of ‘a tool to manage corporate social responsibility’ to a tool to improve an

organisation’s social performance; businesses or organisations would solely focus on


the mission potentially without being proactive to manage social performance to

meet stakeholders’ expectations until there are issues raised by communities or

stakeholders.

2.3 BACKGROUND: AUDIT, FINANCIAL AUDIT, AND SOCIAL AUDIT

Understanding the ‘audit’ itself enhances the understanding of the meaning of social

audit. The ‘audit’ generally is understood as a “management tool used to examine

processes and activities and gauge whether they are conforming to standards and

procedures and whether there are any opportunities for improvement” (Mallen &

Collins, 2003, p.5). Alternatively, ‘how are we doing’ and ‘where do we need to

make improvements’ are two basic questions behind auditing, which is also a

systematic evaluation process (Coyne, 2006). The professional associations, The

Auditing Roundtable Inc. (1997), understands auditing as ‘ systematic documented

process of objectively collecting and evaluating factual information in order to verify

a site or organization’s status with respect to specific predetermined criteria’ (cited

from Coyne (2006, p. 25).

Moving further, people seem to understand two broad categories of audit: financial

audit and social audit. In comparison to financial audit, social audit, although it has

been practised primarily after the 1990s, has a long history. Even though the term,

social audit, was suggested in the UK in the 1930s (Henriques, 2001), a few decades

were needed for its growth. Later on, it was started as a concept from a UK company

to decide together with stakeholders whether a plant of the company should be closed

(Gray, 2000; Harte & Owen, 1987). On other hand, financial auditing was not a new

notion for businesses and organisations when the concept of social auditing was


growing. The SAN explains the differences and relations between financial account

and social account as, “the profit and loss account only tells half the story; social

audit tells the other half” (Spreckley, 2008, p.5). So it can be said that businesses

were practising the financial auditing, “a one sided state of affairs and belongs to the

days when companies were small and public accountability was secured” (Zadek,

Pruzan, & Evans, 1997, p.17). When an economy was growing, “there is clearly as

much need for a social audit as for a financial audit” (Zadek et al., 1997, p.17).

Another scholar (Geddes, 1992) even developed a broader concept of social audit

expansion.

Social audit is best understood as a reaction against conventional accounting

principles and practices. These centre on the financial viability and

profitability of the individual economic enterprise. By contrast, social audit

proposes a broader financial and economic perspective, reaching far beyond

the individual enterprise….Social audit posits other goals as well as, or

instead of, financial profitability….Moreover social audit attempts to

embrace not only economic and monetary variables but also – as its name

suggests – social ones, including some which may not be amenable to

quantification in monetary terms (cited from www.socialauditnetwork.org.uk,

para historical roots).

Like Gray and Power, other scholars further argued and widen the concept of social

auditing as a form of holistic accounting. Social auditing, even termed as social

accounting, is somehow defined and viewed independently. It is a generic and

important terminology for all possible accountings under which financial accounting

is a subset (Gray, 2000). The construct such as what is going on within the


organisation including environmental accounting cannot only be captured by

financial auditing/accounting, and a fresh viewpoint is needed that resembles

financial auditing for monitoring, checking and reporting (Power, 2000); and thus

opened the horizons for other forms of accounting and auditing. Thus having a fairly

similar approach to financial performance of the organisations, social performance

also needs to record social interaction (accounting) and their reporting is followed by

accounts audit (social audit) (Power, 2000). Hence social accounting/auditing and

financial accounting are two domains operated under similar principles of overall

accounting and/or financial accounting that falls under the broader social accounting

idea to review the overall performance of the organisations. For the purpose, author

like Power (2000) has suggested to rename the terminology to ‘social accounting,

reporting and auditing’ instead of social auditing as financial and social domains are

parallel and helpful to understand the overall accounting concept and principles.

Thus, the concept of social audit is not limited to only ‘audit’ and the view is well

supported by previous study. Hence, social accounting is to measure and account to

an organisation’s stakeholders the extent to which it has achieved its own objectives

– i.e. having account for own performance (O'Dwyer, 2005). Alternatively, it is

measuring the performance of an organisation, and the performance could be both

financial and social. However, social auditing has been a tool to measure primarily

social and environmental performance in practice. This study also looks at social

performance focusing on NGOs’ operations in a developing country.

2.4 HISTORICAL DEVELOPMENT OF SOCIAL AUDITING

Even though the term ‘social audit’ was suggested before the Second World War, it

went through a process of several transformations. The concept again appeared in the


1970s when organisations doubted something would be done to them by critical

individuals and NGOs (Henriques, 2001) in the UK. Slightly different to the UK, it

was viewed as corporate management systems of accounting for social performance

in the USA (see Blake, Frederick, & Myers, 1976; Humble, 1973; Owen & Swift,

2001). So it can be said that social accounting was in the periphery in one or another

form around the start of the twentieth century (for example, Gray, 2000; Guthrie &

Parker, 1989) though its modern accounting form again started from the 1970s

(Gray, 2000). In this era, though there was not much development in the social

accounting practices, organisationally-based social audits were developed briefly,

and some guidance for different organisations was available (see Blake et al., 1976;

Gray, 2000). As a result, some companies produced social audits establishing certain

standards (see especially Gray, 2000; Medawar, 1976). Although, environmental

accounting somehow was embraced as social accounting in addition to financial

accounting, there was higher consideration from professional and academic bodies

even in the 1970s (see Gray, 2000).

Unfortunately, the re-appeared social accounting again became inactive among

organisations. For instance, in the 1980s, only a few companies wanted to understand

their company’s social performance due to the huge success of the stock market

(Power, 2000). Interestingly, the notion of social auditing again re-emerged in the

UK, the USA and Europe in the end of the 1980s. In the beginning of the 1990s,

because of the initiation of social activists working together with few values-based

organisations (Owen et al., 2000; Zadek & Evans, 1993; Zadek et al., 1997), social

auditing reemerged once again. This approach was developed first by Traidcraft, a

fair-trading company, together with the New Economics Foundation. The approach

was soon taken up by the Body Shop and by a wide-ranging group of companies,


consultants and NGOs who together formed the Institute of Social and Ethical

Accountability (Power, 2000).

In Europe, particularly in Scandinavian countries, the Copenhagen Business School

started a concept of ethical accounting at the same time as the Traidcraft social

auditing work was developing, and this was widely used by corporate and public

sectors in the region (Pearce & Kay, 2012; Zadek et al., 1997). The summary of

historical development of social auditing is presented in the table below. The table

shows the development of social auditing in different decades including their

respective references.

Table 2.1. Summary of history of development of social audits

Decades Development References 1950s The term was suggested in the UK in 1930s and appeared again in 1950 (Henriques,

2001)

1970s Organisations had a doubt whether something would be done to them by some individuals or NGOs in the UK.

USA adopted it as corporate management systems. Environmental accounting was adopted as a form of social accounting in addition to financial accounting.

Wider consideration was given by professional and academic bodies. The reappeared social accounting concept in 1970s once again was

inactive in 1980s. Very limited companies wanted to understand their social performance

due to unending success of stock market. A professional organisation, being registered as Social Audit Limited,

created movement through publication of a journal, The Social Audit Quarterly.

(Blake et al., 1976; Gray, 2000; Henriques, 2001; Humble, 1973; Owen et al., 2000; Power, 2000)


1990s The inactive social accounting concept re-emerged at the end of the 1980s and the beginning of the 1990s because of social activities and value-based organisations’ activities, such as Traidcraft, a fair trading company.

The approach was soon taken by other organisations such as Body Shop.

Due to effort from value-based organisations, consultants and NGOs, an institute was formed, called Social and Ethical Accountability

Big companies like Shell and BP produced stand-alone social reports in 1988 as an example.

Academic scholar like Zadek and Raynard drew attention to social audit activities to be at the core of future developments on social and ethical accounting.

Counter reporting study started. Council on Economic Priorities developed social reporting standard

SA8000. Whole initiation again led to formation of a new standard AA1000

from AccountAbility. From 1990 to 2005 the practice of social accounting and audit

expanded in the not-for-profit sector (NGO Sector).

(Gray, Owen, & Adams, 1996; Henriques, 2001; Owen et al., 2000; Zadek & Evans, 1993; Zadek et al., 1997; Zhang, Frase, & Hill, 2003)

2010s Development of many professional organisations around the world. Practiced social accounting/auditing as a tool for making government

accountable in developing countries. Discussions are centered on stakeholders’ empowerment approach.

(CUTS, 2013; O'Dwyer, 2005; The World Bank, 2011; UNDP, 2010)

After 1990s, literature depicted that the golden period of social accounting started

because of its adoption by many organisations across the world, promotion by

different professional organisations and creation of knowledge by the academic

sector. Many value-based organisations such as Traidcraft, a fair trading company,

Body Shop International, and the Cooperative Bank pioneered the way in showing

continuing commitment to social and ethical auditing resulting in a response from

more mainstream multinational companies and commercial organisations, such as

Shell and BP who produced stand-alone social reports in 1988 (Owen et al., 2000). In

the academic sector, Owen et al. (2000) describe, “writing in 1995, Zadek and

Raynard drew attention to the potential for this new, at the time barely visible, wave

of social audit activity to be at the core of future developments in social and ethical

accounting” (p. 81). However, social auditing grew the tensions between increasing


return on investment and not violating societal trust among private and public

sectors.

In the movement, the professional organisation’s role also was huge. One of them

was Social Audit Limited UK, who advanced and widely disseminated the concept of

corporate responsibility and accountability not limiting itself to its shareholders;

conducted an audit of social and environmental performance of a few important

commercial organisations followed by journal publication in its journal Social Audit

Quarterly; and thus worked as an advocate for the issues (Owen et al., 2000).

Another considerable work was of the Council on Economic Priorities that developed

social reporting standard SA8000 in October 1997, “which is concerned with

promoting enlightened labour management practices amongst third world suppliers”

(Owen et al., 2000, p.4). However, the scope of SA8000 and social audit being

undertaken by them was severely criticised as it was not holistic for corporate social

performance, and it just focused on the niche market instead of wider stakeholders

(Owen et al., 2000). In contrast, fast growing business adopted SA8000 (Owen et al.,

2000).

Furthermore, another development and the role of professional organisations led to a

new and very much more systematic approach to social auditing. Later on this

approach was developed, and finally formed the Institute of Social and Ethical

Accountability. “The aim was to gain further consensus as to how social auditing

should be practiced” (Henriques, 2001, p.42). This attempt ultimately led to the

formation of a new standard called AA1000 sprung in 1999 from AccountAbility

(AccountAbility, 2008). This standard includes the aspects of social audit and was

used for the gambling organisation called Camelot (Henriques, 2001). Finally, the


concept of social auditing was also expanded to social sector organisations and

public sectors including enterprises, NGOs, and government from around 2000. This

expansion was supported by both academics and professional organisations (for

example O’Dwyer, 2005).

2.5 MANAGEMENT-DRIVEN AND STAKEHOLDERS-DRIVEN SOCIAL AUDIT

Under section 2.2, a brief hint was introduced on the two facets of social auditing. In

an overview of different past literature of social auditing, it can broadly be classified

into two dimensions. It appears that many social audits are conducted by

management either voluntarily or to address stakeholders’ pressures, but some of

them are initiated by an independent or third party. The prior type of social auditing

and how it creates accountability has been discussed by many scholars (for example

Gao & Zhang, 2001, 2006; Gibbon & Dey, 2011; Hill et al., 1998; Zadek & Raynard,

1995a) whereas limited discussion has been done on the later type of social auditing

and its role in creating accountability (see Dey, 2003; Medawar, 1976; Spence,

2009). Specifically, the study on the later type of social auditing in the context of

NGO sector is very rare. Based on these two particular natures of social auditing, this

study further discusses social auditing under two categories: management-driven

social auditing and stakeholders-driven social auditing.

Management-Driven Social Audit

When organisations see or feel the opportunity or risks, for example pressure from

stakeholders, which could potentially bring risk, management would respond in a

way so that they can enhance their economic performance and fulfil the community


demand fully or partially. This creates a perception among stakeholders that

organisations have done something. Such attempts helped organisations to be seen as

accountable among its stakeholders to reduce business risk for the future. Thus social

auditing has been somehow taken as managing competing interests and pressures

from stakeholders (Gao & Zhang, 2006) as a tool for strengthening and enhancing

strategic management process (Gray, 2000). Such management-initiated social

auditing is management-driven social auditing. The management-driven social

auditing leads to produce social (impact) accounts using different (non)participatory

tools and methodologies, in which wider stakeholders are engaged and consulted, to

demonstrate their accountability, transparency, and the effectiveness of their

operations. The remaining section discussion includes approach to social auditing,

process of social auditing, social audit as a tool to document social accounts and so

on. In final section, this thesis also discusses whether management-driven social

auditing is able to create real change and accountability, and empower stakeholders.

2.5.1.1.Approach to Management-Driven Social Auditing

Very limited prior literature has discussed different approaches to management-

driven social auditing. In particular, one key paper discussing approaches to social

auditing is by Hughes (2005). The paper articulated three approaches to social

auditing used by the UK food and clothing retailers in their ethical trade.

The arm’s length approach

The coordinated approach

The developmental approach

The arm’s length approach to social auditing is used to describe the contractual

relations between retailers and their stakeholders (suppliers) which is characterised


by weak social ties and more detached relationships. This approach is used to assess

the risk of their selected suppliers who are under higher risks due to not having a

trade union, having poor human rights records or similar issues. In addition, there is

some sort of detached relationship between retail firms and auditors. The second

approach to social auditing is the coordinated approach, in which contracting

relationship is built on trust, interpersonal relationship and collaboration between

retailers and suppliers. In this approach, the retailers also might have a close

relationship with producers. The retailers can easily assess the labour condition in the

factories of suppliers. There is even a strong relationship between auditor and

retailers. However, this approach has more retailer power, and labour conditions are

rarely monitored by an independent regulatory body. The development approach was

the final approach discussed by Hughes. This is a more open and transparent

approach in social auditing where local NGOs are involved to perform the role of

auditor in the production sites. Thus wider stakeholders are engaged in the process,

and can be an ongoing mutual learning approach between retailers and overseas

supplier. While the first two approaches are a private or corporate sector attempt at

ethical trading due to pressure from stakeholders, the development approach

potentially can assess the performance though this is also management-driven social

auditing.

The second paper that discusses another type of approach or nature of social auditing

is by Kemp et al. (2012) who name it as community-led audit. In community-led

audits, an external actor who is external to the host organisation such as local

community members carries out the social auditing (Kemp et al., 2012).

Interestingly, the notion of community-led audit, and development approach to social


auditing are similar as social audit is undertaken by either NGOs or community

members who are external to organisations. However, any prior literature hardly

discusses in-depth about community-led audits or developmental approach to audits

specifically focusing on the NGO sector. Few grey or practice literature has

discussed another approach, ‘social hearing’, to social auditing which might carry a

similar notion of developmental approach audit (for example, Fox, 2015). In this

approach, organisations organise an event inviting wider stakeholders to hear their

views on a particular issues/subject/project/program such as construction of drinking

water system in a village. The event is facilitated by a person external to the

organisation. There are evidences that social audit hearing has improved

performance, for example rural employment program in India (Fox, 2015). The

social audit approach being discussed and practised in Nepal as per the guidelines of

AIN and ministries of Nepal is also a form of ‘social hearing’ (see AIN, 2010).

Major literature such as Hughes (2005), and Kemp et al. (2012) focused on the social

audit approach being practised in the supply chain of businesses, and corporations

including extracting industries. However, very little academic literature has discussed

different management-driven social audit approaches in NGO sector. Hence,

considering the scope of this thesis – which focuses on NGO sector study in which

community-led approaches for any type of work is a common phenomena – it

primarily explores the wider practices of developmental approaches to social

auditing in the findings chapter (Chapter Five).

2.5.1.2.Process of Management-Driven Social Auditing

A thorough analysis of literature has yielded the different steps being used for social


auditing. Although these steps and processes are similar to some extent, they are

different from each other depending on different authors. Few scholars such as

O’Dwyer (2005), Gao and Zhang (2006), and other practice literature (from Social

Audit Network, and Association of INGOs in Nepal) have been reviewed, and the

overall summary on how social audit is conducted has been summarised below in

Table 2.2. The left-hand side of the table shows the social auditing process described

in academic literature whereas the right-hand side depicts the social auditing process

being discussed in grey literature in real practice.

Table 2.2 A process of conducting social audit

Academic Literature (Gao & Zhang, 2006; O'Dwyer, 2005)

Practice literature (Spreckley, 2008) (AIN, 2010)

Policy and strategy review/establish the value based

Formal decision by organisation to undertake social auditing

Preparation for social audit

Define audit boundaries/define stakeholders Preparation of ToR from BoD

Stakeholder based design of social audit process

Planning

Defining performance indicators/establish the social performance indicators

Monitor progress Conducting of social audit

Stakeholders consultation Internal audit and document review/collect the data

Evaluate results

Preparation of accounts and external reports/write or construct accounts

Report back to stakeholders

Post social audit action

External verification/submit the accounts to independent external audit

Implementation of social audit action plan

Publication of statement and reports and follow up dialogue with stakeholders/publication

Even though Gao and Zhang (2006) offered nine different steps for social auditing as

demonstrated in Table 2.2, they have described the three stages of social auditing

used by Traidcraft.

1. Identifying key stakeholders groups.

2. Initiating process of consultation with each stakeholders groups: this process


allows the organisation to set specific criteria against which the social impact

and ethical behaviour of the organisation will be judged.

3. Producing draft social accounts.

The above different illustrations analysed and practised by different organisations

including professional associations clearly communicate social auditing does not

have any standard framework or steps on how it can be conducted. Interestingly,

while reviewing AIN documents (AIN, 2010) and few ministries of Nepal

government documents on conducting social audits (For example, MoFALD, 2010),

they have discussed social auditing as an event to be conducted by inviting relevant

stakeholders and to be facilitated by a social audit facilitator who is external to the

organisations.

In practice and the process of social auditing, what should be analysed during social

auditing, and are there any types of social auditors? A grey literature suggests that

the social audit team can analyse economic (for example to what extent the program

could create employment, reduce poverty, increase wages, social security or value

addition), social and empowerment aspect (for example increase participation,

safeguard the rights, improve policy formulation, improvement on health and

education), and environmental aspect (for example negative effects towards

environment, or protects environment, protecting tradition heritage, protection from

pollution etc.) (ACORAB, 2013). Similarly, social auditors can broadly be divided

into two categories: broad stakeholders who are engaged in dialogue and decision

making process, and professional social auditors called social and ethical accountants

and auditors (Gao & Zhang, 2006). These auditors can also be assurers for other

stakeholders. For example, an assurance from a third party on information published


by organisations, viz. sustainability report of corporations, is a growing phenomenon

in recent times (O’Dwyer, Owen, & Unerman, 2011). In the same way, involving

social auditors by management also could play the role of assurer to complement and

legitimise the social auditing process for creating better accountability. In addition to

social auditors, there are practices to form the audit team to assess the accounts of an

organisation, and Social Audit Network (Spreckley, 2008) suggests that audit team

composition should be representative from each key stakeholders group. Thus, the

above analysis explained that social auditing process is being practised differently

around the world and hence has a diverse nature.

2.5.1.3.Management-Driven Social Auditing, Social Accounts,

Accountability, and Stakeholders Empowerment

Social auditing stands as a tool to form and regulate corporate social performance

(CSP) of organisations (Kemp et al., 2012), and an accountability mechanism tool or

means of accountability (for example Ebrahim, 2003a; Gao & Zhang, 2006; Gibbon

& Dey, 2011; Hill et al., 1998; Zadek & Raynard, 1995a). So it has been used to

measure organisational performance and impacts, which also enhance organisational

accountability. Social auditing does not only help to understand social performance,

but also to assess and monitor the social performance of the organisations (Ebrahim,

2003a) by providing a framework for organisations for operationalising detailed

planning and monitoring, and a participative method for evaluating impact

(Spreckley, 2008). Therefore social auditing is accepted, as argued by many

researchers, as a process for assessing, reporting and improving an organisation’s

social performance and ethical behaviour through actively engaging stakeholders

(Ebrahim, 2003a; Gonella et al., 1998), which also ensures accountability. That is


why organisations have connected many other programs to social accountability for

broader outcomes and impacts (O'Dwyer & Unerman, 2007), and practitioners also

accepted as an independent evaluation of the organisation social performance against

its social goals, and viewed as a stakeholders-based assessment of the impact of

organisation’s non-financial objectives through systematic and regular monitoring

(Governance, 2005). Thus proponents of social auditing claim that social auditing is

a very dynamic process in which organizations can improve its overall performance

including planning, accounting, auditing and reporting in stakeholders’ participation

(Gao & Zhang, 2001; Gao & Zhang, 2006; Zhang et al., 2003). These outcomes and

the impact generated through dynamic stakeholders engaged social auditing as social

accounts are disclosed in the forms of social reporting as a proof of meeting

stakeholders’ expectations, real changes and accountability.

Moreover, social auditing is also viewed as a powerful tool which can empower the

stakeholders through their engagement and participation. When we discuss

stakeholders’ empowerment in social auditing, scholars argued that stakeholders’

engagement and participation in social auditing would ensure the democratic process,

and thus the empowerment of stakeholders. Social auditing does so through

involvement NGOs and other elements of civil society within stakeholder dialogue,

and thus powerful NGOs can be embedded within the matrix of civil society

(Henriques, 2001). Similarly, literature by Kemp et al. (2012) has discussed and

argued that ‘community led audit’ could symbolise the stakeholders’ empowerment

as a way to encourage a move away from the overly instrumental, calculative and

rational practice of the current audit culture. It is because community-led audits or

assessments would be carried out by actors external to the host organisation; that is

by local community members (Kemp et al., 2012). Similarly, as part of the


beneficiaries and stakeholders’ empowerment process, NGOs have been practising

different approaches/interventions such as community-driven development,

participatory development, and Rights Based Approach (RBA) in which social

accounts are prepared with an active engagement with stakeholders (social auditing).

For example, community-driven development is one of the best approaches being

developed to reach the grass root level poor communities to empower them. The

latest one being practised is RBA (a form of downward accountability) –

empowering people to claim their rights from state and non-state actors as per

international conventions – to development, which also has been taken as a way to

enhance the effectiveness of aid delivery (Cornwall & Nyamu‐Musembi, 2004;

Filmer-Wilson, 2005; Nelson & Dorsey, 2003; O'Dwyer & Unerman, 2010). The

social accounts prepared through such approaches claim the beneficiaries and

stakeholders’ empowerment. Hence researchers argued that social auditing

empowers stakeholders.

The other argument of scholars is that social auditing should be leading organisations

towards reforming corporate governance structures, and such reforms should focus

on empowering less powerful stakeholders so that organisations could be

accountable to stakeholders as they also would be in an organisational decision

making role (Adams, 2002; Friedman & Miles, 2002; O'Dwyer, 2005; O'Dwyer &

Owen, 2005; O'Dwyer, Unerman, & Bradley, 2005; Owen, Swift, & Hunt, 2001;

Owen et al., 2000). The nature of organisational reforms could be administrative

reforms and institutional reforms, and the prior one should lead to the latter one

(O'Dwyer et al., 2005). This process would ensure institutional rights to stakeholders,

and in the absence of this, would be a failure of participative democracy (O'Dwyer et


al., 2005; Swift, 2001). Thus, researchers seem to agree that social auditing should be

a stakeholders’ empowerment process.

However, management-driven social auditing has many criticisms from a bunch of

researchers. A few prior studies have argued that there is high tendency for social

audit agenda to be captured by consultants or management, and thus all democratic

ideals and values of social auditing are compromised (O'Dwyer, 2005, 2011; Owen

et al., 2000) regardless of approaches and processes being used in management-

driven social auditing. The management captures most of the process of social

auditing including stakeholder selection, silencing beneficiaries, and controlling

dialogue agenda (O'Dwyer, 2005). Therefore, scholars claim that a social auditing

concept also might become just a management toolkit or fad (Owen et al., 2000).

Alternatively, social (including ethical and environmental) accounting, reporting and

auditing through stakeholders consultation become a strategy for “managing

stakeholder relations” (Pearce & Kay, 2012). In addition, few other studies have

depicted that social auditing is conducted as a means to legitimise operations of

organisations (Deegan, 2009), and social accounts have no verifiable standards

(Ebrahim, 2003a; Gray, 2000; Owen et al., 2000). Similarly, there have been many

questions about the independence of management-driven social audits (Cotton et al.,

2000; Power, 2000), and organisations fear that during the process of social auditing,

it could arise as a serious problem (Ebrahim, 2003a). Some other research argued

that social auditing is conducted to distract (or to manage) social pressure on

different issues (Gray, 2000), to legitimise their anti-social practices, operations and

behaviours that are not perceived positively by society (Deegan, 2009), to manage

the risk of organisations (Power, 2000), for regulatory compliance (Hutter, 1997).


Hence, as argued by many scholars, management-driven social auditing hardly fulfils

the stakeholders’ expectations and creates accountability and real change.

Furthermore, much literature failed to explain how stakeholders’ empowerment in

practice would work or how stakeholders are facilitated for empowerment (O'Dwyer,

2005), and what the determinants of such empowerment are. Thus there is a huge

question on the beneficiaries and stakeholders empowerment claimed by NGOs. A

renowned development scholar argues that just listening and participation of

stakeholders is not sufficient; the entire idea of empowerment is international and

national NGOs need to disempower themselves (Chambers, 1997). In other words,

organisations need to give up power or transfer power to their beneficiaries and

stakeholders so that they would have full control over their lives (despite the effects

of any organisations); fully participate, negotiate, influence, and control

organisations; and make organisations accountable and transparent in their overall

operations. The NGOs at least (compared to corporations) are expected to change

themselves as argued, “NGOs are given a blank cheque for an almost unlimited store

of trust” (Beck, 1999, p.44), and thus they have greater responsibility to be more

accountable (Gray, Bebbington, & Collison, 2006; O'Dwyer et al., 2005; Unerman &

O'Dwyer, 2006a). But there is much concern regarding the power exercised by

international NGOs over their beneficiaries and stakeholders. For example, past

studies showed that researchers could not discern any intentions to transfer decision

making power to stakeholders by organisations (Owen & Swift, 2001). There are

also questions associated with the degree of power that communities would actually

have; not only to express themselves, but to effect change (Kemp et al., 2012). In

addition, there is not any literature this study is aware of that supports whether


organisations have changed their corporate governance structure as discussed by

scholars (Adams, 2002; Friedman & Miles, 2002; O'Dwyer et al., 2005; Owen et al.,

2000, 2001) including NGOs as part of stakeholders’ empowerment.

2.5.1.4.Management-Driven Social Auditing, Power Structure, and Unequal

World

Whether management-driven social auditing truly creates change and accountability,

and empowers stakeholders as discussed above primarily depends on the power

structure between beneficiaries and stakeholders, and organisations. When any actor

in the society has a bigger power, then it is likely to be impossible to make this actor

accountable towards the rest of society. The same mechanism works while analysing

power relationships between organisations and society. The party which has more

resources, both monetary and non-monetary, has more power and thus society is not

heard in many instances, but they are to be made accountable towards society. In the

same way, when organisations become big and larger, then they might obtain

enormous power, and thus might need to be held accountable to society (Gray,

2000). To balance the power of corporations, NGOs or civil society organisations

claim to represent weak stakeholders in the society (O'Dwyer et al., 2005). However,

non-government-organisations (NGOs) who are formed generally from civil society

organisations also have a tendency to operate as a powerful body detaching itself

somehow from the characteristics of civil society organisations (Henriques, 2001).

These NGOs, might play a powerful entity role in the society, and hence stakeholders

are not heard by them in many instances. To make them accountable, these

organisations’ powers should match their responsibilities to hold them accountable to

society (Gray, 2000).


However, beneficiaries of NGOs potentially have less power compared to NGOs.

They do have and control lots of resources and thus they seem to be more powerful

than beneficiaries and many other stakeholders. These NGOs sometimes appear and

play a role as a more powerful entity than beneficiaries and stakeholders including

governments in developing countries (Adhikari, Islam, & Haque, 2016). Such

extreme power relations between beneficiaries and organisations nulls the

stakeholder’s empowerment (O'Dwyer, 2005), and supports the lack of

accountability and real change. For example, O’Dwyer’s (2005) paper on ‘The

construction of social account: a case study in an overseas aid agency’, identified

how managers in the organisations (INGOs) emasculate the social accounting

process by controlling stakeholders’ voices instead of empowering stakeholder

groups. In Ireland, where society is advanced and educated, proper democracy has

been practised, people can easily speak for themselves, and government is capable of

making other non-state actors accountable; dialogue with stakeholders was controlled

by management, key stakeholders were silenced, and there was very little openness

on what they said and later what they did. How overwhelming would it be to have a

situation in the setting of a developing country where there is a huge power relation

gap between stakeholders primarily beneficiaries and international NGOs, and most

of the primary stakeholders are illiterate, deprived, struggling hand to mouth, and

vulnerable from each socio-economic aspect.

The above illustrated situation is a picture of an unequal world where many

communities (primary beneficiaries) have very minimum or no power due to many

socio-cultural, global, and geo-political factors. And these communities are termed as


poor communities, who lack even the minimum capacity to control their lives in their

countries where many NGOs say they are working for these communities. On the

other hand, community/beneficiaries require a high level of ‘capacity’ within the

local community for successfully accomplishing community-led audits (Kemp et al.,

2012), which tremendously emphasises stakeholders’ engagement and participation

as part of creating accountability and real change, and stakeholders’ empowerment.

But some prior studies support the fact that the real deprived community or people

who have very minimum power lack such capacity to make NGOs accountable. For

example, a group of prior research has found that community driven development

programs were also captured by local elites (Fox, 2015; Mansuri & Rao, 2012;

Platteau & Gaspart, 2003) and thus the pro-poor groups in the communities remain

powerless. Similarly, other researchers have shown that international NGOs have

depicted only strong rhetorical support towards downward accountability through a

rights-based approach, but it has not really been seen in practice (O'Dwyer &

Unerman, 2010; Unerman & O'Dwyer, 2010). It shows that power structure between

international NGOs and local NGOs (local elites), and local elites and beneficiaries is

a challenge in creating impact and accountability. It is the same as argued by Doane

(2016) on The Guardian, “power, ironically, is what may be holding INGOs back

from achieving impact”. Thus different approaches being developed within

management-driven social auditing, inter alia, have not been really empowering the

most disadvantaged people on this planet, and the world is remaining unequal. Even

though there are a couple of studies on social auditing focusing on NGO (for

example, O'Dwyer, 2005), the empirical study focusing at social auditing and

international NGOs operating in a developing country, and how such auditing creates

change and accountability is very rare.


Stakeholders-Driven Social Audit

As discussed above, several techniques or methods to social auditing such as

stakeholders’ engagement and participation, and community-led audits for

stakeholders’ empowerment; and other approaches such as Rights Based Approach

to ensure downward accountability initiated by many NGOs fail to create real change

and accountability to the weakest group in the society. This is because management-

driven social auditing is captured by management because of the enormous power

they have compared to their beneficiaries and stakeholders. As a result, such social

auditing fails to produce independent social accounts. Dey (2010) calls it “absence of

complete and reliable ‘official’ SER accounts” (p. 307) to create real change, trigger

lack of accountability, and empower stakeholders. Hence, few researchers discussed

independent or third party driven social auditing (see Adams & Evans, 2004; Dey,

2003; Gray et al., 1996; Medawar, 1976) in various forms but generally referred to as

independent (external) social reporting (Gray et al., 1996) as a counter balance or

counter reporting to current practices (Dey, 2010). In this type of social auditing,

stakeholders who are external to organisation assess and report the social accounts

(social auditing) independent to the organisation (Spence, 2009). Adopting wording

used by Gray et al. (2009), stakeholders-driven social auditing is the accounting for

the other by the other. Such a type of social accounts by stakeholders through their

own auditing may reveal the gaps between what organisations choose to report and

what they try to suppress (Adams & Evans, 2004; Dey, 2003). These accounts from

stakeholders are an independent social audit which is free from organisation-focused

accountability approach and thus provide critical independent interpretation on

organisational performance (Dey, 2003; Medawar, 1976). Since such audit is done


by stakeholders of the organisation, this thesis now calls it stakeholders-driven social

auditing. A detailed description of stakeholders-driven social auditing including its

approach, how it creates change and accountability is described in this section.

2.5.2.1 Approach/Process to Social Auditing

Some prior literature has explained about social auditing independently conducted by

stakeholders (for example, Dey, 2003, 2010; Gray et al., 1996; Spence, 2009). This

stakeholders-driven social auditing yields independent social accounts. Research

shows that various types of stakeholders initiate the production of social accounts in

different forms and approaches. For example, regarding work and performance of

many organisations around the world, different civil society organisations and

activists produce ‘alternative accounts’, a different social account than the account

produced by relevant organisations. These alternative accounts are independent

social accounts yielded by stakeholders-driven social auditing or external social

auditing (Medawar, 1976), and can be supportive to social accounts produced by

organisations or critical of those accounts.

Spence (2009) discussed different forms or types of alternative accounts whereas

Dey (2003, 2010) discussed more on shadow and silent accounts based on the work

of Gray (1997), Gray, Dey, Owen, Evans, and Zadek (1997) and Gibson, Gray,

Laing, and Dey (2001). People external to the organisations generally produce those

accounts, which is the external social audits of organisations. For the first time,

Social Audit Limited (in the 1970s) produced external social audits called “social

and environmental impacts”, without cooperating with the organisations whose

auditing was done. Then many other activists and organisations started producing


alternative accounts against the accounts produced by organisations. Some forms of

approaches of stakeholders-driven social accounts are presented below.

Silent social accounts: An approach of stakeholders-driven social audit as

introduced by Gray (1997) is producing silent accounts of organisations. Gray

explains that normally silent accounts in relation to social and environmental

performance of organisations that are not disclosed by them are produced. The

initiation point of silent accounting is to find out undisclosed subsets of accounts

from the annual reports or organisations, and put them together as a document in its

own right (Dey, 2003). The relevant information for silent accounts is found in

formal corporate disclosures channel such as annual reports, press releases,

marketing campaigns etc. (Dey, 2010). If this information for silent accounts is

extracted and reported by any stakeholders external to organisations, then they are

independent social accounts.

Shadow accounts: Another approach to stakeholders-driven social auditing is

producing shadow accounts which primarily includes the voices of other

stakeholders, wider sources of information from the public domain (primarily the

media) and other independent organisations (Dey, 2003). They are the sources for

counter information of organisations (Dey, 2003; Lubbers, 2002). The shadow

accounts of organisations are available in public domains, produced independently of

the subject of organisation, and published externally (Dey, 2010).

Anti-accounts: External social audits of organisations’ activity (Spence, 2009) are

produced as anti-accounts. These accounts are also prepared by people external to the


organisations. There are different forms or natures of anti-accounts being produced

by different groups. The first recorded one was evident when Social Audit Ltd.

produced social and environmental impacts accounts of the organisation they were

auditing for without coordinating with them (Spence, 2009).

Counter reports: Another approach of external social audits or stakeholders-driven

social audit adopted was producing a series of counter reports of large multinational

organisations in the1970s by Counter Information Services (see Gray, Owen, &

Maunders, 1987; Spence, 2009). “It is the process of identifying and reporting

information on organization’s significant economic, environmental and social issues

that comes from external or unofficial sources (expert reports, research papers, online

journals, studies from NGOs, government publications, legal proceedings etc.”

(Boiral, 2013, p. 1037). In this approach, the counter information about high profile

organisations/companies is produced (Dey, 2003; Lubbers, 2002). The online counter

accounts are a growing phenomena now as the internet allows wider spread,

immediate and democratic access to information (Boiral, 2013)

Alternative Accounts: This form of external social audits was started by a couple of

NGOs such as Christian Aid and Friends of the Earth, who produced the alternative

accounts or big organisations including Shell and Exxon (Spence, 2009). For

example, ‘Other Shell Report’ was produced by Friends of the Earth incorporating

information related to the social and environmental impact of Shell. In this account,

the voices of communities who were affected by Shell operations in relation to

human rights violations were included (Spence, 2009). The civil society

organisations (NGOs) are playing a vital role in producing different forms of such


alternate accounts in relation to human rights, health and work safety in companies,

power abuse by corporations and so on (Spence, 2009).

Adbusting: Spence (2009) also discussed about adbusting, a parody with humour

attempting to subvert the original message. For example, an advertisement of Shell,

how many kilometres per gallon, is converted to how many lives per gallon. Spence

claims that adbusting can be a form of social accounting.

Academic accounts: Another approach of stakeholders-driven social auditing

demonstrated was academic accounts. Cooper, Taylor, Smith, and Catchpowle,

(2005) undertook a social account of student hardship during the tuition fee debate

in Scotland. These accounts seemed to have an influence on the political debate

concerning social justices (Spence, 2009).

Other accounts produced by investigative journalists: Investigative journalism is

another approach for producing social accounts in the form of news, stories, case

studies etc. These produced accounts could be shadow accounts or alternate

accounts. The Panama papers are a good example (www.panamapapers.org).

For the purpose of this thesis, the researcher calls those accounts primarily as shadow

accounts. These shadow accounts incorporate investigative journalism accounts

produced by journalists and journalists’ views through interviews, government

accounts both from documents and interviews, a few civil society organisations’

accounts from documents and their views and so on. While there have been many

research as discussed above in relation to shadow accounts focusing on operations of


corporations, none of the studies appeared to look at the operations of NGOs using

stakeholders-driven social auditing as a tool.

2.5.2.2 Stakeholders-Driven Social Audit as a Tool to Capture Shadow Accounts

The above discussion leads to a point now that stakeholders-driven social audits

produce many shadow accounts independently of the organisations. An illustration

explained by Spence (2009) would further clarify this. Nike disclosures never talked

about issues like working condition in its factories in developing countries. Their

accounts showed that they are sincere on social and environmental issues and fair

treatment of their employees. When CorpWatch started producing shadow accounts

of Nike’s factories in Vietnam and other developing countries in the wide range of

issues such as working conditions, many times the stories were different from Nike’s

accounts. Such attempts of CorpWatch comprehensively outline the more disastrous

social and environmental effects of corporate activity (Spence, 2009). Thus shadow

accounts captured the different accounts to Nike social accounts. Hence,

stakeholders-driven social auditing in its different approaches and forms can capture

the shadow accounts, and they are generally independent, transparent and true.

2.5.2.3 Stakeholders-Driven Social Audit to Create Pressure, Facilitate Change, and

Trigger Lack of Accountability

The discussion under 2.5.2.2 shows that stakeholders-driven social auditing can

capture shadow accounts which play a vital role in creating pressure on corporations

to be accountable. In that process, different NGOs as a stakeholder of corporations

appear to play the role to balance the power of corporations and create accountability


through their own social auditing. Alternatively, to balance the power of

corporations, NGOs or civil society organisations claim to represent weak

stakeholders groups in the society (Kovach, Neligan, & Burall, 2003; O'Dwyer et al.,

2005) through producing shadow accounts. Such representations on behalf of weak

actors in the society seem to create pressure on corporations, and thus it facilitates

the change.

Scholars also argued that stakeholders-driven social audits also retain the capacity to

assess change/impact and trigger lack of accountability. It does so in different ways.

First, stakeholders-driven social audit accounts do not pretend to be objective or

neutral, and they are pretty transparent (Spence, 2009). Dey (2003, p. 8) presents as

“an organization centred silent account of the organization’s social performance; an

independent, externally produced shadow social accounts of the organization and its

stakeholders”. Thus they explore the reality in a real sense and such information is

powerful in terms of creating changes. Another is these accounts attempt to open

dialogue by exposing contradictions and conflicts. The shadow accounts retain this

potentiality as “they are a polyvocal stakeholder driven view of the organizations’

behaviour” (Dey, 2003, p. 8). Since a shadow account could create the conditions for

an active dialogue between organisations and their stakeholders, it could provide a

shared starting point for both management and beneficiaries including stakeholders

(Dey, 2003). He further argued that such a dialogue would lead to a more explicit

emancipatory objective of stakeholders’ empowerment. Other scholars also support

the view. For example, the counter accounting including online counter accounts has

emancipatory potential (Boiral, 2013; Gallhofer, Haslam, Gallhofer, & Haslam,

2006). However, in the context of NGOs, they operate powerfully in the developing


countries, and there is no empirical study whether stakeholders-driven social audit

creates change and accountability among NGOs. In other words, empirical study in

the context of NGO sector as to whether shadow accounts create pressure or change

is lacking.

Specifically exploring the stakeholders’ empowerment particularly in an unequal

world through stakeholders-driven social auditing, requires that a different

mechanism to empower the stakeholders should be sought in the short run and long

run. In the unequal world, the mechanism of surrogate accountability (Rubenstein,

2007) could be an evident alternative. The surrogate accountability is a mechanism

where powerless people are represented by some entities or groups who are in

between power wielders and accountability holders in the short run until they are

empowered. Through stakeholders-driven social auditing for capacity building,

stakeholders would be able to exercise power for the wide benefits including to make

the powerful organisations accountable for society in the long run. Adopting a word

from Rubenstein’s (2007) “surrogates” accountability, this thesis uses surrogates (not

stakeholders)-driven social auditing from now on.

2.6 SOCIAL AUDITING & ACCOUNTABILITY IN NEPAL

Lately, many international NGOs including multilateral organisations such as the

World Bank and UN have been promoting the concept of social accountability in

Nepal directly and in coordination with other organization such as CUTS (CUTS,

2013; The World Bank, 2011; UNDP, 2010). CUTS International, an organization

based in India, who produced a document on ‘Undemanding the context of Nepal for

Social Accountability Interventions’ in partnership with Affiliated Network of Social


Accountability (ANSA); and they seemed to be funded by the World Bank. In the

pace of promotion, Association of INGOs in Nepal (AIN), the umbrella body of

international NGOs working in Nepal, also has been playing a significant role as it

has developed the social auditing guideline on how to conduct social auditing for its

members (AIN, 2010). Therefore, social accountability (including governance)

recently has been an area for significant investments by these organisations through

different government ministries and local NGOs including civil society

organisations. Many documents about social accountability have been produced in

the context of Nepal by the World Bank and other organisations in Nepal (see CUTS,

2013; Khadka & Bhattarai, 2012; TheWorldBank, 2011; UNDP, 2010). In this

section, there follows a brief discussion on social accounting in Nepal.

Meaning of Social Audit

The documents produced by the organisations discussed above have defined and

described social auditing and accountability. For example, “social accountability is

an approach towards ensuring accountability by engaging citizens and citizen’s

groups directly or indirectly” (CUTS, 2013, p. 2). In social accountability notion, the

citizens, media, communities and Civil Society Organizations (CSO) adopt several

kinds of strategy to hold the service providers accountable (CUTS, 2013). Similarly,

AIN defines social auditing as “a process whereby the beneficiaries/right holders and

stakeholders analyse, review and provide feedback on the effectiveness, efficiency

and relevancy of programs, activities and resources in intuition. It is a way of

understanding, measuring, reporting and ultimately improving an organizations’

social, ethical, environmental, financial and managerial performance through

creating a conversation between an organization and its clients, partners and


stakeholders” (AIN, 2010, p. 2). Finally, the government document defines, “social

audit is an assessment, analysis and evaluation of the work contribution on entire

socio-economic development of plan, policy, program, project implementation and

service delivery” (MoFALD, 2010, p.2).

Social Auditing/Accountability Tools

The overall agenda on which organisations are working in Nepal is good governance.

It is assumed that millions of dollars have already been invested for good governance

work in Nepal. As part of this work, many documents are produced on good

governance including social accountability, primarily targeting to make the

government accountable towards people. For the same purpose, different social

accountability tools and techniques have been used in Nepal. These tools are also

used by NGOs on an ad-hoc basis. A few of these tools and techniques used for

social accountability interventions are briefly illustrated below.

Public hearing: government officials are required to explain what they are

doing in public to those people who are affected by their work (The World

Bank, 2011).

Public audits: Public assess the work being done by government (CUTS,

2013).

Citizen report cards: citizens collectively write reports on the services they

have received from government departments, send the scores they have given

them to the government departments and demand an improvement in the

services shown by low scores (The World Bank, 2011).


Citizen charters: a government department or government program agrees

with the people in that area who are affected by it what are the rights of the

citizens to the services of this program, and these are publicly displayed and

enforced (The World Bank, 2011).

Community score card: government service providers score their

performance in the delivery of services: community members who receive

these services score the performance of the service deliverers, and they

exchange this information, seeking to find ways in which both sides see what

needs to be improved (The World Bank, 2011).

NGO’s Policy Paradox on Social Auditing in Nepal

Interestingly, the social auditing and accountability appeared to focus only to make

government agencies accountable as most of its tools talk about making government

accountable towards people. The understanding of UNDP on social accountability

proves this fact as it understands accountability as, “Social accountability refers to a

form of accountability that emerges through actions by Civil Society Organizations

(CSOs) aimed at holding the state to account, as well as efforts by government and

other actors [media, private sector, donors] to support these actions” (UNDP, 2010,

p.10). While discussing with representatives of the international organisations, they

strongly believed that Nepal has fertile ground for practising various social

accountability tools as there are required formal structures and legal framework

(CUTS, 2013). However, the NGO sector has its own problems of social

accountability, transparency and internal governance. In addition, people are even

more critical towards donor community in terms of their lack of transparency and


accountability towards their stakeholders such as Nepalese government and local

community. For example,

Over the years, a persistently negative image of NGOs has dominated. This

includes NGO culture being deemed as ‘dollar farming,’ and NGOs as

‘begging and cheating bowls,’ ‘family entrepreneurial endeavors,’ and

‘slaves of foreigners’, if not the extension of imperial powers. This is linked to

perceptions of NGOs as being elite-led, hierarchically structured, lacking

transparency and accountable only to donors. The stated unofficial ties to

political parties have further undermined the credibility of NGOs (Tamang,

2012).

Stakeholders also believed that Nepal has been a showpiece for the donor community

to demonstrate their work to wider international donors, claiming they are successful

for policy development in governance level to address the issues of government

accountability. The following accounts from different donor documents support the

facts.

Good Governance Act: Nepal is the first country in South Asia to promulgate

Good Governance Act in 2006. In addition, Good Governance Act has made

provision for special arrangements to conduct public hearings and public

audits (CUTS, 2013).

Right to Information Act: It was promulgated in 2007, which guarantees right

to information as a fundamental right. This is a very important act for social

accountability in Nepal (The World Bank, 2011).


Because of the significant work of donor agencies and NGOs, different ministries of

the Nepalese government have prepared social audit guidelines. For example,

government of Nepal, Ministry of Federal Affairs and Local Development

(MoFALD) have adopted the Social Audit as a tool for downward accountability. For

this purpose, it has developed guidelines called, “Local body social audit guidelines

2067” to be adopted by all government institutions under the ministry. The ministry

has defined the concept of Social Audit as “an assessment, analysis and evaluation

work of contribution of entire socio-economic development of Plan, Policy, Program,

Project implementation and service delivery” (MoFALD, 2010, p. 2). The same

guidelines have mentioned the provision of conducting social auditing by NGOs and

state, “NGO and other social organizations also may adopt the guidelines to conduct

social auditing”. However, the guidelines have asked each local body to conduct

social auditing once in a year mandatorily. In addition to the ministries’ guidelines,

AIN guidelines on social audit mentions, “though RTI act does not explicitly

mention about INGO but AIN has felt that act is relevant to INGOs”. These could be

taken as loopholes in policies which were intentionally prepared through strong

facilitation of INGOs to be strictly implemented, but not for them. This example

shows a paradoxical behaviour and operations of international NGOs and donor

communities in Nepal.

An Example Case Study of Social Auditing in Nepal

A case study on the World Bank funded project depicts how donor agencies are

working with government to practise social auditing. This case explains how social

auditing has been taken as a priority sector in Nepal by donor agencies including

international NGOs, but a description on how social auditing is practised by selected


NGOs will be discussed in Chapter five. One of the projects of The World Bank,

called PRAN-Program for Accountability in Nepal, is being implemented by a NGO

called CECI (The World Bank, 2011). The case study is titled, “Social audits in

Nepal’s community schools: measuring policy against practice by the World Bank”

(The World Bank, n.d) depicts that social auditing has been used to measure the

overall performance of a community school in Nepal by adopting the social auditing

guidelines developed by the Ministry of Education. The practices even show that a

social audit report is somehow a pre-requirement of schools to receive their annual

government allocated budget from the district education office. For this purpose, a

committee has been formed in each sampled school called “Social Audit Committee”

(SAC). The committee is responsible for an overall look at the performance of the

school including school management committee. The guideline mentions that social

audits must be done annually and that the resulting social audit report must be

presented in a public hearing and a parent assembly and then incorporated into the

formal financial audit report of the school. The social audit as described reviewed the

following aspects of community schools:

Community participation

Functions of school level committees

Utilisation of social audits reports

Governance and accountability practices in the school and

community

Physical environment of the school

Teaching and learning environment

Educational management in the school

Management of educational facilities and resources

Financial management

Accounting for school resources

Income and Expenditure


Distribution of local and government resources

Thus social audit was used to measure the overall performance of the school, and

hence creates accountability to community/beneficiaries.

2.7 RESEARCH GAP AND RESEARCH QUESTIONS

The literature review above shows that there have been many studies on

management-driven social auditing focusing on both corporations and NGOs. Even

though few studies have conducted NGOs focused study, there is limited NGO

intensive empirical study focusing social auditing and accounting (except by

O’Dwyer, 2005). In addition, such study in the developing country context, where

international and national NGOs are considered the vehicle for development, is very

inadequate. Moreover, the literature review undertaken above demonstrated that

external social audits (surrogates-driven social audits) for corporations have long

practices in which NGOs and civil society organisations have played a significant

role in producing shadow accounts to make corporations accountable. These shadow

accounts are in relation to sustainability reporting (Boiral, 2013; Gallhofer et al.,

2006), corporate activities, corporate abuse of power, health and safety in the work

place, working conditions in the companies, social and environmental impacts

(Spence, 2009), and other issues. However, when many international NGOs operate

in developing countries they become very much more powerful and thus their

beneficiaries and stakeholders are not heard. This has raised much concern about

their accountability, and surrogates-driven social auditing is rarely studied in the

NGO context primarily in developing countries where they might behave powerfully.

Thus this thesis undertakes this empirical study to understand the nature of

management-driven and surrogates-driven social audits in the NGO sector focusing


on developing country context. This gives rise to our first research questions.

What is the nature of management-driven social audit and surrogates-

driven social audits within the NGO sector in Nepal?

While many scholars have argued that social auditing can create accountability

among organisations (for example, Ebrahim, 2003; Gibbon & Dey, 2011; Zadek &

Raynard, 1995; Hill et al., 1998; Gao & Zhang, 2001, 2006); other groups of

researchers critique social auditing (for example, Gray, 2000; Deegan, 2009; Owen

et al., 2000; Cotton et al. 2000; Power, 2000) is undertaken by organisations just to

legitimise operations, manage stakeholders etc., but hardly to be accountable. Such

arguments (social auditing and accountability) are also primarily based on

corporations and rarely for NGO operations around the world, though NGOs’

accountability has been a major research area among scholars. In practice, the case

studies and documents prepared by NGOs including their funding agencies (donors

or INGOs) in Nepal primarily discuss accountability of government (for example,

Khadka & Bhattarai, 2012; Tamang & Malena, 2011; The World Bank, 2011).

However, their own accountability rarely has been the area for research and

discussion. Particularly, in the context of Nepal, the NGO sector appears to be a

powerful entity with lots of resources, but accountability and transparency has not

been a subject for discussion or research despite serious criticism from stakeholders

including the media. Despite NGO claims on undertaking their social auditing as part

of their accountability, stakeholders-driven social audit is a niche in the sector at

global and local level. This context yields another research question.


Whether and how are management-driven social audit and surrogates-

driven social audit used to create NGOs’ accountability or trigger lack

of NGOs’ accountability in Nepal?

2.8 CONCLUSION

The social auditing has been illustrated both in narrow and wider forms. It was

started as a concept to decide whether a plant should be closed (Gray, 2000; Harte &

Owen, 1987), but it expanded widely including arguments that all forms of

accounting fall under social auditing (Gray, 2000). Moreover, social auditing also

was called the social accounting to represent this broader form of accounting. Thus

scholars like Gibbon and Dey (2011) argue that social accounting seems to be treated

as a narrow and formal form of accountability rather than broader models of

accountability.

The wider practices of social auditing can broadly be analysed under two

dimensions: management-driven social auditing and surrogates-driven social

auditing. The prior one is initiated by management whereas stakeholders initiate the

later one. While management-driven social auditing has also been interpreted as

accountability mechanism tool and organisational performance assessment method, it

is not free from wider criticisms as management control the entire social auditing

process. The surrogates-driven auditing appears to be very independent which can

create change and accountability in comparison to management-driven accountability

in corporations. However, both social auditing natures in the context of NGOs in a

developing country (primarily surrogates-driven social auditing) is under studied.


The prevalent practices being discussed in the context of Nepal also show that social

auditing seems to be a tool for NGOs to make government agencies accountable with

the attitude ‘I/NGOs accountability is perfect’. However, I/NGOs accountability

appeared to a key area to question by stakeholders in Nepal. Thus this thesis attempts

to understand the nature of both management-driven social auditing and surrogates-

driven social auditing, and how they create NGOs’ accountability in Nepal. Chapter

three illustrates the theoretical framework used to view this study in detail.

Chapter 3: Theoretical Framework 73

Chapter 3: Theoretical Framework

3.1 INTRODUCTION

In order to understand underlying issues, motivations, and themes in any

organizational behaviour, some theoretical assistance is required. Prior research has

adopted different theories such as legitimacy theory, stakeholder theory,

accountability theory, and institutional theory for analysis and interpretation of

organizational social accountability. Among them, accountability and legitimacy

theory seem to be often used by researchers. This study, however, has used the

theoretical lens of ‘Surrogate Accountability’ to explore and understand international

NGOs and their partner’s SAA practices. The surrogate accountability is a concept of

accountability which is used to interpret the accountability of an unequal world. This

thesis, therefore, has considered the theoretical perspective provided by surrogate

accountability as the focus is on one of the poorest countries in the world where

inequality is a major social problem. Detailed descriptions and justifications for

using surrogate accountability theory are explained below.

3.2 DEFINING ACCOUNTABILITY

Accountability has been defined differently by different researchers and theorists.

One way of defining accountability is to provide explanations through a “credible

story of what happened, and a calculation and balancing of competing obligations

including moral ones” (Boland & Schultze, 1996, p.62). Others have viewed

accountability as an association relating the “giving and demanding of reasons for

conduct” (Roberts & Scapens, 1985, p.447). Gray et al. (1996) define it as “the duty

74 Chapter 3: Theoretical Framework

to provide an account or reckoning of those actions for which one is held

responsible”.

Since accountability has been defined differently, there is no consensus definition

which is suitable for most of the organizations. Researchers have recognized for a

long time that accountability can be a contrary and complex concept (Choudhury &

Ahmed, 2002; Dixon, Ritchie, & Siwale, 2006). In many instances, such concepts are

explained and discussed relating to shareholders and companies in the corporate

sectors. In other words, the above-mentioned definitions on accountability and their

explanation and interpretation might be suitable for organizations where there is a

principal-agent relationship. It is because these definitions have story of accounter

(who provides accounts) and accounts (materials which are provided) in common.

However, these definitions did not discuss a major component of the accountability

relationship, the accountee, whom the accounts are given to. This component is

considered quite important as they normally have the power to hold the accounter

accountable (Cooper & Owen, 2007; Roberts & Scapens, 1985). In a principal-agent

relationship in the corporate sectors, the shareholders are the principals of the

company that demands the accounts, and agents (the managers) must provide them.

Specifically, there are three different entities: shareholders, stakeholders and society

(Benston, 1982; Cooper & Owen, 2007) to which organizations have responsibilities

for accountability.

On the other hand, NGO accountability is often defined as “the means by which

individuals and organizations report to a recognized authority, or authorities, and are

held responsible for their actions” (Dixon et al., 2006; Edwards & Hulme, 1995).


Ebrahim (2003b) argues that accountability can be understood either in relational

issue- state of being answerable and made responsible by others or in identity issue –

answerable to missions and their own sense of responsibility. In relational

accountability, people are required to explain and take responsibility for their actions

(Sinclair, 1995; Unerman & O'Dwyer, 2006b) through the giving and demanding of

reasons for conduct (Roberts & Scapens, 1985). As in corporate sectors, not-for-

profit or NGO sectors’ definitions also are unclear on the accountee side. Normally,

social sector organizations are accountable to authorities such as government and

donors who can demand information, but other key people such as beneficiaries are

barely considered as an important accountee. Table 3.1 summarises the key

definitions of accountability including NGO accountability, and their components.

All these definitions have a clear discussion about the three components of

accountability: accounter, accounts, and accountee, but they are less clear on

identifying who the accountees are.

Table 3.1 Summary of accountability definitions

Accountability definitions Components of accountability in those definition

Remarks

Accountability in general Credible story of what happened, and a calculation and balancing of competing obligations including moral ones (Boland & Schultze, 1996; Dixon et al., 2006).

Story of accounter and accounts

These definitions reflect the principal (e.g. shareholders)-agent (managers) relationship, and primarily did not discuss a major component of accountability, the accountee (whom the accounts are given to).

Giving and demanding of reasons for conduct (Roberts & Scapens, 1985).

Story of accounter (who gives reasons for conduct) and accountee (perhaps who demands reasons for conduct)

The duty to provide an account or reckoning of those actions for which one is held responsible (Gray et al., 1996).


Accountability in NGO sector The means by which individuals and organizations report to a recognized authority, or authorities, and are held responsible for their actions (Dixon et al., 2006; Edwards & Hulme,

Story of accounter and accountee (but they are authorities)

These definitions also reflect the story of accounter, accounts and accountees.


1995) . However, there is no clear understanding of a major component of accountability, the accountee. The key stakeholders of NGOs, the beneficiaries, are missing.

Accountability can be understood either in relational issue – state of being answerable and make responsible by others or in identity issue – answerable to missions and own sense of responsibility (Ebrahim, 2003b).

Story of accounter, accounts and accountee-others

People are required to explain and take responsibility for their actions (Sinclair, 1995; Unerman & O'Dwyer, 2006b)


The giving and demanding of reasons for conduct (Roberts & Scapens, 1995).

Story of accounter, accounts and accountee (though who demands could be accountee but it is not clear who they are)

Moreover, one scholar has defined accountability differently, being very specific to

accounters, accounts, and accountees with its two classifications: standard

accountability versus surrogate accountability (Rubenstein, 2007). In standard

accountability mechanism, “Actor A (the power wielder – the accounter) is

accountable for its treatment of Actor B (the accountability holder – the accountees)

if A faces significant and predictable sanction for failing to treat B according to

recognized standards (accounts). Recall that the accountability holder is the actor to

whom compliance with the standards is owed. While the accountability holder

usually plays a significant role in sanctioning the power wielder” (Rubenstein, 2007,

p.618, italics added). In addition, this definition of accountability includes three main

elements: standards, information, and sanction – the mechanism of how

accountability works. In this accountability mechanism, accountability holders

endorse and the power wielder recognizes standards. The accountability holders

receive information about power wielder’s compliance with standards, and

accountability holders sanction power wielder – or not. Whereas in surrogate

accountability mechanism, “other actors are involved – a surrogate – who substitutes

for accountability holders during one or more phases of the accountability: setting

standards, finding and interpreting information, and most importantly sanctioning the


power wielders if it fails to live up to the relevant standards” (Rubenstein, 2007, p.

617). However, prior research in accounting was not very clear on the accountees’

side, and did not fully consider elements of accountability (standards, information

and sanctions) together to explain organisational accountability practices. Therefore,

this study has accepted surrogate accountability as a unique theoretical concept to

understand the accountability practices. The next section discusses surrogate

accountability and standard accountability in detail.

3.3 SURROGATE ACCOUNTABILITY THEORY

Definition of Surrogate Accountability

Based on work by Rubenstein (2007, p. 617) as explained above, surrogate

accountability is a concept where “other actors are involved – a surrogate – who

substitutes for accountability holders during one or more phases of the

accountability: setting standards, finding and interpreting information, and most

importantly sanctioning the power wielders if it fails to live up to the relevant

standards”. This notion, unique and lately developed concept on accountability

literature, tries to create accountability mechanism on unequal society through

involving some other actors who are called surrogates on behalf of weak actors.

Involving some external actors in the accountability mechanism seems quite relevant

in the third world countries where weak actors hardly can make powerful actors

accountable towards them due to the existence of severe inequality between them.

Specifically, the third world country’s societies have two sets of people/entities: who

holds the power (powerful actors) and have easy access to resources, knowledge,

positions, education etc., and who cannot hold the power (weak actors) due to


poverty, illiteracy, marginalization, deprivation etc. The powerful actor can be called

power wielders and weak actors can be called accountability holders (Rubenstein,

2007). Often accountability holders are the ones who suffer from the decision and

behaviour of powerful actors. They are so powerful that weak actors cannot do

anything against them, sanctioning powerful actors as an illustration, to make them

accountable towards weak (Rubenstein, 2007). One of the major reasons for this is

due to high inequality between them.

One of the best ways to address these situations (issues) is to try to reduce inequality

by making accountability holders strong by reducing the poverty level, and power

wielders more accountable by sanctioning, as an example (Rubenstein, 2007). This is

somehow related to facilitating the stakeholders for empowerment as proposed by

(Cooper & Owen, 2007), which will briefly be discussed later. However, poverty

reduction or/through empowerment to create standard accountability would require a

long time period, which severely compromises the accountability in the short and

medium run. In this transition, accountability holders are so weak they cannot hold

power wielders more accountable through sanctioning. Hence, involvement of

mediators-surrogates-in the short and medium run would help to solve the problems

– create accountability in an unequal world, which is the overall focus of the concept

of surrogate accountability. Exploring further, the following sections will describe

how surrogate accountability mechanism is different from other accountability

mechanisms and how it is applicable to social auditing and accounting, and assess

performance or impact of NGOs. The significant discussion on surrogate

accountability mechanism, including standard accountability mechanism notion, is

based on Rubenstein’s (2007) paper.


How Surrogate Accountability Differs from Standard and Other Accountability Models

3.3.2.1 Other Accountability Models

Some prior researchers have discussed different accountability practices and models.

For example, Roberts (2001) explained the process and practices of accountability in

terms of either their individualising or socialising effects. The first one is associated

with the operation of market mechanism and formal hierarchical accountability,

whereas the second is associated with face to face accountability between people

with relatively equal power, who have a sense of interdependence self and other.

Moreover, Coopers and Owen (2007) argued that stakeholders’ empowerment is a

model in which stakeholders can hold accountors to account to enhance

accountability. In the empowerment approach to accountability, Coopers and Owen

argued that producing voluntary and mandatory disclosures provides very little

opportunity to facilitate action on the part of stakeholders and thus cannot be viewed

as an exercise of accountability practices.

Another approach or model for accountability argued by scholars is through free

discussion (Cooper & Owen, 2007; Rorty, 1989). This is somehow similar to the

view of ‘ideal speech situation’ put forward by Habermas (1992): “Ideal speech

situation enhance accountability by providing all stakeholders to enter the discourse

and to present views and challenge the views of other” (cited from Broadbent,

Dietrich, & Laughlin, 1996; Cooper & Owen, 2007). The discourse can be ensured

either through discussion or dialogue, and dialogue is a process and practice of


accountability (Roberts & Scapens, 1985). The overall idea is if beneficiaries

participate in some form of communicative process that may improve the

accountability.

Another approach to accountability is through practising standard accountability

mechanism. Many accountability models and approaches explored by many

researchers discussed the accountability in a fully functional democratic society

where there is ideal or free speech situation, people can present the views and

challenge the views, and stakeholders can participate in some form of

communicative process. Generally, these features are of the standard accountability

mechanism. The standard accountability mechanism explains how accountability

works in normal conditions in the world and societies where democracy and

emancipation is exercised. Many accountability approaches discussed in

accountability literature are related to the standard accountability model. Hence, a

detailed discussion follows on how standard accountability mechanism works.

3.3.2.2 Standard Accountability Mechanism and Its Elements

The standard accountability consists of three different components: standard,

information, and sanction. The ‘standards’ is any agreed rules, norms or outcomes or

procedure between accountability holders and power wielders. These standards are

determined by both parties. These standards might be the existing standards on which

both parties agree. If there are no existing standards, accountability holders should

endorse them and power wielders should recognize and be aware of them. For

example, if there are existing standards on environmental friendliness, a trade


organization and environmental group might agree that the trade organization should

follow all these standards while operating. If there are no such standards already in

place, environmental groups might have different environmentally friendly rules that

should be recognized and owned by the trade organization if it wants to operate.

These new rules can solely be agreed by the trade organization or mutually

renegotiated with the environmental group followed by recognition. If power

wielders do not know the standards in advance, then sanctioning would be similar to

after-the-fact punishment.

Information is the second element in the standard accountability model. The standard

compliance report should be communicated to accountability holders. The power

wielder has both moral (accountability holders deserve to know whether power

wielders fulfil obligations to them) and strategic (power wielder does not want to be

sanctioned) reasons to report about compliance with standards to accountability

holders. If power wielders could not comply they are expected to give justification

which could be general or strategic. The trade organization, mentioned above as an

illustration, should report to the environmental group their compliances with

standards agreed. The trade organization report might be: a full compliance report,

partially compliance, or no compliance at all. If the organization cannot comply with

what it has agreed for, justification is provided. Rubenstein (2007) argues that “the

treat of sanction not only gives the power wielder an incentive to explain past

activities, it also gives an incentive to dissimulate – to claim that it has complied with

the relevant standards more than it actually has” (p. 619).


The final element is sanction. On the basis of information provided, accountability

holders do make decisions regarding actions. In the worst case, power wielders could

be sanctioned when they do not fulfil compliance standards. Boycotting the

company, voting to get rid of the worst representative and suing a corrupt CEO are

also forms of sanctions. Such threats of sanction would make power wielders

describe past activities including claiming their compliance. The involvement of a

third party or accountability holders is needed to independently gather and verify

information about power wielders and whether they are complying with standards.

Accountability holders may use sanctions by themselves (workers strike against

company) or relying on mediating agents (a lawyer for example) or by other

institutions (such as press, police including courts or administrative body). In this

example, the environmental group might agitate against a company or use the press

to write against them or appeal to a court to sanction trade organization. As discussed

here though there might be other supporting background intuitions to accountability

holders, they play a crucial role in sanctioning power wielders. The purpose of

sanctioning is to give pressure to power wielders to abide by all the agreed standards.

Figure 3.1 summarises the standard accountability mechanism. The overall standard

is dynamic in nature as they change over time. Both accountability holders and

power wielders should be updated and agree on any updated standards. When the

standard gets changed then the nature of information and sanctions also changes.

Figure 3.1 Elements of standard accountability mechanism


Adopted from Rubenstein (2007, p. 624)

3.3.2.3 Standard Accountability Mechanism Cannot Function in Unequal World

Indeed, any standard accountability mechanisms such as electoral accountability,

legal accountability, market based accountability, civil society based accountability,

administrative accountability are based on sanctions (Rubenstein, 2007, p.617). The

accountability holders impose or help to impose sanctions if power wielders fail to

fulfil the agreed standards. This may be done directly or indirectly through

institutions. Such sanctions are easily possible in developed societies where

accountability holders are also powerful. In other words, even though power wielders

have power, accountability holders can impose sanctions by them or through

institutions due to having rules of law in the country/society and well-functioning

democracy, and access to resources, higher level of knowledge, understanding, and

education.

However, the beneficiaries of NGOs in most of the developing countries are poor,

discriminated, deprived, marginalized and uneducated. They might not take a step to

engage in communicative action or may not be able to understand the

talk/issues/discussion to contribute adequately in the process. In contrast, both


international NGOs and local NGOs have knowledge, capacity and resources

including financial resources (the major portion of it would be from bilateral

agencies – the powerful country’s government money), and thus they become a

powerful entity. This is the absolute picture of an unequal world. In such an unequal

world, the standard accountability models being developed and practised by different

organizations including NGOs may not create accountability since accountability

holders (beneficiaries/community) cannot endorse standards, power wielders may not

provide compliance information, and accountability holders cannot (non) sanction

power wielders. In other words, standard accountability mechanism could be very

complicated in the case of an unequal world, and accountability mechanism

generally is severely compromised. Therefore, regardless of the practices of many

standard accountability models, they failed to address accountability in an unequal

world. This study, therefore, adopts the surrogate accountability mechanism to

explore the accountability in an unequal world. The next section further explores

surrogate accountability mechanism.

Surrogate Accountability and Its Elements

As discussed, under the conditions of severe inequality between power wielders and

accountability holders, all parts of standard accountability are hard to achieve in the

short and medium run. Creating change and accountability in such contexts appears

possible only through surrogate accountability. It becomes possible when a third

party gets involved on behalf of accountability holders as they cannot sanction or

help to sanction, cannot collect information and cannot negotiate or set standards

with power wielders. This overall process is the surrogate accountability mechanism.

Rubenstein (2007) further elaborates the notion of surrogate accountability


mechanism, which also has three components: surrogate accountability sanction,

surrogate accountability information and surrogate accountability standards.

3.3.3.1 Surrogate Accountability Standards

On behalf of accountability holders, surrogates endorse the accountability standards

that are to be considered by power wielders. As discussed above under standard

accountability, all the tasks done by accountability holders are performed by the

surrogates to set standards: norms, rules, procedures etc. with power wielders.

However, there might be some risks associated with this mechanism of setting

standards. The surrogate might hold the power wielder to more demanding standards

than accountability holders themselves would have done, then promoting

accountability holders’ preferences will be compromised. On the other hand,

standards that would be set by accountability holders may not be reflected fully or

represent their interests while surrogates set standards with power wielders. In

contrast, the surrogates might be even better in setting standards and promoting

accountability holders compared to accountability holders themselves.

3.3.3.2 Surrogate Accountability Information

The surrogates collect and gather different information about whether a power

wielder has fulfilled all agreed standards. If surrogates are physically and culturally

closer to where information is collected, they work better compared to accountability

holders, especially if standards are related to rules and norms, not promoting

accountability holders’ preferences. Furthermore, if accountability holders are far

away, then surrogates can do better than accountability holders at collecting


information and interpreting them if they are written in different languages. When

surrogates need to negotiate with a power wielder on behalf of accountability

holders, the chances of neglecting their views also will be higher. But, such

limitations aroused while collecting information by surrogates can be resolved by

having discussions between accountability holders and surrogates.

3.3.3.3 Surrogate Accountability Sanction

The surrogates sanction the power wielders when accountability holders do not have

the capacity to do so. In this case as well, surrogates might do better or worse than

accountability holders. It could be worse when surrogates sanction in the wrong case

with the wrong intensity or in the wrong way than accountability holders would have

done, and would even do better when it deals with morally important obligations that

are relevant to many marginalized groups, not only to a particular group.

Generally, in contrast to standard accountability mechanisms, surrogates take over

the task of accountability holders on behalf of them as depicted in Figure 3.2 below.

Surrogates endorse standards, receive information from power wielders and make

decisions on sanctions. Depending on the power of accountability holders, surrogates

may only be involved to set standards, or receive information or sanctioning power

wielders or involved in any two functions such as receiving information and

sanctioning power wielders. In other words, the surrogates might work on behalf of

accountability holders only in one stage or all stages of accountability mechanism.

Under this mechanism, surrogates work on behalf of accountability holders to

endorse standards to be recognized by power wielders, gather information about

power wielders on compliance of standards and sanctions power wielders if they


have not met the standard endorsed by accountability holders/surrogates. One

interesting factor in this mechanism is that though surrogates work on behalf of

accountability holders they cannot sanction the surrogate. They help accountability

holders to sanction power wielders. That is why Rubenstein argues that surrogate

accountability mechanism is one step lower than the standard accountability

mechanism. For example, a government works as surrogates between international

NGOs or beneficiaries by sanctioning NGOs to meet accepted standards of aid

provisions, and NGOs can be surrogates on behalf of communities to deal with a

corporation which is opening a cement industry in a nearby residential area.

Figure 3.2 Elements of surrogate accountability mechanism

Adopted from Rubenstein, (2007, p. 627)

Many societies are not free from inequality at local and international levels. The

inequality among different groups and entities in the society are created or added

knowingly or unknowingly. As a result, there are powerful actors and weak actors,

and the accountability mechanism between them is severely compromised. However,

the accountability mechanism notion in such an unequal world is somehow neglected

in accounting literature although different forms and natures of accountability have

been explored by researchers. This notion, surrogate accountability, thus can be

defined as the accountability mechanism that creates accountability in an unequal

2. Surrogates receive information about power wielder’s compliance with standards

3. Surrogates (help to) sanction power wielder – or not

1. Surrogates endorse and power wielder recognizes standards

4. Standards might change


world. The following section illustrates how surrogate accountability mechanism is

applicable within the NGO sector.

3.4 APPLICABILITY OF SURROGATE ACCOUNTABILITY IN NGO

A description on the applicability of surrogate accountability mechanism within the

NGOs sector is undertaken in this section. The explanation starts with discussing

some prior literature on different forms or mechanisms of accountability used in

NGO sector followed by a brief note on surrogate accountability as a new theory to

explain NGOs’ accountability. The final section focuses on explaining the relevancy

of this theory in the context of NGOs operating in Nepal.

Accountability Forms Used in Prior Research on NGOs

Not-for-profit sector (social sector or NGO) operates in different principles – primary

objective is social performance – compared to corporate sectors where social

performance is the secondary objective (Pearce & Kay, 2012). Basically there is no

principal agent relationship as in corporate sectors. The accounts are normally asked

for by donors who fund the work, and fund receivers also report to funders because

they are the resource providers/holders. Furthermore, most of the literature on

accountability is related to shareholders or companies though some developments in

social sectors have been noticed in the last decade because of their increased

importance, and rapid growth (Dixon et al., 2006; Edwards & Hulme, 1995;

Unerman & O'Dwyer, 2006a). Hence, principal-agent accountability mechanism may

not be relevant for NGOs. This leads to a few important questions: why social

organizations try, if they do, to be accountable; who is the main audience of these

accounts; how can accountability in the social sector be explained; what does make


organizations accountable; and what are the forms or types of accountability

mechanism explained in accountability literature in relation to NGOs?

Looking at the motivations for NGOs to be accountable, it is argued that there are

few drivers for accountability in NGOs sector. Morality (accountability is right in

principle), performance (accountability improves performance), political space

(accountability increases credibility and thus influence), and wider democratisation

(accountability of NGOs improves democracy in society) (SustainAbility, 2003) are

a few drivers for NGOs to be accountable. Similarly, who the organization is, what it

does, how it is funded, and what the organization does with the money it receives are

some prerequisites for the development of accountability relationships

(SustainAbility, 2003). To understand further, several prior research have discussed

different forms or types of accountability mechanism being practised among

organizations. Some of these accountability forms or mechanism discussed by prior

literature ranges from hierarchical accountability or vertical accountability to

downward accountability and horizontal accountability, functional accountability to

formal and informal accountability, and holistic accountability. These forms of

accountability are briefly discussed below.

3.4.1.1 Hierarchical Accountability

The hierarchical accountability form is one of the most explored accountability

mechanisms in the literature. This is a form of accountability to a narrow range of

influential stakeholders (O’Dwyer & Unerman, 2008), narrowly functional, short

term orientation, and focus on those stakeholders who control the resources and

immediate impacts (Ebrahim, 2003b). Such accountability seems to focus only on


powerful players such as donors, and government, who have the power to progress or

retard the achievement of NGOs (Ebrahim, 2005; O’Dwyer & Unerman, 2008). This

accountability also carries the notion of other forms including upward accountability

– accountability towards funders (Unerman & O'Dwyer, 2006a), vertical

accountability between staff and manager in NGOs (Dixon et al., 2006; Unerman &

O'Dwyer, 2006a), functional accountability (O’Dwyer & Unerman, 2008; Roberts,

2001). The major drawback of hierarchical forms of accountability is it can have

damaging effects on the ability of NGOs to act as effective catalysts for social

change (Dixon et al., 2006). However, this is very common form of accountability of

NGOs around the world.

3.4.1.2 Downward Accountability and Horizontal Accountability

Another form of accountability discussed by scholars is downward accountability.

This form of accountability seems to focus on accountability towards beneficiaries

(recipients) (Ebrahim, 2005; Unerman & O'Dwyer, 2006a). Horizontal accountability

(Dixon et al., 2006; Unerman & O'Dwyer, 2006a) also has the similar concept

though it is not formally a downward accountability. That is, accountability of NGO

staff and a self-help group (a group of beneficiaries) or self-help group and a member

of self-help group are examples of horizontal accountability. This form of

accountability is quite rare in practice as NGOs are primarily accountable to funders

(O'Dwyer & Unerman, 2007).

3.4.1.3 Formal and Informal Accountability


The accountability has also been discussed within the formal and informal

accountability framework. Any forms of accountability either are formal or informal.

For instance, hierarchical or vertical or upward accountability tends to be formal, and

accountability of a NGO staff towards community members tends to be informal.

When matters such as trust, emotion, conscience, social contracts, mutuality etc.

enter into the relationship (Gray et al., 2006), accountability tends to be informal.

3.4.1.4 Holistic Accountability

The researchers also have tried to explain most forms of accountability within a

holistic accountability framework. Many forms of accountability as discussed above

with an exception to downward accountability of NGOs focuses on immediate

impacts, performance based on resource use, individual projects and on creating

impressions (O’Dwyer & Unerman, 2008). Thus these limitations on accountability

mechanisms led scholars and NGOs to seek broader and more holistic forms of

accountability which focus on longer term and sustainable impacts (Ebrahim 2005;

O’Dwyer & Unerman, 2008). O’Dwyer and Unerman (2008) name this broader form

of accountability as holistic accountability which tries to incorporate all the impacts

of NGOs brought to organizations, individuals or environments. In addition, this

accountability does not only account for stakeholders recognized under hierarchal

accountability, but also the groups for whom NGOs are working (beneficiaries).

Hence holistic accountability also includes the notion of downward accountability to

beneficiaries (Dixon et al., 2006). Thus holistic accountability engages a broader

range of stakeholders (O’Dwyer & Unerman, 2008) such as organizations,

individuals and the environment including individuals and communities directly and


indirectly impacted by the NGOs’ activities (Ebrahim, 2005; Edwards & Hulme,

1996).

Moreover, holistic accountability is viewed as a comprehensive form of

accountability which includes most of the forms of accountability such as internal

and external, upwards and downwards, strategic and holistic, and formal and

informal. Researchers, therefore, argued that the holistic form of accountability

would solve many counterproductive effects of other forms of accountability leading

to creating longer term change/impact being focused on the mission statement of the

organizations (Ebrahim, 2005; O’Dwyer & Unerman, 2008). Successfully creating

longer term real changes, thus, enhances NGOs in their accountability for the

impact/performance (O'Dwyer & Unerman, 2007).

Surrogate Accountability as a New Theory to Explain NGO’s Accountability Practices

Many accountability mechanisms as discussed above could not fully create the

accountability of NGOs towards beneficiaries. To address the problem of

unaccountability of NGOs towards beneficiaries, scholars started discussion on

alternative accountability forms or notion expecting them to create real change and

accountability towards beneficiaries. Two evident alternatives that were explored for

creating accountability to beneficiaries are downward accountability mechanism, and

stakeholders’ empowerment (which include beneficiaries).

First, downward accountability appears to be a promising accountability notion to

make NGOs accountable to beneficiaries. Many NGOs significantly incorporated


downward accountability notion such as Rights Based Approach (RBA) in their

project interventions. However, despite much debate and demand for downward

accountability of NGOs, prior studies questioned the downward accountability

mechanism of NGOs. For example, O'Dwyer and Unerman (2007) suggested that

NGOs do not seem primarily accountable towards their accountability holders, rather

to donors and government agencies. In other words, there is more inclination of

NGOs for upward accountability in practice (Unerman & O'Dwyer, 2006a), and

accountability toward beneficiaries seems comparatively very weak (Edwards &

Hulme, 2002).

The second alternative is empowering stakeholders through facilitation to enhance

accountability (Coopers & Owen, 2007). Researchers have also connected

accountability improvement through free discussion (Rorty, 1989), dialogue (Roberts

& Scapens, 1985), and ideal speech situation (Habermas, 1992, cited in Coopers &

Owen, 2007). These components are equally relevant for stakeholders’

empowerment through facilitation. This view of empowerment through facilitation is

also well supported by other scholars in their prior studies (for example O’Dwyer,

2005). However, few scholars (for example, Coopers & Owen, 2007; O’Dwyer,

2005) have also questioned stakeholders’ empowerment notion in creating

accountability among NGOs towards their beneficiaries. This thesis later explores the

idea of empowerment for NGOs’ accountability as understanding power structure is

helpful to study empowerment.

One of the most important perspectives within the NGOs’ accountability mechanism

is to understand the power dynamics in the societies, particularly between NGOs and


their beneficiaries. The world is not equal, and thus there are different levels, groups

and sub-groups, rich and poor and so on having diverse interests and level of powers.

Specifically, developing countries have serious levels of inequality among people

and institutions in the societies. People or institutions who own large resources, for

example international NGOs, generally tend to be powerful, and vice versa. The

powerful actors are tempted to work in such a way that weak actors’ rights, benefits,

and even existence are compromised. But, these weak actors in the accountability

mechanism might not be able to do something (e.g. sanction) against powerful actors,

and as result powerful actors do not have any reasons to be accountable (Rubenstein,

2007). On the other hand, these weak actors such as beneficiaries are crucial

stakeholders for NGOs because their existence depends on them. The projects are

designed, funds are raised, and approvals to work are sought to raise the well-being

of these beneficiaries.

However, accountability of NGOs towards them is questionable as discussed in the

first alternative above which shows NGOs have higher inclination towards vertical

accountability rather than downward accountability. In other words, their focus is for

upward accountability because donors do exert a higher level of power with them

which can affect the operations of NGOs, but accountability holders (beneficiaries)

do not hold power to affect them. Thus, whether NGOs are accountable ultimately

gets connected with the power structure. The excessive power on NGOs compared to

their beneficiaries holds them back to be accountable, and hence, downward

accountability mechanism also fails to create accountability.


Similarly, one of the major reasons behind the failure of stakeholders’ empowerment

approach in creating change and accountability is also the huge power differences

between NGOs and their beneficiaries. O’Dwyer (2005) found that management

emasculates the social accounting process which is supposed to empower the

stakeholders. Alternatively, when management controls the social accounting

process, it negatively affects stakeholders’ empowerment, and hence in creating

accountability. Furthermore, NGOs might attempt to adopt standard accountability

mechanisms among the most vulnerable people generally within their one to five

years project period, but their approaches within their given power differences do not

create accountability. Specifically, empowering the most deprived people, the

beneficiaries of NGOs, might be quite time consuming. It is because empowering

community socially and economically takes a long period of time, but the NGOs

projects are time bound and could be for a maximum of five years in a location.

Thus, the standard accountability mechanism may not be suitable to make the

organizations accountable in the short and medium run (Rubenstein, 2007). This also

causes the empowerment notion to fail in creating accountability.

Additionally, Unerman and O'Dwyer (2006b) even discussed some accountability

strategy to assist organizations to refrain from inappropriate accountability. Some of

them are: judicious conformity to the accounting – fulfilling requirements of major

donors, character witnessing – mentioning big donors name for others, managing

audit – using big four, improving governance – maintaining representation as an

example, embedding particular cultural identity – only working among women, and

engendering trust. Analyzing these strategic points also, none of them clearly

illustrates why NGOs should be accountable to beneficiaries given their huge power


gap. This strategy helps social sector organizations to be accountable with donors

and government, to legitimise their operations, and to increase their profile, but lacks

accountability to the key stakeholder, primarily beneficiaries.

The discussion has concluded that almost none of the accountability forms or

mechanism expounded above could clearly explain the accountability towards

beneficiaries/accountability holders, especially in unequal societies. Hence, a

different accountability mechanism is required as an alternative which possibly can

explain the accountability mechanism in an unequal world. Therefore, surrogate

accountability would well describe accountability in NGOs in developing countries

where inequality is rampant. Previous studies looking at accountability practices in

NGOs have not clearly explained the accountability in an unequal world primarily in

developing worlds where NGOs might play a powerful role. This study will fulfil

this void in the research.

Application of Surrogate to the Context of NGOs Operating in Nepal

While reflecting the work of both international NGOs and local NGOs, they are

engaged to address problems such as poverty and social injustice, human rights

violation, illiteracy, low income etc. (O'Dwyer & Unerman, 2007). The beneficiaries,

for whom NGOs claim to work to address those problems in Nepal are accountability

holders, and NGOs themselves are power wielders. While addressing the problems,

power wielders, that is the NGOs, design the projects, seek funds and implement

projects to raise the standard of wellbeing of accountability holders who are

deprived, marginalized and poor. These NGOs can be national, local or transnational.

Although they can be local and national, resources generally come from transnational


organizations having operations in many countries around the world. In that sense

I/NGOs have the control over resources and projects, and thus they were termed as

power wielders. On the other hand, poor community people who do not hold any

power, and are expecting NGOs (as developing countries’ government could not

even provide minimum required services) to work for them to raise their living

standards were termed as accountability holders.

In the context of Nepal, international NGOs and NGOs appear as an important sector

for overall development. Around 840,000 NGOs, though officially registered with

Social Welfare Council (SWC) are around 40,000 (SWC, 2016b) and 254

international NGOs (SWC, 2016a) are operating for a population of 26,494,504.

Hundreds of international aid agencies are not registered in SWC but they are

funding projects through different NGOs in Nepal. In total 25.2% of people are

below poverty level (The World Bank, 2016), which means I/NGOs are working for

around 6.7 million (25.2% of 26,494,504) people in Nepal as most of them claim that

they are working primarily for ultra-poor people.

Furthermore, the NGOs’ presence seems quite significant and therefore they might

behave as powerful entities. Two examples have been cited here to show their

powerful presence. First, the national planning commission of Nepal acknowledges

the international aid agencies in its official census (published) document for the

support they have provided as “most financial resources and expertise used for the

census were national. Nevertheless, important catalytic inputs were provided by

UNFPA, UNWOMEN, UNDP, DANIDA, US Census Bureau etc.” (CBS, 2012).

Second, Nepal government, Ministry of Health Department of Health Services


annual report also mentioned the acknowledgement (acknowledged by Minister for

Health) to external development partners for their support and contribution (DoHS,

2015). These examples basically communicate two things: Nepal itself is not able to

do many things on its own. As a result, international NGOs or aid agencies’ supports

are needed, and there is a significant role of aid agencies in most of the activities in

the country either through government or NGOs or both. This also would make

NGOs powerful in Nepal.

One study has revealed how aid agencies and NGOs play a dominant role in the

country, and how they highly lack accountability towards beneficiaries. Although the

study is related to one multilateral agency, it worked through an international NGO

who had a minimum role in the case. Adhikari et al. (2016) described a case about

World Food Programme (WFP), a department of United Nations operations in Nepal.

After the 2015 earthquake in Nepal WFP, together with international NGOs Save the

Children and Red Cross, distributed rotten rice and lentils to victims as part of the

response. Different investigation reports from human rights organizations and

government proved the distribution of damaged food which had made many children

sick. However, WFP entirely refused to accept the mistake producing many

disclosures, and its senior officials blamed local media for disseminating fake news

and challenged the Nepal government that the support could be diverted to other

countries. Other NGOs working with WFP, Save the Children and Nepal Red Cross

inclined towards vertical accountability probably reporting to WFP and donors that

they are doing good work, but they did not speak for weak actors, the beneficiaries.

The beneficiaries, the earthquake victims, were just weak actors who could not

sanction WFP due to the huge power gap between them.


The above examples seem to suggest that NGOs appear very powerful in Nepal (this

thesis will critically examine this contention), and thus standard accountability

mechanisms in different forms including downward accountability failed to create

accountability. Hence a different accountability mechanism would be needed among

NGOs in Nepal to really understand their accountability towards beneficiaries.

Arrangement of surrogate accountability, to create accountability until accountability

holders are empowered, actually would help to explore, understand, and learn about

accountability within the NGO sector in Nepal. This illustration through the help of

prior literature suggests that there is high applicability of surrogate accountability in

NGOs in the developing country context including Nepal. The next section

concludes the chapter discussion.

3.5 CONCLUSION

The above discussed literature on accountability has depicted that the NGO sector is

also lacking downward accountability because funders and authorities have been

their primary bodies to demonstrate their accountability. Being unaccountable to

beneficiaries further signifies that NGOs tend to operate as power wielders; while

their beneficiaries who are accountability holders are really poor, marginalized, and

deprived; and hence they have no power to sanction power wielders. This leads to the

involvement of a third party as surrogates in the short and medium run until

accountability holders are empowered to ensure accountability of NGOs becomes

important. This mechanism of surrogate accountability would uniquely explain the

accountability mechanism within the NGO sector. The next chapter (Chapter four)

discusses the research design adopted for this study.

100 Chapter 4: Research Design

Chapter 4: Research Design

4.1 INTRODUCTION

This chapter presents the research design of this study (thesis) to achieve the

objectives, to explore the nature of social auditing within the NGO sector, and

whether and how social auditing is used to create NGOs’ accountability in Nepal, as

specified in Chapter one. This thesis, therefore, incorporates the suitable qualitative

research methods: interview and document analysis to meet the objectives. A

detailed description on selection of major NGOs, their beneficiaries (accountability

holders), and surrogates (stakeholders) for the study; data collection and data

analysis through in-depth interviews and document analysis; and reliability, validity,

credibility, trustworthiness, ethics, and transferability of the study are presented in

the following sections.

4.2 SELECTION OF MAJOR NGOS UNDER THIS STUDY

This study focuses on two types of NGOs: the international NGOs, and local NGOs,

and their respective associations. Both types of NGOs represent the firm level,

whereas their respective associations represent the industry level. Among more than

250 international NGOs and thousands of local NGOs, this study selected four major

international NGOs namely Oxfam International, World Vision International, United

Mission to Nepal (UMN), and International Nepal Fellowship (INF) and four major

local NGOs namely Peacewin, INF Nepal, Asal Chhimekee Nepal, and Disabled

Rehabilitation & Rural Development Organization (DRRDO). However, there is

Chapter 4: Research Design 101

much diversity and representation among these selected NGOs. For example,

selecting two pioneer international NGOs (UMN and INF) who have been working

in Nepal for more than six decades, and two international NGOs (Oxfam and World

Vision) who are among the most influential and largest in Nepal yields varieties

within them. In addition, one local NGO (DRRDO) is a partner of two international

NGOs (UMN and INF), and another NGO (ACN) was independent to these four

international NGOs. Similarly, one NGO (INF Nepal) is a major partner of one

international NGO (INF), and another local NGO (PEACEWIN) is a partner of

World Vision and many non-sampled larger international NGOs. Among them two

NGOs are operating in very poor and most marginalised districts, Mugu and Bajura,

as they are on 74th and 75th ranks respectively in human development index among

the 75 districts of Nepal (un.org.np). Therefore, they are also called third world of

the third world. Thus, the diversity of NGOs makes the selection logical and

systematic (Marshall & Rossman, 2011).

Moreover, this thesis has incorporated national associations of both international

NGOs and local NGOs called Association of International NGOs in Nepal (AIN),

and NGO federation of Nepal respectively. They represent international NGOs and

local NGOs in the industry level. Hence, studying the NGO sector both in firm level

and industry level has made the study more robust, systematic, and comprehensive.

Details on the eight sampled international and local NGOs and their associations is

given in Appendix A and Appendix B. Information such as the relationship between

INGOs and NGOs, their country of origin, their mission or vision, areas of

interventions in Nepal, coverage areas and websites are included in the appendices.


These NGOs in the study operate within the context of Nepal under some legal

requirements in the country. The international NGOs should be registered with the

Social Welfare Council (SWC), which is the regulatory body of international NGOs

in Nepal, within the Ministry of Women, Children and Social Welfare. Generally,

INGOs are operated in five-year agreements with SWC. On the other hand, local

NGOs are registered with the District Administration Office legally. These local

NGOs could affiliate to SWC but this is not mandatory for regular operations. By

July 2016, there were 39,763 local NGOs affiliated to SWC. However, it is assumed

that the number of local NGOs would be around 80,000 in Nepal. Similarly, 254

international NGOs were registered with SWC by July 2016. Hence the sampled

international NGOs are registered with SWC, and sampled local NGOs are registered

with district administration office and affiliated also to SWC. Moreover, AIN is the

national umbrella organization of international NGOs, and NGO federation is also

the national association of NGOs operating in Nepal.

4.3 SELECTION OF MAJOR STAKEHOLDERS/SURROGATES

As illustrated in Chapter three under theoretical framework, this study has used a

surrogate accountability lens to meet the study objectives. Considering theoretical

framework of the study, and working approach of NGOs in which stakeholders are

the heart of the work, different stakeholders, who are also the surrogates, in between

NGOs and their beneficiaries were selected for the study. These stakeholders directly

and indirectly play a role in influencing the operations of NGOs. In the context of

Nepal, the key stakeholders for INGOs are central and local government, civil

society organizations, national commissions, social auditors, journalists, local


political representatives; and hence the study attempted to undertake interviews with

these stakeholders. In addition to those stakeholders, the study also considered

accounts from a few international stakeholders such as intentional journalists,

international government body, and international commission and civil society.

4.4 DATA COLLECTION: INTERVIEWS AND DOCUMENTS

Since the study focuses on the nature of social auditing and its uses in the creation of

real change/impact and accountability of NGOs; their practices on social auditing as

well as claim on disclosures about their performance, impacts and accountability

would be important. The additional value is added while identifying stakeholders’

perspectives, opinions, perceptions, ideas, understanding, and experiences about

NGOs. These attributes could be explored using qualitative research methods. Within

the qualitative research methods, this study adopted in-depth interview and document

analysis including information published in websites for the study. While in-depth

interview assisted the researcher to get first-hand information (primary data) on

underlying issues about the topic, texts from publically available sources (secondary

data) yielded practices being applied in social auditing and accountability by NGO

sector. Hence, this study focused on robust data collection techniques and

documented all the research procedure (Bowen, 2009).

Prior to conducting interviews with NGOs and their associations, and wider

stakeholders including beneficiaries; this study involved a review of publically

available documents including information in the websites. These publically

available documents provided information on management-initiated social audit, its


social accounts and accountability of NGOs, and stakeholders’ views on the same

from stakeholders-driven social audit. While overall document analysis of NGOs and

their associations demonstrated the practices and claims of the NGO sector in

relation to their social impact accounts and accountability; other documents analysis

from wider stakeholders depicted their perception and understanding in regards to

NGOs’ overall performance and accountability. In addition, some of the notions

acquired from documents analysis also were helpful for designing interview protocol

including some semi-structured questions.

4.5 THE INTERVIEW METHOD

The interview was a significant research method for robust and empirical study.

Therefore, the researcher used interview method as a key technique for the study. In

this method, out of three formats of interview: informal conversational interview,

general interview guide approach, and standardized open-ended interview proposed

by Gall, Borg, and Gall (2003), this study used standardized open-ended interviews.

This approach is known for asking identical questions so that responses are open-

ended (Gall et al., 2003). Such open-ended questions allowed interviewees to give in-

depth views/answers as they liked. In the process, the researcher asked some probing

questions as a means of follow-up (Turner III, 2010). Hence, the in-depth interview

provided the opportunity to probe deeply to uncover new clues, open up new

dimensions of a problem and to secure vivid, inclusive accounts that are based on

personal experience (Burgess, 1982), and acquired rich insights for the study. The

interview could be a construction site of knowledge (Kvale & Brinkmann, 2009)

even for social auditing/accounting study; and hence the researcher relied quite

extensively on in-depth interviews (Kvale, 1996) for this study.


Interviewee Selection and Interview Protocol

The selected NGOs, their associations, and their wider stakeholders as described

above were the interviewees for the study. These interviewees can be divided into

four groups. The first group was the CEOs or Chairman or their associates from

international NGOs and local NGOs representing the firm level. The second group

was from NGOs’ industry level in which Chair of both AIN and NGO federation

were interviewed. Undertaking the views of these groups reflects the views of the

organization who are working for marginalized people in Nepal, and the overall

sectors’ perspective. The third and very important group was the beneficiaries of

those organizations for whom NGOs work, and this group can really tell the level of

impact they have experienced by the interventions of NGOs. They are also the

accountability holders. The wider stakeholders of these INGOs were the fourth

group. This group also has higher level of significance as social accounts and

accountability accounted by INGOs should be consistent with what this group has

seen and experienced in their day to day life. From this group, the researcher selected

diverse people representing grassroot level to the national level. Among 26

participants from the stakeholders group, a few high profile interviewees also were

included. For example, two interviewees were the very senior level government

officers (Joint secretary) in Ministry level; two were the Secretary of National

Human Rights Commission of Nepal, the independent watchdog for human rights,

and a Program Director for National Planning Commission; and another was the

head of district development committee, the district level government office

responsible for the entire development of the district. Similarly, the other was the

President of a CSO, and also was the national ex-president of National Federation of

Journalists; and two were the leading national journalists from the largest and


renowned media houses of Nepal. These are the stakeholders who can verify the

social accounts of INGOs, and ensure that the interests of communities are protected.

Thus, the researcher interviewed a total of 46 interviewees across Nepal for this

study.

The following table shows the different groups who were interviewed, number of

people in each group, time used for interview and interviewee’s significance. Further

details such as place of interview, date, time of interview, interviewee’s name and

position are given in Appendix C.

Table 4.1 The details of interviewees and interviews

Interviewee group

Inter-viewee nos.

Time period of interview

Tools/technique used for interview

Significance of Interviewee

INGOs’ CEOs or their association

4 30 minutes to an hour

Face to face, audio recorder, notes

Resource providers, impact creator and monitors, power holders

Local NGOs’ Chair or CEOs



Implementers, resource receivers, impact creators

I/NGOs’ associations Chair



They represent the entire industry in the country

Beneficiaries including 4 local political representatives

10 20 minutes to 40 minutes


People to be impacted, for whom the work is being done, accountability holders

Government Officers (central -7 and local -7)


Face to face, audio recorder, notes (one was through email)

Regulators, monitors, power holders, key stakeholders to ask to demonstrate impacts

Journalists 6 30 minutes to an hour


A stakeholder to reveal issues to wider public

Civil society organizations



They are a watch dog on behalf of people

Social Auditors 2 30 minutes to an hour


They facilitate social auditing of NGOs, and know the real practice

National Commissions


Face to face, audio recorder, notes (one was not recoded)

They are independent commissions and watchdog for the whole nation


As stated earlier, reviewing publicly available information and existing literature in

the field of social accounting provided the researcher with the background

knowledge that is useful for preparing interview protocol. The interview protocol or

guide (See Appendix D) illustrated a brief introduction (Guthrie, 2010) on research,

and then detailed the interview protocol process. The interview process was

conducted in three different stages (Creswell, 2003; Creswell & Creswell, 2007): (a)

the preparation for the interview, (b) the constructing effective research questions,

and (c) the actual implementation of the interview. The entire interview guide or

protocol followed the eight principles and other stages or process required for

interview according to McNamara (2009). These principles are: choosing interview

setting, explaining purpose of interview, mentioning terms of confidentiality,

mentioning the format of interview, stating time period of interview, contacting after

interview if needed, asking whether they have any question before starting interview,

and making recorder and notes ready. Two examples of how the above mentioned

principles were applied during the interview were that interviews were conducted in

the place chosen by interviewees and where they would feel comfortable such as

their office, home or hotel/café. Second, not recoding an interview as per interviewee

preference (see Appendix C).

Much consideration has been given for creating a suitable environment for

interviewees during semi-structured interviews. All questions were open ended

which offered easiness to interviewees and allowed the researcher to be flexible and

gain a proper understanding of respondents in the natural flow of discussion. The

open ended questions also help participants to engage in loosely guided

conversations (Maykut & Morehouse, 1994 cited from O’Dwyer, 2005), and

empowers them to speak in their own voices which creates opportunity to ‘tell


stories’ and offer narrative accounts (Llewellyn, 2001). In the beginning of

interviews, a couple of questions were asked for background details focusing on how

they are connected to NGOs’ operations. Many questions asked were related to

impact assessment, social impact accounts, social auditing, accountability and

stakeholders’ role in creation of NGOs’ accountability, social accounts disclosures,

and so on.

Step to Process Interview Data

The study followed certain steps to process the interview data. After completion of

interviews, they were translated and transcribed. The transcriptions were cross

checked and verified a couple of times to ensure the consistency of meaning. Any

confusion in the transcripts was addressed by re-listening to the interviews. The notes

taken by the researcher were also examined, and they were also used to verify and

cross check. Then transcripts were logged on the basis of dates, places, types of

organizations, and groups of stakeholders. Such organizing and displaying data

reduced the volume of data (Miles & Huberman, 1994). These data were now the

narratives.

These narratives (information) were then thoroughly analysed (Gibson & Brown,

2009), and systematically reviewed without any influence from the researcher

(Bowen, 2009). The reading, re-reading, thinking and reading data during analysis

made researchers intimate with materials (Marshall & Rossman, 2011). This also

helped to understand implicit and explicit meaning. Similarly, the researcher

examined line by line, bits of sentences for coding, and open coding to develop a

category of information (Corbin & Strauss, 2008). In the process the researcher


analysed lines, phrases, sentences and paragraphs from the transcripts’ narratives

(Bowen, 2009). Narrative or contents then were particularly analysed for pattern

recognition with emerging codes, subthemes, themes and categories (Fereday &

Muir-Cochrane, 2006) from the entire available data as part of managing data.

Finally the contents were categorised (Guthrie, 2010). The researcher processed and

analysed all those information over five months (February to June 2016). Thus the

interview data were processed for further analysis.

Analysis of Interview Data

This study used narratives analysis to examine social audit nature and how it is used

to create NGOs’ accountability together with the notion of data analysis and

interpretation recommended by Miles and Huberman (1994). In particular, the three

steps: data reduction, data display and conclusion drawing/verification proposed by

Miles and Huberman (1994) were used to support the overall narrative analysis. The

narrative analysis also was supported by thematic analysis as it is very useful to

identify, organise, describe, analyse and report certain patterns (themes) within data

in details (Attride-Stirling, 2001; Boyatzis, 1998; Braun & Clarke, 2006; Tuckett,

2005). In addition, thematic analysis involves searching across the texts in this study

to discover repeated patterns of meaning (Braun & Clarke, 2006). The researcher has

followed six stages of thematic analysis, and these stages are (Braun & Clarke,

2006):

familiarizing yourself with your data

generating initial codes

searching for themes

reviewing themes

defining and naming themes and


producing the report.

While analysing narratives, the observation, comparison, revision, triangulation and

interpretation of interview data through codes, subthemes, themes and categories

followed until a consistent picture with evidence to understand the nature of social

auditing among NGOs, and whether and how they are used to create change/impact,

effectiveness and accountability. Here, the researcher extensively compared the

accounts from NGO sector and their stakeholders including beneficiaries to

understand struggles, contradictions and tension in overall social auditing and

accounting process. That is, the researcher examined the texts in the transcripts

related to social accounts of sampled organizations, and their national associations

with the accounts produced by stakeholders. In the next level, a few revisions in

coding were done. The overall process used to categorize data was written in a small

note so that the researcher was able to justify and match themes and sub-themes with

theory. While searching answers in narratives during interpreting themes, sub-themes

and categories, the researcher challenged each explanation and interpretation. These

emerging themes and categories were compared with existing literature where

available. In the process, the analysis of different narratives from transcript

documents became instrumental to lead to findings through refining ideas,

identifying conceptual boundaries and pinpointing the fit and relevance to the

study/topic (Bowen, 2005). Finally, based on available analysed narratives together

with narratives from documents the researcher prepared the thesis.

4.6 THE DOCUMENT ANALYSIS METHOD


In addition to interview, the study also used document analysis method to collect,

process and analyse data from available sources. To select the right documents for

the study, the researcher adopted two strategies. In the brainstorming documentary

strategy, the researcher went through a thought process regarding types and varieties

of documents needed for analysis (Gibson & Brown, 2009). In the second strategy,

the researcher explored documentary sources to identify the kind of documents and

information that are actually available for analysis (Gibson & Brown, 2009). In

addition, among four different categories of documents according to their degree of

accessibility: closed, restricted, open-archival, open-published (Scott, 1990), this

research primarily used open-published documents. The next section discusses how

these documents were selected.

Selection of Documents

After identifying open-published document sources, the researcher recognized few

types of actually available published documents that discuss social auditing and

accounting and its practices among NGOs. Some of these are annual reports,

accountability reports, and contents in the websites. Few organizations also had other

types of documents such as news bulletins in which they discussed SAA. However,

all types of documents/information were not available for each organization, and

their reports also did not exclusively explain about SAA. Generally, one of the

important documents was the annual report, which was one of the key documents for

the researcher as it is important for organizations seeking to shape their own “social

imagery” (Gray, Kouhy, & Lavers, 1995), and it is a medium for corporate

communication including strategic choice for rhetoric and rhetorical arguments (Vaara & Tienari, 2002). In NGO contexts, annual reports generally should contain


the social auditing and its reporting. The researcher reviewed all types of documents

of major selected NGOs and their associations for narratives.

The details on type of organizations and their associations, and documents and

information that were reviewed are shown in Table 4.2 below. Among the four

international NGOs, all produced annual reports; two also produced accountability

reports; all had websites, and one produced other documents (for example UMN

news) where social auditing also had been discussed. Among the four NGOs

reviewed, three had websites, and only one of them uploaded an annual report in

their website. None of these organizations have stand-alone social auditing reports

publically available. In the industry level, AIN had both annual (membership)

reports, other reports including social audit guideline, and websites; whereas NGO

federation only had information on websites.

Table 4.2 Selected INGOs and sources of information/data

Organization Annual

report Account-ability report

Other report/document that discusses social auditing/accounts

Websites content

Remarks

Firm level Oxfam International

8 (2007-08 to 20014-15)

4 (2008, 2009, 2013-14, 2014-15)

2 (Oxfam Impact report and evaluation report)

√ Oxfam Nepal does not produce stand alone report for Nepal.

World Vision 8 (2008 to 2015 including annual report for Nepal)

4 (2011, 2012, 2013, 2014)

4 (strategy summary, community based monitoring, citizen voice and action, EU CVA policy briefing)

√ World vision started publishing stand-alone annual report for Nepal from 2011.

UMN 8 (2007-08 to 20014-15)

NA 4 (UMN strategic plan, strategic change process, 2 UMN news)

√ All reports are related to work in Nepal

INF & INF Nepal 8 (2007-08 to 20014-15)

NA NA √ Single annual report for both NGO and INGO

Asal Chhimekee Nepal

NA NA NA √ NGO

PEACEWIN NA NA NA √ NGO DRRDO NA NA NA NA NGO Industry level


Association of INGOs in Nepal

√ 101 √

NGO Federation NA NA NA √ Total documents 32 8 20 8 60 documents

(without counting website contents)

Moreover, to understand the views of stakeholders of NGOs, the researcher collected

narratives/data from open archives. These reviewed publically available documents

were produced by stakeholders of NGOs on their performance and accountability.

The available narratives in those documents was related to both industry level and

firm level. These documents include national and international governments’ reports,

CSO’s reports, Commissions’ reports, investigative journalists’ reports and so on.

Specifically, the researcher focused on documents and data that contained assessment

of overall NGOs’ operations in Nepal including their general practices, performance,

accountability, and impact. However, the study used minimum relevant data or

narratives for the study out of massive data information. Table 4.3 shows the

different stakeholders and the number of considered reports/documents by the study.

It also shows the geographical representation of these stakeholders.

Table 4.3 INGOs’ Stakeholders and their geographical representation producing

NGOs’ social accounts

Stakeholder Geographical

RepresentationNumber of documents Remarks

Investigative journalists including authors who write for newspapers

National/international 189 (177 national2 and 12 international3)

Extracted from Factiva data base4

Government International 2 (DFID, and United States Department of Labor)

1 Choutari, basic operating guideline, membership report 2014, AIN code of conduct 2008, BOGS manual, CECI Nepal newsletter, ToR AIN-health task force, CCTF workshop report, PRSP report, AIN appeal for Nepal reconstruction 2 National newspaper are: The Kathmandu Post, The Himalayan Times and The Republica 3 International newspaper are The Guardian, The New Work Times, and The Washington Post) 4 The researcher used search words like, Oxfam or World Vision or UMN or INF, INGO and accountability, INGO and earthquake, INGO and impact on 5th and 6th April 2016. The search result is of last 5 years.


Civil society organization and Commissions

National/international 65

Total 197 documents Note: much information extracted from different national and international newspapers and other websites (which are not extracted by Factiva) were not counted.

Step to Process Data from Documents

A process was followed to review the documents. All documents under review were

grouped on the basis of their relevance to each other for narrative analysis. Then

these documents were printed and read for an overview and for basic understanding.

These documents produced by NGOs and their associations, and stakeholders were

subjected to searching. The key words such as social audit, social accounts,

accountability, effectiveness, impacts, performance, change etc. were searched and

highlighted in the documents. Alternatively, the researcher analysed line, phrases,

sentences and paragraphs from the documents (Bowen, 2009) to identify relevant

narratives to understand complete meaning. The contents were extracted, and

particularly analysed in relation to classifying the disclosures (Krippendorff, 1980)

and then information was separated into two parts: organization-produced

narratives/contents/information and stakeholders-produced

narratives/contents/information. Such organizing and displaying data helped to

reduce the volumes of data (Miles & Huberman, 1994). The contents were then

subjected to further narrative analysis through pattern recognition with emerging

codes, subthemes, themes and categories (Fereday & Muir-Cochrane, 2006).

Analysis of Documents Data

5 Freedom Forum-2, National Civil Society Forum-1, Commission for the investigation of Abuse and Authority-2, and accountabilitylab-1


The analysis of data from documents and transcripts was done at the same time

following the same process using narrative analysis. Here also the narrative analysis

was supported by the thematic analysis (Boyatzis, 1998). The researcher observed,

compared, revised, and triangulated information from both interview narratives and

documents’ narratives through codes, sub-themes, themes and categories until a

consistent picture with evidence was found. In the process, the analysis of different

documents’ and transcripts’ narratives became instrumental to lead to findings

through refining ideas, identifying conceptual boundaries and pinpointing the fit and

relevance to the study/topic (Bowen, 2005).

Hence, during the entire time of processing and analysing narratives from interview

documents, they became complementary to each other in providing evidence under

both categories: organization-produced narratives and stakeholders-produced

narratives. But, the data from these two categories were challenging with each other.

4.7 RELIABILITY, VALIDITY, CREDIBILITY, TRUSTWORTHINESS, ETHICS & TRANSFERABILITY

This research was designed in a way intending to maximize reliability and

credibility. The researcher of this study maintained consistency in the judgement

which ensured the reliability of the narrative analysis which was supported by

thematic analysis (Boyatzis, 1998). The consistency was maintained through

following interview protocol which helps lead analysis, investigating the key issues

in documents and transcripts. Importantly, implementing two data sources viz.

interviews and document analysis actually improved the reliability of the research

findings. Similarly, the researcher has implemented consistent and logical


interpretation of data which has increased the validity of narrative research

(Riessman, 2008).

The study also has considered credibility. Interviewing many multiple stakeholders

including beneficiaries of NGOs provided a massive information source to re-

confirm the accounts/narratives with each other. As a result, the information from

archival and interviews with NGOs were triangulated extensively through

verification during interview with few relevant stakeholders and developed

alternative explanation (Marshall & Rossman, 2011). This triangulation and

alternative explanation has significantly increased the credibility of the study.

Moreover, trustworthiness, ethics and transferability have also been well thought-out

for the study. The overall data of the study from different sources as described earlier

has purported to have a very ‘thick’ description, which was followed by an audit trail

(Bowen, 2009). Such an approach enhanced the trustworthiness of the study (Bowen,

2009). While looking at the ethics of the study, it was considered to be low risk due

to using publically available data, and interviewing people with their prior consent in

the location of their choosing. In particular, to interview government employees, a

letter from the Nepal government was received in response to the researcher’s

request as part of ethics compliance of the University. Only one participant expressed

that the participation is not official and all the accounts mentioned were individual

opinions (this interview was not recorded). Similarly, all interviewees were more

than 18 years of age. Ethics approval was received in November 2015 for the study

(QUT ethics approval number 1500000816). Thus there is almost zero risk for the

study to be drawn into controversy. Finally, the study did not only conduct study


among the sampled organization, but also extended it to their national associations in

the country. Hence national associations would represent the overall sector view.

Thus the study has high transferability.

4.8 CONCLUSION

The chapter discussed about research design implemented to study NGOs’ social

auditing practices and accountability in Nepal, the objective of the research study. In

summary, the chapter detailed two research methods: in-depth interviews and

document analysis. Within the first method, a total of 46 interviews were taken from

different participants including CEOs of NGOs, their beneficiaries, and NGOs’

stakeholders. The second method demonstrated the types of documents that were

analysed for the study from both NGOs and stakeholders. The chapter then discussed

how the data was processed, analysed and interpreted using narrative analysis which

also was supported thematic analysis. Finally, the reliability, validity, credibility and

transferability of study were explained to enhance the rigour of the study. The

following chapter provides a detailed description of the findings of the study.

118 Chapter 5: Findings: Social Audit, Social Accounts, and NGOs’ Accountability in Nepal

Chapter 5: Findings: Social Audit, Social Accounts, and NGOs’ Accountability in Nepal

5.1 INTRODUCTION

As stated earlier, this thesis is trying to understand the detail practices and nature of

social auditing, and whether and how this social auditing creates real

changes/impacts and accountability within the NGOs in Nepal. For this purpose, this

study examines social (impact) accounts produced by NGOs as well as their

surrogates in relation to NGOs’ overall operation, and presents the findings. For the

purpose, two research methods: document analysis and in-depth interviews were

used. While interviewing CEOs from NGOs and examining their documents

illustrate the overall social impact accounts and a greater form of accountability to

their stakeholders including beneficiaries; understanding views from surrogates of

INGOs including accountability holders through interviews and documents

demonstrate the experiences, understanding and perception of overall performance

and accountability of NGOs from surrogates’ eyes. Hence on the basis of these social

accounts either produced by organisations or their surrogates, the findings have been

discussed, reviewed, and compared within two natures or types of social auditing:

management-driven social auditing and surrogates-driven social auditing for

understanding the performance, impacts and accountability of NGOs. The theoretical

lens of surrogate accountability is used to view the overall understandings of the

study. The section starts by looking at ‘Nepal as an unequal world and NGOs’

accountability’ followed by the detailed findings presented in three subsections:

Chapter 5: Findings: Social Audit, Social Accounts, and NGOs’ Accountability in Nepal 119

management-driven social audit, surrogates-driven social audit, and comparison of

social accounts from these two types of audits.

5.2 NEPAL AS AN UNEQUAL WORLD AND NGOS’ ACCOUNTABILITY

Nepal has been recognised as a least developed country having many socio-economic

problems including huge gaps in the power among people and different groups.

Motivated to address the socio-economic problems in Nepal, many international

NGOs have been operating there for decades. The disclosures produced by these

NGOs and past study also consistently acknowledge these socio-economic problems

including huge power gaps and inequality among different groups, which has also

resulted in civil war. For example, the intergroup inequality, landlessness, and being

economically disadvantaged have been linked to a decade (1996-2006) long civil war

in the country (Murshed & Gates, 2005). Another study has investigated the positive

association between a number of killings by rebels in that civil war and greater

inequality (Nepal, Bohara, & Gawande, 2011).

While NGOs have been working to address inequality in the country, they are also

critically viewed in creating an “unequal world”. One of the findings of this study

also seems to support how powerful I/NGOs are in Nepal leading to “NGOlisation”

of the country, and thus creating “unequal world” by making some people rich and

employing educated elites who have the capacity to consume (interviewees J3, J4

and J56). Specifically, one of the issues particularly identified was the power

relationship between INGO and their stakeholders including accountability holders,

6 Details on coding of interviewees are found in Appendix C.


and how the country is being “NGOlised”. Even though, INGOs’ discourses claim

and strongly believe that they are held very much accountable by government to their

stakeholders including beneficiaries (for example, interviewees Executive Director -

INGO2; The Chair - AIN), most of the stakeholders, including government, appear

very critical in viewing the claim of INGOs in their fulfilment of standard

accountability. These stakeholders seem to agree that INGOs in Nepal are a powerful

entity, appeared as more powerful than even government, and thus they contribute to

create the other “unequal world”:

We have now seen and experienced that the entire country is now NGOlised and

there is no control of the state over them (J3, Regional Bureau Head – Kantipur

Media).

Some handful of INGOs bringing a huge amount of fund, large number of

employees with high profile salary, expensive vehicles, comparatively large

amount of allowances and perks, influencing in politics and policy levels etc.

come under dominant categories. Save the Children, Oxfam, Action Aid etc. are

some of them. They seem more powerful than the government (CSO1, The

President of Freedom Forum – A Civil Society organisation).

But due to the weak governance system of our government, aid agencies are

being out of control. They do not want to come under government policy and

want to directly implement their projects from back door (LG2, Social

Development Officer – Local government).

What I have seen in the district is most elites and semi-elites have NGOs, and

they think they represent people and sometimes even challenge or use

threatening languages to government offices with a feeling ‘why do we have to


report to local government’ (LG5, Women Children & Social Welfare Officer –

Local government).

They are powerful in central level but the capacity of government in local and

central levels to regulate them is absent (SWC2, Deputy Director – Social

Welfare Council).

A few past studies also have acknowledged such inequalities created by NGOs, and

shown how neoliberal ideology is further supporting in creating such an unequal

world. A couple of studies identify the inequality and power gap between INGOs

(Northern NGOs) and NGOs (Southern NGOs) (for example, Lloyd, 2005), how

‘NGO class’ through their consumptions – the marker of their distinction of this class

– directly fed the donor country such as the USA creating ‘current account balance’

deficit of the host country such as Haiti, and reproducing inequality within the world

system (Schuller, 2009). Schuller argues that NGO practices can strengthen local

inequalities and create a donor-dependent class and they work as intermediaries

continuing the inequalities in the communities. This is because many NGOs either

have familial or political ties and the NGO management are semi-elites who are

promoting the vision of globalisation and support neoliberalism. Concentrating on

Nepal, a study on development practices including forest management discussed how

neoliberalism is being promoted embedding it within the development practices to

claim authority and exert power by local elites, how the marginalised are left behind,

and how such programs undermine state control over natural resources (Nightingale,

2005). Similarly, an investigation looked at how neoliberalism is expanded through

microfinance programs, an approach to poverty alleviation, mobilising imperial


relations of power by many donor agencies together with NGOs (Rankin & Shakya,

2008).

As INGOs are very much more powerful in Nepal, the stakeholders appeared to link

INGOs to neoliberalism, also a finding of the study. The following accounts from

stakeholders support the view that INGOs are working to weaken government

mechanism, create dependency, evoking community people against government, and

thus they are working for neoliberal globalisation as a powerful entity.

Definitely, INGOs are very powerful in Nepal. NGOs and INGOs are just to

work in partnership with government and be mobilised to contribute in needs of

government. But they have been evoking the community people against their

government and trying to ditto copy implementing systems according to western

cultures. Those organisations have been established as the major factors for

creating disorder in government system and creating dependency in community

people (CG5, Section Officer – Central Government).

We have a weak mechanism to monitor the INGOs in Nepal and hence they

behave very powerfully and appears as powerful entity (CG2 – Joint Secretary,

Central Government).

Few past studies and this study in the context of Nepal have thrown little light on

inequality among different groups – primarily between NGOs and their stakeholders,

the role of NGOs in creating inequality, and how the notion of neoliberalism has

been powerfully promoted by donor agencies and NGOs. On the other hand, the

beneficiaries who they work with are the most disadvantaged, marginalised,

deprived, illiterate and poorest of poor on this planet; and thus they are the group


potentially having no power. While interviewing 10 beneficiaries in the

communities, they were hardly able to respond except a couple of them who also

were representatives of political parties. They generally said, “We are ignorant, we

do not know many things, and do not even remember most things that were discussed

in social auditing” (most beneficiaries). One beneficiary further added, if NGOs do

not work for our benefits, what we can do to them, nothing, just we think bad NGOs

came and went (B3). It therefore suggests that there is a huge power gap between

I/NGOs and their target groups (beneficiaries). The huge power gap between them

appears similar to the power gap between corporations and their stakeholders as in

the case of companies like Nike and Gap, who violated domestic labour laws, but

employees did not complain as they were desperately poor (Rubenstein, 2007). Thus,

INGOs in developing countries are creating another type of unequal world in

addition to existing inequalities.

Because of these power gaps between NGOs and their beneficiaries, the narratives

claiming ‘creating significant changes/impacts’ and ‘full accountability’ towards

their beneficiaries in the domain of standard accountability mechanism might remain

questionable. Theoretically also, a huge power gap between power wielders and

accountability holders does not create accountability under the notion of standard

accountability mechanism. Since the accountability holders are very weak when

looking at the accountability mechanism between NGOs and their beneficiaries, the

accountability mechanism dependent on them generally is severely compromised

(Rubenstein, 2007). Hence, the accountability mechanism of ‘potentially the most

powerful group to possibly the weakest group in the social sector’ – the unequal

world – may demand for different accountability notion to make these power

wielders accountable towards accountability holders. Alternatively, under conditions


of severe inequality between power wielders (NGOs) and accountability holders

(NGOs’ beneficiaries), all parts of standard accountability are hard to achieve in the

short and medium run. As accountability holders cannot sanction or help to sanction,

cannot collect information and cannot negotiate or set standards with power wielders,

a third party, the surrogates, should get involved on behalf of accountability holders

to make power wielders accountable. Hence, surrogate accountability mechanism as

an alternative has been proposed in this unequal world to understand the

accountability of INGOs.

Thus in the unique country context of Nepal, where INGOs are powerful, and

NGOlisation and neoliberal globalisation appeared successful; considering social

auditing to review whether it can create accountability and real change must be an

interesting study. Particular interest would be to investigate whether surrogates-

driven social auditing is able to create change, and if not, then why. The next section

discusses social auditing, focusing on management-driven social auditing and

surrogates-driven social auditing as discussed under the literature review chapter.

5.3 MANAGEMENT-DRIVEN SOCIAL AUDITING

Management-Driven Social Auditing

When organisations initiate assessing their performance or impacts with or without

the involvement of stakeholders in response to wider demands or voluntarily to be

seen accountable, it is known as management-initiated social auditing. While

preparing social accounts based on such depiction of accountability, INGOs believe


that they have been fairly accountable to their beneficiaries, and therefore perceive

that the standard accountability mechanism is working perfectly. These social

accounts constructed within the perceived standard accountability mechanism are

then disclosed to the stakeholders, which may include accountability holders. A

detailed discussion on how NGOs adopt different approaches to social auditing,

certain processes to construct social accounts, and how social audit document social

accounts and whether management-driven social audit can create accountability is

undertaken in this section.

The Development Approach to Social Auditing

Out of three approaches to social auditing: the arm’s length, coordinated, and

developmental approaches (Hughes, 2005) as discussed under the literature review

chapter, the developmental approach to social auditing is more relevant in order to

explain the social auditing approaches of NGOs. In the same chapter, another

approach of social auditing, community-led audit (Kemp et al., 2012), was also

discussed, which has a similar notion of development approach. On the basis of

practices on social auditing in ‘development and humanitarian sector’, the

developmental approaches of social auditing identified by Hughes (2005) and

community-led audit argued by Kemp et al. (2012) can further be expanded with the

help of findings of this study. The study found four different approaches to social

auditing within the NGOs, and they are social hearing, stakeholders’ feedback,

project assessment, and capacity building and empowerment. These approaches to

social auditing are identified as the expansion of development approach.


5.3.2.1 Social Hearing Approach

The social hearing approach to social

auditing is a type of development approach,

and it seems to be a common approach

practised for social accounting among

NGOs. As mentioned by one of the CEOs,

social auditing is viewed as social hearing

in our context (INGO1); many NGOs adopt

this approach for social auditing. This

adoption of social accounting is well

noticed by other stakeholders such as

regulation body of I/NGOs as one of the

interviewees mentioned, “Some of the

organisations are seen getting to the

communities, gathering the people and

conduct social auditing” (CG1, Joint

Secretary – Central Government). The case

study (within the box) describes social

hearing approach of social auditing in

detail.

Despite conducting hearing approach of social auditing, NGOs also expressed the

view that they do not see much value in it, and thus they use other approaches for the

purpose (INGO2). While understanding the motivation for not conducting this social

hearing approach of social accounting, INGO2 revealed, “actually social audit

Case study 1: Social Hearing Approach

United Mission to Nepal (UMN) is one of the longest serving

INGOs in Nepal. In addition, UMN is one of the sampled

organisations which conducts the hearing approach of social

auditing in their projects through their NGO partners.

For the preparation of social hearing approach of social

auditing, a summary report which includes major social impact

accounts is prepared and a presentation is also made ready to

present among stakeholders (INGO2). While inviting

stakeholders, all who are impacted by project or operations of

organisation in local level are invited including government

officers, journalists, beneficiaries and other relevant people

through letters mentioning specific date, place and time of

social audit event (INGO2). The social auditor also hired before

the event.

Normally this approach of social auditing is conducted at the

end of the midterm of the project through a public gathering, or

community gathering where the partners organization present

the work that are going on in the projects and community has

an opportunity to ask questions, to comments (INGO2). On the

day of audit, organisations present the work that are going on in

the projects and community has an opportunity to ask questions

and to comment (INGO2). The meeting is facilitated by/of

social audit facilitator.

Finally, after the event, a report is prepared by social audit

facilitator and is submitted to organisation who conducts social

audit event. The accounts of even in the produced through

disclosures. For example, “UMN’s Sustainable Livelihoods

team and its partners have conducted 16 social reviews,

hearings and social audits to ensure both upward and


[hearing approach] is a very powerful tool at project level but I am not convinced on

effectiveness and suitability at higher organisational level, and I think it is to do with

transparency and accountability rather than impact measurement itself” (INGO2).

Thus NGOs are found to be using hearing approach to social auditing for creating

accountability.

5.3.2.2 Stakeholders’ Feedback Approach

Another approach that falls within the development approach discussed by

organisations is stakeholders’ feedback approach to social auditing. Different to

hearing approach where stakeholders are invited for social audit event, many

stakeholders can directly send feedback on the performance to the organisations by

using different means such as phone, SMS, email, complaint letter and so on. INGO4

shared, “We have used feedback mechanism during emergency response and now

started for development work of our organisation too.” In addition to the above

mentioned means, another tool that is used is post distribution survey during

emergency response, which provides immediate feedback on the performance of

organisations and it gives opportunity to improve services (INGO4). INGO4 further

said, “This approach of social auditing has helped us to be more accountable as we

would like to respond 80% of feedback timely, and ultimately to improve our quality

of work. We understand the entire process as part of social auditing.” It demonstrates

that stakeholders’ feedback approach appeared as another social auditing approach

for NGOs.

5.3.2.3 Project Assessment Approach


The third approach within the development approach is project assessment approach

to social auditing. This approach is a widely and extensively used approach for social

accounting by NGOs. This approach of social accounting is primarily based on

project assessment or evaluation approach. However, this approach is not generally

called or understood by these organisations as an approach of social

auditing/accounting. In this approach, a team is formed to assess or review the

performance of organisations/projects, construct social accounts, and prepare a report

of social accounts. These social accounts then might be reviewed by relevant

stakeholders including the organisation itself. The social account report is then

submitted to their relevant stakeholders.

This project assessment approach to social auditing also was briefly described on the

basis of past experience by a higher level government official while working in the

district as a Local Development Officer (the district level responsible office for

overall development of district, and coordination with all INGOs). “A team is formed

and mobilised for social accounting. The appointed team does assess and evaluate

social accounts, and present to the responsible body that includes Local Development

Officer. Then a formal gathering was organised with stakeholders including

community people where they would ask different questions, and we would answer

their queries on the basis of report and presentation of the team that assessed the

work” (CG1 – Under Secretary, Central Government). Likewise, INGO4 also shared

their social auditing approach which is based on project design/evaluation approach.

When five-years project is designed to submit to government, all stakeholders

such as local and central governments, partners NGOs, community are

invited, and project is designed jointly. The stakeholders including


community know about the project from the very beginning and what

organisation is doing. When project is approved, then it is shared with

central government, district government (in the form of plan of action).

Moreover, the project jointly works with communities and local stakeholders

while implementing activities. For example, if a school constructing is the

need in community, then an action plan is prepared in mass meeting of

stakeholders where a discussion is also done on contribution of resources

from different stakeholders for the work. Such stakeholders meeting is done

again and again to monitor the progress and to discuss with other issues.

When construction is finished then final stakeholders meeting is organised

and all the accounts are presented and discussed (INGO4 – Acting Country

Director).

This study found that this project assessment or evaluation approach to social

auditing is a widely practiced approach of social auditing in NGOs even though

social auditing is generally understood as a social hearing approach.

5.3.2.4 Capacity Building and Empowerment Approach

The final approach explored through discussion with NGOs and their disclosures is

‘capacity building and empowerment’ approach within the notion of development

approach. This approach seems to be a common approach of the work of NGOs

including for social auditing. In this approach, stakeholders are made ready for social

auditing. In other word, stakeholders’ capacity is built to make them able to

understand issues, enhance knowledge, and assess the impact of organisations. While

one INGO shared their experience how their partner NGOs were made capable of


conducting social auditing through their support, the other disclosure discussed how

capacity building led to the conduction of social auditing.

We have an organisation capacity building focus for our NGO partners, and

we use a participatory organisation self-assessment tool which looks at

different aspects of organisation effectiveness and basically organisation

members are facilitated to go through a self-assessment. Social auditing is

the process that we encourage our partners to use and I think majority of our

partners are using social audit. ..where the partners’ organisation present the

work that are going on in the projects and community has an opportunity to

ask questions, to comments. ……We use that with NGO partners, school

partners; .. but with our encouragement and with our support what they try

and what they find is actually it is the process that very rapidly builds very

high level of trust with community that they are working with. And so all of

our partners once they started doing it with the right support they found

actually it is very effective tool and they are really positive about it. But

initially they are a kind of… not sure… (INGO2).

When the capacity building approach was used for school management

committees, then they were able to conduct social audits as an outcome

(WVI-Nepal, 2014a).

In five MRMV countries, national-level policies were changed as a direct

result of program inputs with young people, empowering them to advocate

for their own needs. This is the result of deliberate capacity-building (Oxfam,

2015).

Thus the capacity of stakeholders including beneficiaries is built to make them able

to assess the performance of NGOs through social auditing. As mentioned in the

disclosure of NGO, stakeholders need to be strengthened with both organisational

and technical skills to be able to effectively and efficiently work to fulfil their

mission (UMN, 2013). Such technical and organisational assessment capacity among


stakeholders would properly assess the performance and accountability of the

organisations.

Moreover, the capacity building also seems to be an important process for leading

stakeholders towards empowerment. NGOs’ documents claim that communities and

stakeholders are empowered by using different means, and the empowered

stakeholders then seek the proper way to assess the performance of the organisations.

World vision approach for empowerment is described here as an example. For World

Vision “social accountability” refers to civic engagement by communities (other than

voting) designed to improve the performance of government (WV-International,

2013). This shows that Citizen Voice and Action (CVA) is a social auditing and

accountability approach of World Vision primarily for improving the services

(creating changes) of service providers.

Then the pertinent question is, how are stakeholders empowered for social auditing

and through social auditing? Disclosures show that building the capacity of the

stakeholders is a significant step for empowerment, which will follow the

stakeholders’ representation and participation in the decision making process of

organisations. Thus the overall process of empowerment can be categorised into five

different steps.

Capacity assessment

Providing education and training

Equipping with right tools

Social mobilisation and advocacy

Stakeholders’ participation and representation


In the first step, stakeholders primarily beneficiaries’ capacity should be assessed as

mentioned in the disclosures, “to build their capacity, UMN’s Doti Cluster team

organised Group Capacity Assessments” (UMN, 2014, p. 14). The communities

where NGOs work are generally illiterate, marginalised, deprived, ignorant and pro-

poor and thus their level of understanding and awareness would appear quite low.

The assessment process should be able to capture the real capacity of stakeholders

which will guide them to develop the right means and methodology to build their

capacity.

Then, the second step would be educating and providing training to these

stakeholders to increase their existing capacities (UMN, 2014; WV-International,

2013) on the basis of the findings from step one. Depending upon the needs, the

education and training types would vary including from simple literacy classes to

community people to education about rights, financial literacy, organisational

management, impact assessment, technical knowhow and so on. Building capacity of

community and stakeholders through education and training can be a time consuming

process as it may not happen overnight. In addition, enhancing technical and

organisational assessment capacity to make them able to assess the impact and

performance of organisations to these pro-poor communities could take a substantial

amount of time.

Another step is to equip stakeholders with the right types of tools which help them to

know and claim their rights, compare the real services and service provider’s

commitment (WV-International, 2013), identify what is best for them, and rate

organisation performance. On the basis of education and training they received, and


having the right types of tools and knowledge with stakeholders, they can then

involve themselves for social mobilisation and advocacy, which could be for or

against organisations depending upon their performance, to influence decision

makers to improve the services (WV-International, 2013), which also includes

sanctioning organisations. In the process the community and stakeholders acquire the

right types of experiences which further helps them to assess organisational

performance and mobilise themselves.

Finally, one of the best ways to influence the quality of services of organisations is

through having participation of stakeholders in the decision making body – which is

the sign of empowerment. However, the participation itself may not ensure the full

influence on the decision making as organisations do not want to transfer their

power. Thus the right proportion of representation of stakeholders in the decision

making body ensures the quality of performance of organisations and which is also a

level of “full empowerment”. The regular advocacy and social mobilisation process

after community and stakeholders being equipped with technical and organisational

skills would lead to having a proper representation in the decision making body. This

means community and stakeholders are now taking ownership of the work (CG1).

Thus through representation in decision making body/process and ownership of the

work as demonstrated, social auditing is a real stakeholder’s empowerment process.

Alternatively, the overall discussion within the management-driven social auditing

shows that social auditing facilitates stakeholders’ empowerment.

The process of empowerment of NGOs during and through social auditing is also

noticed by their stakeholders. For example, two stakeholders of I/NGOs expressed


their views how the social accounting process linked to empowerment of

stakeholders and beneficiaries. A civil society representative expressed that the real

measurement of changes and impact should go through the process of empowering

the beneficiaries, informing them about the standards of and measure through their

real life experiences (CSO1). Similarly, a government official added, “social auditing

in my view is playing vital role in making community people aware and increasing

the ownership of changes brought by the organisations” (CG1).

Moreover, International Nepal Fellowship (INF) disclosure illustrates why

empowerment is a condition to see and assess the changes/impact of the work. “The

impact of INF’s work can be seen in empowered communities who are able to

mobilise themselves collectively to analyse their situations, make action plans and

then implement them to improve the health and livelihood of their communities”

(INF, 2013). This basically means, unless communities are empowered, impact

cannot be seen, and the community as a whole cannot even assess the impact of the

organisations. Therefore, community and stakeholders empowerment seems to be a

preliminary condition for social accounting and vice versa. The next section analyses

the process of social auditing adopted by NGOs.

Process of Social Auditing

The process of social auditing appears different for various approaches adopted for

social auditing by NGOs. For example, the process of social auditing for hearing

approach and empowerment approach can be different. Generally NGOs discussed

during interviews about their process adopted for social hearing approach of social

accounting though some disclosures briefly discussed about other approaches viz.


‘capacity building and empowering approach’ to social auditing. For example, in

hearing approach to social auditing, UMN explains, “social audit consists of a series

of public meetings in which methods, actions and results of an organisation are

discussed openly that leads to improvements in the future” (UMN, 2010). Similarly,

INGO3 mentioned they organise social auditing generally when there is hardware

support (for example, putting hording/billboard with some awareness-raising

message). Regardless of approaches, the entire process of social auditing for impact

accounts can be divided into three different stages (INGO1): pre-audit, audit, and

post audit.

5.3.3.1 Pre-audit

Pre-audit includes the overall process of NGOs they have done from project design

to preparation of social accounts. The pre-audit process can be categorised into two

parts: induction stage (NGO1) and social account construction stage. The induction

stage is briefly discussed here, but the details on how NGOs construct social

accounts has been presented in Appendix E. The induction stage is also categorised

into four different steps (INGO1).

Preliminary visit: This is the stage where NGOs try to understand the

community generative themes before designing the project/program (INGO1)

Second phase visit: When organisation makes the decision to design the

project on the basis of preliminary visit, the community and stakeholders are

consulted again while designing the project to incorporate their views

(INGO1). Oxfam summarises steps one and two as ‘a baseline or assessment

of the situation prior to intervention’(Oxfam-America, n.d).


Project orientation visit: In this stage stakeholders are oriented to the project

(INGO1). During this orientation, the objective of the project, amount of

budget, activities of project, how project makes partnership with the

community are shared (NGO1). INGO3 organises ‘project start up workshop’

in the district with stakeholders that also includes the discussion on how this

program can be taken forward and when joint monitoring with government

and other stakeholders is possible. In addition, information of project is also

broadcast from local radios (NGO1).

Project implementation phase: This is a continuous and regular process

(INGO1). The social accounts are prepared for different purposes and for

different stakeholders. For steps three and four, again Oxfam summarises ‘a

monitoring system with quarterly or midterm reports documenting progress in

relation to plans’ (Oxfam-America, n.d).

Slightly different to other approaches, the significant focus of the NGOs in

empowerment approach would be capacity building of communities including

stakeholders primarily after step three of the induction stage through education,

training, equipping with tools, involvement in social mobilisation and advocacy, and

so on (WV-International, 2013).

5.3.3.2 Audit (day of audit)


Hearing approach to social auditing is done at the end of the year in local level and

district level (NGO1, NGO3). A social auditor who is hired facilitates the overall

social accounting process (NGO1). This person is responsible for the overall auditing

process on the day of audit including preparation of code of conduct (what sort of

questions can and cannot be asked, questions should not blame anybody etc.), asking

organisation to present their social accounts, verifying these accounts with

stakeholders to ensure whether what organisations have said has happened in the

communities, and whether the work is effective (INGO2, NGO1). The person also

should ensure the meaningful participation of community people such as

beneficiaries so that they do not feel hesitation to express their views in front of other

elite stakeholders including government officers (INGO2). The community and

stakeholders can raise issues if the work is not effective (NGO1). They also present

the feedback of stakeholders in last year’s social auditing, and how they addressed

this feedback (NGO1). The review of performance of NGOs by stakeholders is

phrased by Oxfam as, ‘annual reviews that document aggregate evidence and that

bring stakeholders together for reflections on progresses (Oxfam-America, n.d).

The other approaches are the regular process of NGOs to be done at any time of the

year. In the empowerment approach, different to hearing approach, communities and

stakeholders are provided opportunities to rate performance or impact of service

providers by using different tools such as ‘community score card’ or hearing

approach of social auditing against commitments made by service providers or

certain criteria generated by stakeholders (WV-International, 2013). Similarly, in the

project assessment approach, generally monitoring and evaluation method is used

(Please refer to Appendix E).


5.3.3.3 Post Audit

A final report of social accounts is produced. A report is prepared by social auditor

or project assessor, and submitted it to organisation (INGO2, NGO1). NGO1

differently shared that a committee is there to produce a social audit report though

they accept the report from social auditor. The organisation prepares detailed process

level reports including what stakeholders said in details, and how they can move

further in coming days on the basis of feedback (NGO1). The head of the

organisation approves the report and it goes to the board for final approval (NGO1,

NGO3). On the other hand INGO2 expressed that social auditor submitted report to

organisation which will then go to the board; and the board reviews the report and

prepares action plan for further action to improve on the basis of report. Before

conducting another social auditing the organisation reviews their previous action

plans looking at what they have done and what is yet to be done (INGO1). The report

is published externally and distributed to government line agencies, beneficiaries and

other stakeholders (NGO1). Some even shared that independent report is not

distributed to stakeholders. Indeed, the periodical progress reports also discuss social

auditing. In the empowerment approach, in addition to preparing final reports, the

communities are facilitated to work with other stakeholders to influence decision

makers to improve the services using different methods such as advocacy (WV-

International, 2013).

Social auditing process among most marginalised and illiterate

community


One of the major stakeholders, primarily beneficiaries, of INGOs in developing

countries are the marginalised communities; deprived, illiterate and poor people who

hardly read the reports, understand the accounts, put their views in public meetings,

and even barely understand the development languages people use during project

implementation and social auditing. But they are the key people for NGOs, who call

them beneficiaries or the accountability holders or target groups or right holders; and

most of the project focus is for their socio-economic development. Other

stakeholders also expect NGOs to conduct social auditing in the village with a

process that is understandable even by most marginalised people (LG6). In such

contexts, this study attempted to explore NGOs’ accountability mechanism towards

this group during the process of social auditing. INGO2 responded:

In the social auditing, we managed to prepare some pictures and drawings,

which we call gallery, can be seen by those people. They are asked by audit

facilitator, whether such things depicted in the gallery have happened in the

communities or in their life or not. So intentionally we addressed their issues as

they cannot read our social accounts during social auditing and when we sent

report after social auditing. Social facilitator is trained in such a way that he

asks their views, feedbacks and suggestions during social auditing (INGO2).

In addition to this, a follow up workshop of meeting with these people in their

community to discuss the social audit final report would further increase the value of

social auditing (INGO2). The report can be presented to this group of people in a

way they will be able to understand (INGO2). However, it seems NGOs are also

having difficulty being accountable to beneficiaries. Therefore, INGO2 said, “We are

thinking to conduct social auditing in village level as per government guidelines, and

conducting of social auditing in village level is important as village people do not get


reports.” To facilitate the process of social auditing in a village, they also have a

guideline such as, ‘how to communicate with beneficiaries’ (INGO3). They are

followed while interacting with communities. Thus NGOs shared that they have a

specialised focus to engage and empower accountability holders in social auditing

with a different method and tool to make it understandable.

Social Audit as Tool to Document Social Accounts

The social auditing can capture the social accounts of NGOs. These social accounts

could be the positive changes or negative changes of NGOs’ operations. Both of

these anticipated and unanticipated social accounts are the result of social auditing.

This thesis carried out the examination of these social accounts in two levels: firm

level and industry level. In the firm level, some social accounts produced by a few

sampled organisations such as Oxfam, World Vision, and UMN were examined

specifically on their impacts, accountability, and effectiveness. Likewise, in the

industry level (INGO sector), the social accounts produced by AIN and NGO

federation of Nepal were investigated. Most of these social accounts appeared to

demonstrate the positive changes or impacts they have brought in the lives of

beneficiaries, in the communities, and in the country. According to those social

accounts NGOs claimed that the standard accountability mechanism has been

working well.

Specifically, both the interview with CEOs of NGOs and their documents revealed

that social auditing captures generally all types of social accounts such as NGOs’

impact accounts (positive, negative, short term, long term, in local level or national

level), their performance accounts, and overall organisation/project’s policies or


values (INF, 2009, 2012; UMN, 2008, 2013; WVI-Nepal, 2011). That is, social

auditing documents changes or impacts brought by NGOs in individual and family

lives, increased level of community awareness and their empowerment, and changes

in communities. Importantly, NGOs also viewed social auditing as a tool that can

capture what financial audit cannot. For example, social auditing can capture

corruption issues. It does so by checking and tracking the resources, and their flow

until the end users receive them (INGO2, Program Manager), while financial audit

territory focuses on reviewing paper including invoices and receipts. INGO2 further

illustrated, if a NGO bought seeds to distribute to its beneficiaries, financial audit

checks only the invoices and receipts in the office setting. However, it cannot check

whether a beneficiary in the community received seeds. On the other hand, the

community could easily say they have not received seeds during social auditing

when NGO presents their accounts to stakeholders saying, “Seeds are distributed to

community” (INGO2). Thus social auditing plays a role in reducing corruption and

increasing impact (INGO2) and therefore create changes and accountability.

The summary of some other social accounts captured by management-driven social

auditing has been presented in Table 5.1 below including some example quotes.

These social accounts are positive social accounts, and ultimately demonstrate and

claim the NGOs’ accountability towards their beneficiaries and stakeholders.

Table 5.1. Summary of some social accounts captured by management-driven social

auditing

Summary of social accounts captured by social audit

Example quotes

Social audit captures changes brought in individual family life

When social audit… able to take out the view, experience and feedbacks from project beneficiaries. It can appraise the impact only in that case (INGO1).


Some impacts of NGOs have seen really well in individual and family through income generation activities as well (LG6).

Social audit facilitates and captures increased level of awareness, capacity building and empowerment of people

In Nepalese context, the NGOs and INGOs have positively contributed in improving and enhancing the values of democracy. They have also contributed a lot in educational, social and economic sustainability of those people who were only politically aware (CG1).

Social audit captures both qualitative and quantitative changes

Similarly, social accounting captures both quantitative and qualitative changes as social impact accounts report includes both qualitative and quantitative information for the stakeholders (INGO2, INGO4) including budget and expenses (Beneficiaries).

Social audit captures policy level influence and change

We also try to bring changes in government policies through different advocacy and campaign activities (INGO3, INGO4). INGOs are champions to develop pressure groups at different levels, sometimes it may influence policy making process and contents of the policy as well (CG2).

Social audit assesses organisational mission

Social accounting process and tools help organisation to understand and realise whether their vision and mission is being achieved as they can compare their performance with feedbacks from stakeholders (INGO2).

Social auditing captures human rights issues

The rights of people can be protected and violations of rights can be minimised through social auditing (INGO2).

Social auditing can capture cross cutting issues addressed by NGOs

Social auditing can capture the cross cutting issues being addressed which helps to make society inclusive (INGO2).

Social auditing captures what financial audit cannot including corruption issue

Social auditing is a powerful tool to capture what financial auditing fails to capture as social auditing can track resources from organisation to community level (INGO2).

Social auditing captures all types of social impacts (positive, negative, short term, long term etc.)

The impacts seen in different level such as community level, district level, national level and global level are also captured (INGO3).

Social accounting captures performance of service providers as well

WVIN used the Citizen Voice and Action (CVA) tool to increase dialogue between citizens and service providers to improve the accountability of the administrative and political sections of government. As a result 7 VDCs have made their own action plan to improve their local health institution (WVI-Nepal, 2013).

Social accounting measures the overall impact of NGO or their projects or policy/values

Over the last three years UMN has designed and implemented a process of looking at its performance against organisational policies and values. This assessment is based on internal monitoring and the feedback of stakeholders. UMN calls the process Social Accounting” (UMN, 2009).

In addition to these social accounts, this study also examined social accounts of the

NGOs under this study primarily in their documents/disclosures to further understand

the nature of social auditing and how it creates accountability. The examination

looked at NGO’s impact accounts, and how stakeholders including beneficiaries are

offered opportunity to assess those accounts. Almost all social accounts claim that

stakeholders are valued well and their feedback is highly useful for organisation

decision making. They also claim that the significant level of impacts in


beneficiaries’ lives have been brought and they are truly empowered. Table 5.2

highlights some exampled accounts from NGOs under the study.

Table 5.2 Examples of social accounts of NGOs under the study captured by social

audit

Area of social accounts

Oxfam International

World Vision UMN INF

Creating changes/ impact

In five MRMV countries, national-level policies were changed as a direct result of program inputs with young people, empowering them to advocate for their own needs. This is the result of deliberate capacity-building (Oxfam, 2015).

Impacting the lives of more than 8,000 children in Nepal by improving maternal and child health (WV-Australia, 2012).

This year our work directly impacted on the lives of 171,518 of the poorest people of Nepal (UMN, 2014)

Women are being empowered, actively improving their family life and taking part in community developments (INF, 2012).

Hearing stakeholders

In assessing the impact of a particular program we strongly value the feedback we receive from communities, which often informs our decision to modify or discontinue a program (Oxfam, 2011).

WVIN adopts a multi-stakeholder approach to partnering, recognising that all of these different groups have an important role in creating change (WVI-Nepal, 2015).

This (stakeholder consultation) will be a regular annual process as UMN seeks transparency and good constructive advice (UMN, 2007).

INF has developed informal community structures [that is, self-help groups] and has developed coordination between primary and secondary stakeholders. This has created opportunities to share their problems and get help from the nearest service centres (INF, 2014).

NGOs NGO1 (Peacewin) NGO2 (Asal Chhimekee)

NGO3 (DRRDO)

NGO4 (INF Nepal)

Creating changes/ impact

Empowering women and children is our major impact and few women now represent in the parliament as well.

Community empowerment of low and socio-economically backward people of our target groups is our major impact. In addition, their increased level of awareness and activeness to do something good at community level such as cleaning villages, schools etc. is also an

All PWDs got disability identity card because of our operations and able to claim government allocation budget to disabled people, and PWDs got assistive devices.

We can see it in two different phases. …the visible impacts in our working communities are the increased level of awareness in different aspects………Secondly, the socio-economic and physical changes such as construction of drinking water schemes, schools....


impact.

Moreover, this study also investigated social accounts produced in the industry level

of both international NGOs (by AIN) and local NGOs (by NGO Federation) to learn

the NGO’s social auditing nature, and how it creates changes/impact and

accountability in NGO sector. These social accounts also proclaim that beneficiaries

are empowered, and NGOs’ have higher standard accountability. The periodical

conduction of social auditing and producing disclosures are evidence of the claims.

Table 5.3 shows a couple of social accounts for examples.

Table 5.3 Examples of social accounts of AIN and NGOF in industry level captured

by social auditing

Social accounts

Association of INGO in Nepal (AIN) NGO Federation of Nepal (NGOF)

Creating changes (Empow-erment)

AIN understanding is similar as INGOs. Mostly INGOs do social development and few do economic development.

General people are empowered a lot to understand democracy and their basic rights. This is one of the examples of impact brought about by NGOs and their ventures.

Account-ability

INGOs have higher standard of accountability: within Nepal (SWC) in the eyes of Nepal law. Second is our donor audit and scrutiny. And third is INGO head office where there is also audit. We are monitored in three folds thus has better accountability mechanism.

The NGOs have been conducting social audits, public audits and making their reports public in periodical manner.

Social Audit and Surrogates Expectation


Social accounts from both textual analysis and interviews show that organisations

undertake social auditing to satisfy external and internal requirements including

accountability through accounting changes/impacts. UMN disclosure can be taken as

an example – social accountability has been treated to involve a variety of

stakeholders in assessing the impact, accountability and transparency of the work

(UMN, 2008), to monitor its own social, economic and environmental impact (UMN,

2009), to be transparent disclosing its finances, processes, practiced values and

impact of the programs (UMN, 2008). Therefore, conducting social auditing by

NGOs seems to be a part of the process of a standard accountability mechanism

towards their beneficiaries and stakeholders. In the mechanism, INGOs demonstrate

their compliances to many standards expected by communities, donors and other

stakeholders; and communicate these compliances through social auditing and other

processes.

However, reviewing NGOs surrogates’ accounts including beneficiaries during in-

depth interviews and texts review, their accounts demonstrate that their expectations

from the NGO sector have not been fulfilled. That is, most stakeholders expressed

their experience that NGO primarily conducts social auditing to be seen as

transparent and accountable, for donor compliance, to demonstrate community

participation, and reporting purposes (Many Surrogates). The surrogates even

perceive NGOs standard accountability and its communication through social

auditing and other process as rhetoric transparency and accountability (SWC2,

Deputy Director of SWC), and thus it is not really to be accountable towards their

beneficiaries. Social auditing is done primarily to show good governance of their

organisation to attract more funding from donors (J3). They even recognise if they

were accountable to beneficiaries, then besides people being empowered on rights


and awareness, the poverty level would have reduced significantly by now. In other

words, full functioning of standard accountability mechanism as demonstrated in

their disclosures and expressed in interviews through social accounts is not fully

working in reality. Hence, limited stakeholders consider social auditing done by

NGOs is for impact assessment, organisational improvement, and accountability; and

thus social audit conducted by NGOs does not seem to meet the expectations of

surrogates. Rather it has been done for organisational purposes. Therefore,

management-driven social auditing seems to have many underlying problems to

create real change and accountability. These underlying problems are discussed next.

Underlying Problems of Social Audit to Create Real Change and Accountability

Stakeholders believe that there are many underlying problems with management-

driven social auditing and thus it hardly creates real changes in the communities and

people’s lives, and triggers lack of accountability within NGOs. These problems of

social audit have been explained under the following summarised points.

5.3.6.1 Management Works for Silencing Stakeholders

Majority of stakeholders accounted that I/NGOs appeared to work in silencing

stakeholders during social auditing. An INGO regulatory body’s key official shares

his experience the participation in a social auditing as:

I was recently called as key speaker in social audit of some large INGOs.

What I found there was that none of the partner NGOs critically commented

over weaknesses and improvements of their leading INGOs. On granted time


for comments, whatever they said was only related to the praises and good

doing of their INGOs (SWC2 – Deputy Director of SWC).

5.3.6.2 Management Controls Stakeholders Selection

Similarly, NGOs also seem to control the participants, the stakeholders, for social

auditing. A social auditor shared how participants are selected for social auditing and

how widely the impact is made in the communities as: “there are few people in the

community who are invested by many NGOs and they are the one who come and

speak during social auditing. Impact of NGOs’ work are seen among these people

but when we visit other general people in the communities, many such people’s

conditions are the same as before” (SA1 – Social Auditor). A government local

officer also supports this view (LG5). Thus social auditing, as opposed to the

expectation of surrogates, is undertaken to reduce the potential risk from

stakeholders, as a skilful tool to manage stakeholders, and for compliance purposes,

but barely for accountability.

5.3.6.3 Management Controls Information

The findings also suggest that there is high level of management control in

information for and during social auditing. The same auditor further expressed how

information is also controlled by NGOs. “They do not provide all information we

want for social auditing purpose. For example, if a community house is constructed

in NPR two million, they just give us information of two million but we need

separate information for labour cost, material cost and so on. In addition, failure

cases (negative impacts) are not shown in social auditing. If 100 goats are


distributed, only one or two that have been good are demonstrated but out of 100

how many have not been good are not shared” (SA1). Another auditor also shared

that social accounts that organisation is going to present to stakeholders are not given

to them, and they know them only during presentation (SA2). Many other

stakeholders also have similar views that NGOs do not want to provide information.

Such information control reduces the accountability of NGOs.

5.3.6.4 Management Creates Artificial Setting for Social Auditing

Stakeholders also feel that NGOs entirely work within an artificial setting in the

communities for social accounting process, and hence it cannot account for the real

changes. A social auditor again mentioned his experience, “though I facilitate social

auditing, I feel that the community people are taught in advance by NGOs on what to

speak during social auditing (sic). Once I monitored the work in the field and what I

found was there is a huge gap on what they spoke and what was in the reality.

Moreover, the information (social accounts) given by organisation and what I found

in the field during monitoring did not match with each other. My observation has

shown that around 75% progress that has been shown in the documents during social

auditing is fake” (SA1). Similar were the views of some other stakeholders including

another social auditor. Therefore, the social auditing process as expected by

surrogates does not really give an account of the real change.

5.3.6.5 Management Controls on Selection of Social Auditor

Similarly, there seems to be a direct involvement and control of NGOs in the

selection of social auditor or evaluator. Digging in-depth on the process of recruiting


a social auditor and ensuring their quality, INGO2 mentioned, “The social audit

facilitators are also trained by us. These people are from local communities and are

part of our partner organisations. If a new facilitator who is not trained by us come to

facilitate social auditing, we discuss with them about our approach, guidelines, and

method in advance. We orient them before conducting social auditing.” This view is

differently supported by the social auditor. “If real report prepared by social auditor

is disclosed to stakeholders to protect community interests, the views of NGOs on

that auditor will be changed and nobody gives them the work. This also tempts

facilitators to make good report to get work from NGOs in the future” (SA1).

Another stakeholder recalled his experience, as:

I know 8-10 renowned project evaluator/consultant in Nepal. They shared with

me that INGO management orient them in advance what sort of findings they

want in evaluation report. Accordingly, they evaluate projects (J5).

These illustrations also clearly demonstrate how social accounts are constructed to

show good and positive accounts only.

5.3.6.6 Management Controls Final Social Accounts and Disclosures

In addition to the above mentioned control, the final social accounts and report of

social auditing is also under the full control of the organisation. INGO2 also

mentions that when a social auditor submits a report to the organisation then this

might need some correction before distributing to stakeholders; and the report is also

not widely distributed (INGO2). While questioning the reason behind limited

distribution of corrected report, NGOs said, “organisation believes that stakeholders

do not give priority to read those reports and this report is primarily for organiser to

improve their services” (INGO2). The accounts from the NGO1 further strengthen


the point how management control the reporting process. The view is they accept the

report, which is two to four pages, from the social auditor and then the organisation

prepares a detailed process level report including what stakeholders said, and how to

move further in coming days on the basis of feedback (NGO1). In addition, social

accounting reports are distributed to limited stakeholders, and in many cases they are

not even disclosed to stakeholders. INGO1 mentions, “Social accounting report

becomes the private document of organisation” (INGO1). Another renowned

organisation interestingly shared why they are focusing on their own evaluation

system rather than using a consultant for program evaluation. “When we used to use

consultant for evaluation, we would get confused after looking at evaluation report

thinking whether we have achieved our objective or not. Many times that led to

conflict with consultant” (INGO3). This suggests that the evaluator did not write

social impact accounts as wanted by the organisation.

For additional insights, a discussion with audit facilitators in the district, civil society

working on governance issues, and beneficiaries would be helpful. Beneficiaries

expressed, “NGOs think we are village people and do not need reports” (B3).

Moreover, journalist views that the social audit reports are not disclosed to

stakeholders besides some coverage on local media mentioning organisation ‘A’

conducted social auditing (J1). There are no practices of making an independent

report of social auditing among NGOs (CSO2). Likewise, the social auditor shared

that there is full control of the organisation in social auditing reports and their

disclosures:

Auditor can differentiate whether work has been done in the community and

similar accounts have been brought for social auditing. But when auditor


makes report and submit to NGO in the district, they prepare their own

report as per their need and send to higher level and donors (SA1).

These illustrations clearly suggest that the final social accounts and disclosures are

fully controlled by NGOs.

5.3.6.7 Organisation Controls Dialogue Agenda

NGOs also seem to control the dialogue agenda for social auditing despite knowing

dialogue is a characteristic of a democratic society. While asking whether the

organisation presents failure case studies or stories in social auditing, NGO1

responded that normally it is not seen in social auditing. NGO1’s view is also

supported by NGO2, “There are no successes all the time, but challenges too.

However, they are not reported in social auditing.” Similar is the experience from an

official from the regulatory body of INGO. They could neither show the budget

allocated for staffing and community work nor could they indicate the numerical

figures of deprived people graduated from poverty, improved health status and

economic strength (SWC2).

5.3.6.8 Extensive Exaggeration of Social Accounts

As NGOs appear to make up things and exaggerate the social accounts for social

accounting purposes, relying on changes as reported is really tough. One social

auditor shared, “I as an independent person facilitating social audit, I need to visit

secretly to community before conducting social auditing event and try to know

program’s impact, beneficiaries’ views and so on. In this process, I try to prepare


separate accounts and I cross check whether my accounts match with INGO social

accounts. In addition, on the day of social audit event, I triangulate views of three

parties stakeholders, beneficiaries and organiser to ensure impacts are brought by

interventions” (SA2). Such checking should be done as experiences say that around

75% of social impact accounts reported seem unreal (SA1).

5.3.6.9 No Adequate Emphasis for Empowerment Approach of Social Auditing

Even though NGOs are empowering the people through a social auditing process;

stakeholders’ accounts seem to be quite critical on capacity building and

empowerment approach of social auditing. For example, there is strong criticism on

NGOs for the lack of ‘real’ capacity building and empowerment approach to their

stakeholders including beneficiaries in their social auditing/accounting. Many

stakeholders have raised concerns. The first concern is on the level of understanding

of beneficiaries, which plays a significant role in assessing performance during social

auditing as expressed by the Under Secretary of central government:

The feudalism has not been long of erased so, there still persists its effect in

societies and communities. The general community people are still in the

stage that they can't express their discomforts and feelings (CG1).

Another major concern is the participation and involvement of beneficiaries during

the planning stage as involvement of stakeholders in planning is related to

assessment of performance during social auditing (Many Stakeholders). As

mentioned by one local government officer, “but the reality is different because the

plan is prepared in higher levels without analysing real situation (sic). There is

always a question whether the beneficiaries were involved in planning the project.


Activeness of participants, their level of understanding the project purpose and their

ability to reflect community needs also play vital role in this” (LG2).

Finally, the stakeholders’ participation and representation in decision making body of

organisations – the symbol of empowerment – is not seen to be an agenda for NGOs

to make representation in their own organisation, but always for other organisations

(Few Surrogates). Stakeholders even shared that most of the time it is really hard to

get access to the offices of these NGOs, and therefore representation in their decision

making body is still out of reach for beneficiaries and stakeholders.

5.3.6.10 Episodic Social Auditing, Not Based on 360 Degree Approach

Another strong reason presented by stakeholders on why social auditing cannot

create real change is it is not conducted in its real essence. The leading civil society

organisation experience in social accountability practices of I/NGOs is, social audit

is conducted primarily among the community through focal group discussion or key

informant interviews, to monitor their log frame activities by collecting random data

without having research focus, and rare feedback from stakeholders (CSO2). The

log-frame, the logical framework, is a project management tool used by many NGOs

around the world. Hence social auditing conducted by INGOs are not based on a

360-degree approach, rather it is episodic, hence it hardly creates the change (CSO2).

5.3.6.11 Laden Process for NGOs Only

Finally, all interviewed international NGOs said that they do not conduct hearing

approach of social auditing though they ask their partners (NGOs or government


agencies) to conduct social auditing for them. Therefore, the social auditing process

seems to be a laden process for only NGOs in the context of Nepal. INGO2 views

support the facts, “Our Partners asks us why do you want us to do social auditing but

your organisation does not do it. This has been quite difficult for us as well, though

we have other different approaches that fulfil the aspirations of social auditing.”

Similarly, NGO1 perceives this as an advocacy issue on behalf of NGOs to INGOs

as only NGOs are compelled to conduct social auditing. These views show that

social auditing (primarily hearing approach) is taken as a laden process only for

NGOs. It also shows that what international NGOs say and do varies a lot, the

hypocrisy of NGOs, and accountability for them is something to be applicable for

others, but not for them.

Thus, given these circumstances and contexts, and underlying problems with

management-driven social auditing among NGOs, how communities actually work

on setting and discussing standards with NGOs; understand information, if provided

by INGOs; and sanction them for non-compliance of standards. Thus standard

accountability mechanism as perceived by NGOs seemed to be questioned in

creating real change and accountability. In the next section, this thesis discusses

surrogates-driven social auditing, and whether it creates changes and accountability.

5.4 SURROGATES-DRIVEN SOCIAL AUDITING

Surrogates-Driven Social Audit

Despite different degree of engagement of stakeholders, NGOs are tempted to

demonstrate only their good performance and primarily positive impacts, and to


disclose some inefficiencies and ineffectiveness, if they do, as learning. In addition,

management tries to control the overall process of social auditing as discussed in an

earlier section. Therefore, the claimed social impact accounts and accountability of

organisations do not represent the ground reality, true observations, experiences, and

‘say’ of wider stakeholders as critical observations on performance accounts may

remain hidden or unnoticed. Hence, the result of social auditing, related to

performance, impacts, and accountability of organisations disclosed in the reports

and expressed by managers of the organisations are organisation’s driven social

accounts motivated to demonstrate standard accountability. These social accounts

could be biased and may represent only the organisation’s view; and therefore,

surrogates-driven social auditing is needed to have a balanced view of these social

accounts.

In the surrogates-driven social auditing, this study identified that different surrogates

directly and indirectly assess the performance or social impacts of NGOs. These

accounts were both supportive accounts to organisations’ social accounts or critical

of those accounts. These surrogates did assess, account and report (which could be

formal reports or news articles, or some minor protests) social accounts of those

organisations to wider stakeholders. They are the shadow accounts as a result of

surrogates-driven social audits. These shadow accounts are an independent social

audit which is free from organisation-focused accountability approach and thus

provide critical independent interpretation on organisational performance (Dey,

2003; Medawar, 1976), and reveal the gaps between what organisations choose to

report and what they try to supress (Adams & Evans, 2004; Dey, 2003).


Process/Step of Surrogates-Driven Social Audit

The surrogates of NGOs construct and disclose NGOs’ social accounts independent

to NGOs. This thesis found that the process of construction of social accounts in

surrogates-driven method could also be similar to management-driven method; and

accounting social impacts of I/NGOs is also a regular phenomenon of some

surrogates such as government. In addition to construction and production of social

accounts related to NGOs by government, the researcher also found that the national

and international civil society, international government, national and international

commissions, national and international journalists and other related stakeholders

also construct the social accounts of NGOs directly and indirectly. For example,

while journalists adopt an investigative journalism method to construct social

accounts (J1), monitoring and evaluation method is generally used by some other

agencies such as government.

In the process, the surrogates used different tools such as focus group discussion,

interviews and observations within their methodology for assessing and then

constructing social accounts. For illustration, one district level journalist mentioned

how they report social accounts of NGOs. “I have reported both stories good and

bad from the field on NGO work that includes changes seen in individual life, and

wastage of money without any output, but involvement of corruption. NGOs also

intentionally want journalists to write success stories” (J1, District Reporter –

Kantipur Media). Journalists also use observation, interview, focal group discussion,

triangulating NGO accounts with government accounts, and so on to construct their

social accounts during their monitoring, field visits, and investigative journalism

(Journalists). Likewise, while social audit is conducted and a report is prepared by


the social auditor the government monitors and evaluates the work of NGOs.

However, social auditors’ independent report is hardly disclosed, and many social

accounts reports prepared by the regulator are not disclosed publically in the context

of Nepal. One illustration describes how government constructs social accounts.

They have been measuring the impact through process which is their main tool

of measurement. Number of beneficiaries participated in activities are their

achievements which is entirely a process of measurement. They only focus on

process but miss to evaluate the progress. Instead, they only assume the

progress on the basis of their achievement through the process. For example,

they assume the increased income of farmers after they participate in certain

trainings. The process oriented progress measuring tool is being critically seen

by SWC. We measure those issues through evaluations. The evaluations take

place a maximum of two times during their project period as 'mid-term' and

'final' evaluations. We also go for monitoring in different times, though we are

not being able to cover all of them. This is the only reliable way of seeing the

impact (SWC2 – Deputy Director).

During the discussion with surrogates, few methods/tools that are being used by them

were explored.

Central Project Advisory Committee (SWC1, SWC2, CG4): Central level

government body to monitor INGO work

District level Project Advisory committee (CG4): District level government body to

monitor INGO work

Project Facilitation committee to look at general and project agreement of INGOs

(C2)

Mid-term and final project evaluations (SWC2)

Donor monitoring (INGO1, NGO3)

Social audit and its reports (SA1, SA2)

Media reports (Journalists)


However, these methods of constructing social accounts may or may not be specific

to a particular organisation. The researcher scanned wider documents of these above

mentioned surrogates in different sources including national and international

newspaper to understand their side of social accounts – the shadow accounts. They

were found in newspapers, commissions report, international government report,

civil society report, and so on. Many of such reports are publically available and thus

they were used for this research. Social accounts available on those reports captured

by social auditing are discussed next.

Social Audit as a Tool to Capture Shadow Accounts

This thesis elaborated the anticipated social (impact) accounts captured through

management-driven social auditing process under section 4.3.1.4. Surrogates-driven

social audit also documented some of these social accounts complementing

management-driven social audits. However, surrogates-driven audit captured

primarily the shadow accounts of NGOs’ performance and accountability.

The shadow accounts appeared to question many social accounts documented by

NGOs. The shadow accounts from interviews with surrogates, and surrogates’

documents have critically interrogated the proclamation of NGOs on creating

changes in individual lives, the community and the country. In addition, they

critiqued on the claim of NGOs on their full accountability towards their

accountability holders and stakeholders. For example, shadow accounts depicted that

many interventions of NGOs are not driven by local needs of the country and they

are also captured by local elites; there is a lack of sustainable and significant changes


(impacts) in accountability holders’ lives, rather dependency has increased on local

and national level; and there is rampant corruption and practices of mis-utilisation of

funds among NGOs. Similarly, shadow accounts also revealed why NGOs’

interventions are unable to create expected changes, and stakeholders do not see

them as accountable. In particular, shadow accounts illustrated NGOs work is

creating disorder in the government system to make it weak, spending huge amounts

of money in their own salary and administrative costs, lacking transparency in their

operations, manipulating their social accounts extensively, missing balanced

approach in interventions, carrying hidden agenda and so on. The following

examples of accounts from surrogates and beneficiaries reveal the working approach

of NGOs and their impacts on the lives of people and the country, and therefore raise

a big concern on their accountability.

INGOs are heavily involved in policy corruption as they give some

consultancy work to government staff in policy level and through them they

influence policy as they want (J5). Indeed, Nepal still has not officially

calculated bad impacts of INGOs, actually they have already been too

dangerous (J3 – Regional Bureau Head, Kantipur).

The work of INGOs is somehow supporting partly for livelihoods, teaching

about rights and how to speak, but we have not seen and experienced the

significant and sustainable changes in our lives and community (All

beneficiaries).

They do not want to show such costs to their stakeholders and thus they are

skilfully presented (CG4 – Under Secretary, CG2 – Joint Secretary).

The summary of some major shadow accounts including their example quotes have

been presented in Table 5.4 below. These shadow accounts basically question the

claim of NGOs’ in creating changes and their accountability.


Table 5.4 Summary of major shadow accounts and their exampled quotes

Summary of some shadow accounts captured by audit

Example quotes

Not driven by local needs of the country and work of NGOs is captured by local elites

The major reason behind all this is that the organisations are donor driven. Rather than the need of government, its policies, procedures and focuses; the NGOs and INGOs seem being driven by the needs, policies and focus of their funding partners (CG4). Many projects come to villages targeting for we Dalit7, but they have not reached to us as local elites captured them’ (B10, B6, B9).

Lack of Sustainable development (impacts) and significant changes in people’s lives

I had done an impact study of an INGO where they invested NPR 50 million. After three months of project phases out, almost nothing was seen in the community (J3). NGOs also try to control people in the community asking to not involve in other NGOs and government programs, but when their project is about to finish then come to government offices to take over as part of their sustainability approach, obviously the work is not sustainable (LG6).

Creation of dependency

To talk in national level, we have reached in the situation that we are unable to develop our nation without the support from foreign agencies. The situation also indicates that the government is not able to do anything without the NGOs and INGOs. .. The same system has reached to remote villages as well. Therefore, the dependency has been created from the grass root level to national level. This is something like a person seeking the provider NGOs for travel expenses before getting to have his citizenship made (CG5). We were a food sufficient country. When Donors (including INGO) started distributing foods, our productivity went down. Now we are entirely dependent on food from outside (J4).

Corruption, mismanagement and mis-utilisation of funds

Few houses were built after earthquake and INGO said they spent NPR 1million for each house. But the house real cost would be only around 10,000, and person cannot stay in this house during winter (J2, J4). We are told that the drinking water project has NPR 4.2 million budget. Finally, the community got 0.7 million, and we asked rest of the money then the NGO said, “we use for helicopter” (B4).

Weakening government mechanism to play as a powerful entity

INGOs think that they are the ‘government’ and government is under them in Nepal (J5).

High profile salary and very higher percentage of overhead cost

The main reason is that the consultancy, logistic management and staffing costs are very high in Nepalese context. If you show the real payment of any of your employees in the communities, they will be burst. This is because the communities get only knowledge and skill sharing but not the cash counts. If you show the real figure of the payment of your employees, neither the communities nor the district level line agencies will allow you to enter inside. This reality has somewhat caused the NGOs and INGOs in being opaque in Nepalese context. This is my experience of directly working in the sector for past 16 years. They often show in block the 'human resource cost' but are very reluctant to provide in unit basis (SWC2).

Very In-transparent approach of operations

It is reckless to talk of transparency by them who are themselves in opacity. The NGO runners are mostly found from same family and clans where their major purpose seems to fulfill their needs through donor tracking and fund digesting. Talking of transparency by them is just pageantry (CG5). One NGO presented NPR 6 million annual budget only for gender violence issues in the district. As a district office responsible for women and children, I

7 Lower caste and so called untouchable people in the society


came to know on the same day that NGO also works for gender issues (LG5). No balanced approach: only focused on rights but no duties

Their projects are only based on demand generation rather than supply. For example in western Nepal, the slavery has been eradicated. But if you see the life status of freed slaves now, you will find them in worse condition – not having land, no job access in the market, no proper food, no clothes. This will ultimately push them towards criminal and illegal activities for their survival. What I mean to clarify is that the NGO/INGOs should also focus their activities on supply side (SWC2).

Human rights violations by INGOs themselves

INGOs have been found in violating human rights. It is not during the working process but there are several examples of knowing it after their interventions were over (C1).

Carrying hidden agenda

I sometimes feel the nexus between world traders and NGO/INGOs in distorting existing local systems and entering hybrid seeds instead of local seeds especially in agro-production mechanism (SWC2). On the contrary, INGOs are international organisations and they are here not only with their social development agendas but their hidden interest may come along (CSO1, J5).

Huge gap of impact accounts on disclosures and on the grounds

My observation has shown that around 75% progress that has been shown in the documents during social auditing is fake (SA2). Once I participated district council meeting on behalf of village. NGOs also present their work in the meeting. One NGO presented showing many progress (changes) they have made in my village, but I have never seen that NGO working in our community (B5).

Unending cycle of the work/project

When asking about some negative evidences they present as proposal to their donors, they often say that their donors won't give them money if they present all positive thing (CG4). In the case of Nepal, it should learn from the past six decades of aid management as we enter the new round of aid packages coming in as “climate change” (Ojha, 2013).

Setting, influencing, manipulating and capturing whole operations including social accounts

Everything is carefully planned and operated to control and manipulate as they need including management of stakeholders (Most stakeholders).

Interestingly, above key shadow accounts did not only challenge NGOs’

performance and accountability, but also revealed the in-depth and undisclosed

influences and probably the motives of operations. Specifically, working to weaken

government mechanism (CG5), creating dependency, adopting approaches in which

people are taught rights but not duties (J2), focusing on demand based projects

(SWC2), not showing hidden agenda of operations (CSO1, J5) etc. might be

supportive to neo-liberal agenda, and NGOlisation of the country. Stakeholders

understand that such approaches are intentionally adopted by big international NGOs

for ‘neo-liberalism and NGOlisation’ of the country in which donors empower

INGOs and NGOs to act against government. Because of this, the country has moved


towards NGOism in which social movement is NGOlised and therefore free social

movement has already been killed in Nepal (J3), and the numbers of people in need

and their reach to services are inflated so that they can demand and demonstrate their

larger share of the national cake or donor funds (Xaba, 2014). The Deputy Director

of SWC expressed:

I sometimes feel the nexus between world traders and NGO/INGOs in

distorting existing local systems and entering hybrid seeds instead of local

seeds especially in agro-production mechanism (SWC2).

Other stakeholders also opined their experiences on how the operations of NGOs

support neo-liberal agenda and NGOlisation, and thus standard accountability

mechanism fails to create change and accountability. A beneficiaries’ group is

formed in the community and NGOs seem to do something targeting the social

auditing process, and the group or fixed number of people are taught and asked to

speak for good things only (J1, J5, J3). Now these people have learnt if somebody

comes to the village and asks about whether NGOs are doing good work then “we

have to say yes” (LG5). Likewise, when a small support is provided to a beneficiary

who has been doing potato farming for decades, then INGOs make a story out of it

claiming the beneficiary success is due to their intervention (J1). Such practices also

revealed the huge gap of impact accounts on disclosures and on the grounds. Now

neither political parties nor government functions in Nepal without the support from

NGOs (J3, C5); and if government works to control corruption in the sector, the

donors of NGOs (for example, embassies) use diplomatic pressure not to take action

(CG2 –Under Secretary, Central government). Similarly, there is a sharp critical

view of stakeholders regarding transparency of NGOs. This would suggest that


I/NGOs are very reluctant to provide information to their beneficiaries and

stakeholders about their overall operations, meeting community and stakeholders

expectations (standards), which questions the information they disseminate to

accountability holders about their compliances on standards. Hence, the standard

accountability mechanism as interpreted by INGOs is not functioning for creating

changes and accountability.

Surrogates-Driven Social Audit as a Tool to Create Pressure and Accountability within NGOs

“There is a saying that the more strictly we are watched, the better we behave”

(Manandhar, 2012). In the same way, the surrogates-driven social auditing appears to

be playing a role of watchdog to create pressure and accountability within the NGO

sector in Nepal. Generally, both types of social auditing: the management-driven and

surrogates-driven, have the potential to create pressure and accountability, but their

degree obviously would be different. Questioning NGOs by stakeholders during

social auditing, through complaints and feedback during project assessments would

make them responsible in some extent though final social accounts are generally

controlled by them. Particularly, the surrogates-driven audit, seems to be creating

more pressure in the sector to change their behaviour for better social accounting and

accountability.

For example, naming is shaming and thus when social accounts of NGOs are

published through newspapers and any other means, they felt pressure.

Consequently, they are expected to respond on those pressures which make them

accountable. Some accounts have been presented in Table 5.5 which gives a good


illustration of how surrogates-driven social audit exerts pressure to the NGO sector

so that they had to defend themselves by producing counter accounts.

Table 5.5 Examples accounts showing how social audit create pressure and

accountability within NGO sector

Shadow accounts on INGO’s work

AIN counter (defensive) accounts in response to shadow accounts

A national daily published article ‘Is Development itself the cause of Nepal’s problems?’ By Dr. Jeremy Rappley

Aid is not magic and rather plays an important role in supporting and completing local endeavours. It has proved to be somewhat effective in the promotion of human development, education and health (Galimberti & Rai, 2011).

‘Politics of aid’ in Nepali Times By Rabin Subedi

AIN members are guided by internationally defined principles and standards of human rights, and we abide our code of conduct based on principles of transparency and accountability, non-political party partisanship, legal compliance, performance oriented culture (Rai, 2010a).

‘Spendthrift donors’ in Kathmandu Post By Rajesh Paudel

INGOs are considered as donors in the extent that they raise funds for projects in Nepal, but they are a different and distinct category from bilateral donors who primarily fund projects. Hardly anyone talks of the contributions INGOs have made to this country but many are quick to criticise (Rai, 2010b).

Is Surrogates-Driven Audit Really Helpful to Create Change?

As discussed above, when surrogates raise their voices through different forms, they

would create a pressure to NGOs. Especially when their names are involved, they

tend to become more serious about it and as a result organisations respond to the

voices. The following illustrations demonstrate how surrogates-driven audit creates

changes.

Surrogates shared that the shadow accounts produced by them have positive effects

in creating changes and accountability among NGOs in Nepal. For instance, media

does focus on reporting of NGOs’ work, and they have seen effects of their


reporting. “Because of our reporting some projects of INGOs have been returned

from the community as they were not suitable in our context and for the community

they were working for” (J3 – Business Head, Nepal Republic Media). Another top

Journalist (J4 – Editor, Kantipur publications) shared his experience.

INGOs have been more complicated than the past in Nepal, hence we media and

other stakeholders started scrutinising them and questioning them. As a result, they

appear to be sensitive now. When WFP together with INGO distributed rotten food

to people after earthquake, actually media was the primary one who created

problems for WFP in their working approach publishing news including picture of

rotten food. Wider media challenged WFP operations, which created pressure to

them to be accountable towards people though they try to hide everything.

Similarly, when a freelance writer for a newspaper wrote about an organisation

regarding their work and performance, instantly the relevant organisations including

those who were funding the project responded on his writing. The freelance writer

writes of his experience, “In response to a writing in the newspaper on issues on the

work of donor, one of the embassies called for a meeting and informed me that I was

simply making a mountain out of a molehill” (Manandhar, 2012).

Finally, Adhikari et al. (2016) explained a case, which also was touched by the

journalist above, in Nepal after the earthquake. When Nepal was hit by two bigger

earthquakes on and after the 25th of April 2015, many INGOs and bilateral agencies

rushed to respond to the disaster victims. In the response, World Food Program

(WFP) and Save the Children were allegedly distributing rotten food to the victims.

There was a huge concern from surrogates over rotten food distribution as WFP


earthquake responses’ social accounts were made public by NHRC through its

monitoring report, by media through broadcasting on TV and radios, by journalists

publishing in the national broadsheets, by other people through social media. As a

result, government started to investigate the issues through which government also

got involved. Then, WFP responded when they had huge pressure from stakeholders

questioning their accountability in operations. Finally, WFP returned distributed food

and destroyed it although they attempted a few times to deny the distributed rotten

food was from WFP, the food reached its distribution point but was not distributed to

victims and so on. Actually, WFP itself had conducted social auditing through its

own investigation and social accounts also were released for the public. These

accounts claimed that food was of good quality, the distributed food was not from

WFP and so on. This case suggests that management-driven and stakeholders-driven

social auditing had completely contradictory social accounts, but external social audit

only could create change.

These examples show that surrogates-driven social audit retains the capacity to create

change over management-driven social audit. The next section undertakes the

comparative analysis of management-driven social audit and surrogates-driven social

audit.

5.5 COMPARATIVE ANALYSIS OF MANGEMENT-DRIVEN AND SURROGATES-DRIVEN SOCIAL AUDIT

Under sections 5.3 and 5.4, the thesis analysed management-driven social audit and

surrogates-driven social audit. The former was internal social audit primarily driven

by NGOs whereas the latter was independent social audit driven by surrogates, and is


the voices of stakeholders from the public side. Both social audits gave rise to social

accounts of NGOs. While management-driven social audit was open to many

criticisms, surrogates-driven social audit appeared as a catalyst for real change. Now,

this study comparatively analyses the social accounts produced from both audits. The

discussion also focuses on why management-driven social audit failed to

demonstrate standard accountability as per claim, and why surrogate accountability

seemed the best option for accountability of NGOs in Nepal.

NGO Constructed Social Accounts and Surrogates Constructed Shadow Accounts

5.5.1.1 Social Accounts of NGOs’ Under the Study and their Shadow Accounts

The findings on social accounts produced by NGOs and their shadow accounts

produced by surrogates show much inconsistencies with each other. NGO driven

social accounts are generally positive changes brought by them and their full

accountability towards stakeholders, whereas shadow accounts are quite critical of

NGOs’ social accounts and their accountability. Table 5.6 compares the social

accounts produced by sampled INGOs such as Oxfam, World Vision; and their

shadow accounts produced by surrogates. Anticipated social accounts are constructed

primarily by INGOs within the perceived notion of standard accountability

mechanism; and their shadow accounts primarily are constructed by stakeholders

questioning on INGOs’ perceived standard accountability mechanism. While INGO

constructed social accounts claim full accountability and transparency in their

operations, surrogates have questioned their claim demonstrating proof and

examples. Specifically, NGOs have produced narrative discourses claiming their full


accountability, proper method for impact/change accounting, huge impacts where

they are intervening, extensive stakeholders’ engagement, efficient and transparent

operations, and so on. However, surrogates have questioned each aspect of their

narratives.

Table 5.6 Examples of social accounts produced by sampled INGOs and their

shadow accounts

Organis-ation

Social (impact) accounts by sampled INGOs

Shadow accounts by surrogates

Oxfam Accountability Making power wielder accountable

Oxfam is primarily accountable to people living in poverty but we take our accountability to all stakeholders seriously and continuously strive to balance the needs of different stakeholders. These include partners and allies, staff and volunteers, donors and supporters, coalitions and alliances, suppliers, governments, the private sector, academic institutions and the wider public (Oxfam, 2012). In our humanitarian, development and campaigning work, we aim to help people in poverty to know and demand their rights, and to hold to account those in power (Oxfam, 2013a).

….CARE Nepal, Oxfam and Save the Children's spending in Dhading supports Troutman's example. According to a report in Kantipur daily, they are spending money like water-they pay as much as Rs 60, 000 in monthly rent for a house that was earlier rented for Rs 8, 000 a month and seven times the normal transportation fares. Most of what happens within these agencies-such as …Oxfam….how most things they do is limited to paperwork, how only staffs benefit from grants and assistance-remain hidden. INGOs are often manned by privileged people who are often critical of the government but defend their position or stay quiet for fear of losing their privilege (Paudyal, 2015).

Oxfam Instant impact assessment

Real time evaluation: Our campaigns work to a six monthly reporting timeline, with continual monitoring of key issues and real-time evaluations of short-term projects and events (Oxfam, 2013a).

In Dhading, rice saplings provided by Oxfam ….has begun to rot. In the long run, the government should form an independent agricultural authority to monitor and hold organisations that dupe farmers accountable (Editorial-Desk, 2015).

Oxfam Extensive Stakeholders engagement

We believe that stakeholder engagement and feedback can inform our work and bolster our efforts towards greater impact and efficiency. In all our work, we identify key stakeholders at the planning stage and engage them throughout the program cycle to ensure that their views and contributions are taken into account. Listening to stakeholders is done through: uniting globally, connecting with supporters, engaging with governments and institutions, fostering collaboration in the NGO sector, encouraging feedback (Oxfam, 2011).

We have been informed that various organisations including Oxfam are working [in the affected areas] but nothing has been reported to us. Nor have people shared much about their support. Even those agencies working in cluster have not informed the government about the money spent for earthquake survivors, according to officials (The-Kathmandu-Post, 2016). Minister for Agricultural Development (MoAD) Hari Parajuli expressed reservation over Oxfam and Save the Children distributing seeds to the farmers without proper consultation and approval from the concerned ministry (The-Kathmandu-Post, 2015).

Oxfam Proof of impact through assessme

External evaluation of the RHV project confirmed that projects are most successful (Oxfam, 2014).

All their (..Oxfam,….) activities taken together must surely save the world from hunger, malnutrition, ….that prevent the rest of us from becoming just like the best of the West. Unfortunately, that is not the case; despite all their activities taken together, utopia has not arrived.


nt There is an inverse correlation between the proliferation of NGOs in Nepal and the state of the country (Siwakoti, 2012).

Oxfam Very efficient work due to feedback

We believe that stakeholder engagement and feedback can inform our work and bolster our efforts towards greater impact and efficiency (Oxfam, 2013).

Private houses for rent have been expensive by five times. Oxfam has rented a 7 rooms house in Haramatari by paying Rs. 70,000 per month. Sitaram Shrestha said, “now land lord does not have to quote rent, I/NGOs themselves come and say, we are ready to provide this much” (Kantipur, 2015).

World Vision Commitment to accountability & transparency

As we move forward, World Vision International Nepal renews its commitment to uphold the principles of transparency and accountability in our efforts to ensure vulnerable children receive fullness of life (WVI Nepal, 2013).

Though existing provision require importers to specify the place, where the relief material is to be distributed, to enjoy duty waiver, most of the importers have not furnished such details. Kenya based D Light Kenya alone has sent 16,750 solar lights in the name of Nepal Freight Forwarder Association (NFFA) and World Vision International (Paudel, 2015)

World Vision Greater impact

We have greater emphasis on accountability, and we are more focused on the impact of our work (WVI Nepal, 2014).

An INGO that has been working in Lamjung for 15 years is preaching about Christianity in the name of helping earthquake victims. World Vision, is preaching even though they have been instructed not to do it by local government (Adhikari, 2015)

World Vision Impact on child protection

WVIN has successfully strengthened local government systems for child protection, building capacity of child protection committees, building awareness in the community and then linking the two (WVI-Nepal, 2014b).

In 2011 and in 2012, Nepal made a minimal advancement in efforts to eliminate the worst forms of child labour (USDLBILA, 2011, 2012).

Oxfam and UMN Accountability and proof of impact

But government does want evidence of an impact on the community’ (Booth, 2009).

Fourteen INGOs…………….. , INF ….and World Vision International have reported to the government last year, according to the finance ministry. He further told Republica that the government is going to force the INGOs to report about their programs and budget (Ghimire & Acharya, 2014).

Oxfam and World Vision Accountability and impact

We have a greater emphasis on accountability, .. focus on increased accountability to the communities in which we work. World Vision has been using a framework called Program Accountability Framework (PAF) to demonstrate its accountability to stakeholders (WVI Nepal, 2014). Strengthened accountability contributes to greater impact (Oxfam, 2013).

She said, they gave us very bad shampoo which is causing hair fall. A staff from office of Drinking Water Supply and Sanitation also said the hygiene and sanitation stuffs given by Oxfam and World Vision have been useless. These stuffs are soap, brush, toothpaste, shampoo and so on. He further said, the toothbrushes are like roots of bamboos, bad smelling toothpaste, soap and shampoo that do not give lather have been useless (Kaini, 2016).

5.5.1.2 NGOs’ Industry Level Social Accounts and Their Shadow Accounts

In addition to social accounts of sampled organisations, this research also examined

social accounts of INGOs in industry level represented by Association of INGOs in

Nepal (AIN) and NGO Federation of Nepal. The industry level social accounts were


compared with social accounts produced by national level civil society organisations

and commissions of Nepal; international civil society organisations, commissions

and government; independent authors who write for newspapers; and national and

international journalists. Although thousands of social accounts produced by these

surrogates were identified, some of them have been presented for illustration here.

Table 5.7 compares the social accounts produced in industry level and their shadow

accounts produced by national civil society and commissions. While industry level

social accounts focused on extensive stakeholders engagement in the process, high

level of transparency in the operations, significant investment for impact creation and

empowerment; social accounts produced by surrogates appeared to be critical of

these narratives.

Table 5.7 Social accounts produced in industry level and their shadow accounts by

National Civil Society Organisations and Commissions

Social accounts produced by AIN Shadow accounts by national civil society and

commissions Stakeholders engagement and transparency We ensure that our assistance is transparent and we involve poor people and their communities in the planning, management and implementation of programmes. We are accountable to those whom we seek to assist and to those providing the resources (AIN, 2007).

There is significant discrepancy between the information provided by project/district offices and beneficiaries. Inquiry on foreign aid and project information was very minimal at district level. None of the agencies provided complete budgetary information. Hence, all agencies have failed on their claim that they were transparent and accountable. Knowledge level on Aid Transparency and Accountability (ATA) amongst heads of district/project offices seems very low. The project beneficiaries do not seem to have any knowledge on ATA at all (FF, 2012). Serious questions have often been raised at the justification of their programs, the funding source and the acquisition of funding, transparency in mobilization of funding and the accountability of these institutions (Commission for the Investigation of Abuse and Authority (CIAA, 2016, p.34).

Investment for/and Impact Over the years, INGOs have played a crucial role in Nepal’s development ……typically focused on addressing the needs and rights of poor and marginalized citizens. Member INGOs have budgeted more than 22 billion rupees to invest in the

INGOs are sending report mentioning there has been good changes in socio-economic, education and political condition of people living in Karnali region. But the life status of people has gone far down, and the region has been good marketing and saleable products for INGOs (Bam, n.d).


development of Nepal through the local partners i.e. NGOs, CBOs and governmental agencies. INGOs as a whole provide approximately 8 to 10% of Nepal’s total foreign aid budget (AIN, 2014).

Similarly, huge portion of foreign aid is being spent through NGOs; but expected benefits have not been achieved. Due to lack of effectiveness of NGO monitoring agencies, the activities of NGOs working in the field of national priority are not found to be transparent and accountable (CIAA, 2015).

Partnership and empowerment Grounded in civil society: we honestly aim to represent and respect the interests of the members of civil society we work with and they actively participate in the development, implementation and evaluation of our programs. Longer term partnerships: to assist communities and organisations develop their capabilities to improve the implementation and sustainability of their programs (AIN, 2008).

We are concerned over rumours regarding international aid flow violating mandates especially by minimising the roles of the local organisations regarding supply and distribution of relief support to the affected communities (National Civil society forum (NCFS, 2015).

Similarly, Table 5.8 demonstrates the social accounts produced in industry level and

their shadow accounts produced by international government, civil society and

commissions. While social accounts in industry level strongly demonstrate their

commitment on preventing corruption, bringing impact, high level of coordination

with stakeholders and ensuring effectiveness of the work; international stakeholders

have questioned such disclosures.


international government, civil society and commissions

Social (impact) accounts by and in AIN disclosures

Shadow accounts by International government, civil society and commission

Corruption is unacceptable Point 8 is a ‘catch-all’ guideline; if our staff are pressured to do things that we consider unethical or contrary to the BOGs (e.g., engage in corrupt practices or provide information or resources to others), this is considered unacceptable and may lead to the suspension of activities or of the project altogether (AIN, 2007)8.

In Nepal “disappointingly, we found that at least one programme supported by DFID appears to have increased the opportunities for corruption in society9”(ICAI, 2014), p. 22). Regarding corrupt institutions, the GCB mentioned political parties as the most corrupted (77%). They are followed by the public officials/civil servants (66%) ……..NGOs (20%) (TIN, 2014). The CIAA prioritised cases of wealth accumulation, banking fraud, tax evasion and financial irregularity in

8 The basic operating guidelines: a guide for practitioners and signatories. Both AIN and bilateral agencies such as DFID are signatories. 9 DFID also works through INGO, NGOs and government.


NGOs/ INGOs in June, 2013 (TIN, 2014). Impact of the project CECI Nepal signed the second phase of the Program for Accountability in Nepal entitled “MDTF/PRAN2” on 03 July 2015 (CECI-AIN, 2015).

On the survey to look at effectiveness of Program on Accountability in Nepal (PRAN), social accountability project, revealed non-PRAN districts (control group) to be much more aware of their rights as against PRAN operated districts (experimental groups) (ICAI, 2014).

Coordination and avoidance of duplication The BOGs signatories work in coordination with the Government of Nepal and fully respect its regulations and work (AIN, 2007). Creating an environment for coordination and collaboration among members’ activities to establish synergies in the health efforts and avoid unnecessary duplication and overlapping (AIN, n.d).

This space to enable transparency, idea sharing and collective action is particularly valuable in Nepal, where NGOs are often criticised for their lack of coordination and duplication of work (Accountabilitylab, 2015).

Effectiveness and accountability Part 2, which explains the four fundamental principles that underpin the BOGs (accountability, transparency, impartiality and inclusiveness). We must ensure that we engage all potential actors in dialogue to make sure that they have the chance to express their point of view. This reduces the likelihood of conflict and increases the security of staff and effectiveness of our support (AIN, 2007).

Where does the money go? If you donated a dollar to Nepal, your money may or may not even go to Nepal. The Disaster Accountability Project recently conducted a survey of organisations soliciting donations for Nepal and found that one in ten organisations won’t guarantee where the money will go. For example, the appeal for donations from ShelterBox, a charity based in Cornwall, England, includes a lot of photos of Nepal, but the donations don’t necessarily go to there (Troutman, 2015).

Likewise, Table 5.9 compares the social accounts of INGOs in industry level and

their shadow accounts produced by authors who write for a newspaper. AIN social

accounts is depicting their plan for climate change intervention, role of INGOs for

significant country development, and their zero tolerance approach for corruption

whereas their shadow accounts raise concerns including how illiterate women can

understand the mastery language of their development, need for corruption audit

among INGOs, and very unsatisfactory performance of INGOs.


authors who write for newspapers

Social accounts by and in AIN disclosures

Shadow accounts by other authors who write for newspapers

Climate change intervention plan AIN climate change task force workshop discussed as: Post 2012 on Adaptation:

“No one knows what the NAPA is, ‘said by a grassroots women’s representative at a roundtable organised in Kathmandu to take stock of the implementation status of the National Adaption


..Funding the immediate needs of the LDCs, NAPAs must be funded (app 2 billion) to build trust

Community based Adaptation (Capacity Building) on rain water harvesting, deep irrigation, check dams, forest fire, agriculture practice between forest (AIN, 2009).

Program of Action (NAPA)” (Ojha, 2013). Many women from the marginalised groups can barely articulate themselves in Nepali. How can they even begin to compete with those who have mastered the language of donors (Ghale, 2016)?

Zero tolerance for corruption Our patience with inefficiency and interference is limited and we have zero tolerance for corruption (AIN, 2007).

Among NGOs…..I see the necessity of corruption audit – an audit different from the regular official audit rather focuses on the impact of the projects in the society, an audit that is conducted in the field, an audit conducted by locals (Rayamajhi, 2015).

Significant role for country development Foreign aid has played a crucial role towards fulfilling the Nepalese aspirations of development and also strengthening the balance of payments situation of the country (AIN, 2005).

The contributions of the NGOs and INGOs have been largely unsatisfactory, and studies on the impact of the works of these agencies on the poverty stricken communities are not carried out in the country. Regulation of INGO has to be done strictly implementing the one window system (Karki, 2016).

In the same way, the comparison also was done between accounts produced in

industry level, and their shadow accounts produced by national and international

journalists. The social accounts from national journalists on INGOs seem to be a

regular phenomenon in the case of Nepal as many such accounts are often seen in

national broadsheets. However, the researcher has considered only a couple of them

for illustrations. While continuing to claim commitment to transparency,

accountability and government regulations, as well as higher percentage of budget to

beneficiaries by INGOs and their association; shadow accounts showed that a very

minimum percentage of the budget goes to beneficiaries, local government had to

take an action against INGOs due to their noncompliance on very basic requirement.

Table 5.10 summarised those accounts.

Table 5.10 Examples of social accounts produced by sampled organisations and in

industry level and their shadow accounts by national and international journalists10

10 Note: Hundreds of social accounts in industry level and their shadow accounts by national journalists can be presented. However, just few examples only have been demonstrated.


Social accounts by and in AIN disclosures Shadow accounts by national and

international journalists Commitment to transparency and accountability AIN, on behalf of its INGO members, commits to be transparent and accountable for the allocation and spending of their resources in the recovery and reconstruction work (AIN, 2015).

During the recent relief response to the Nepal earthquake, aid agencies faced a slew of stories in the international media calling for clarity about where the money was going in a country where corruption is said to be “endemic” (Clarke, 2015).

High percentage of budget goes to beneficiaries The annual report of world vision for example shows 5% is administration cost, 11% is fund raising cost and rest goes to humanitarian work out of 2.8 billion USD. Similarly Oxfam 2014-15 Annual report reports that 70% is program cost (intending that it goes to beneficiaries) (Oxfam, 2015; WV-International, 2015).

At present, only 0.2% of humanitarian aid goes directly to local and national non-government agencies and civil society organisations, out of an estimated budget of $24.5bn (£17bn) (Mosselmans, 2016).

Complying government regulations and notifications We are also working closely with the government and the Centre Child Welfare Board to monitor women and children at risk of trafficking. This assistance is provided in close coordination with DDRCs and clusters led by government authorities in all affected districts to ensure accountability, transparency and compliance with government notifications and regulations (AIN, 2015).

The local district administration of Nepal government has banned INGOs in the district to participate in the district level disaster relief committee meeting as they did not submit relief report to government though the report has been asked for seven times (Rathaur, 2016).

Finally, the study also carried out a comprehensive comparison of social accounts of

INGOs and their surrogates, including their beneficiaries, extracting the accounts

from in-depth interviews. As part of rigorous analysis, the accounts were compared

with a minimum of two different groups: government, and other surrogates, which

includes civil society, social auditor, commissions etc. While INGOs and their

associations tried to fully demonstrate their social accounts on how they ensure rights

and empowerment of people, reducing poverty of the country from 56% to 23% (the

overall impact/changes), complete accountability towards beneficiaries, and

extensive stakeholders engagement through participatory approach; surrogates

completely challenged on the claim of their social accounts with examples and

proofs. The accountability holders (though the following table did not show it)

expressed that despite certain livelihood support for few months, NGOs’ intervention

has not reduced poverty, and brought many changes – if there are – they are not


sustainable in the villages (For example, B1 & B2). Similarly, government accounts

claimed instead of bringing 100% impact in the communities according to

investment, they are roughly bringing 20%. Civil society and journalists simply

challenged the claim on poverty reduction from 56% to 23%, rather they spoke with

the proof that the poverty reduction is due to inflow of a huge amount of remittance.

The summary of comparative accounts discussed above is presented in Table 5.11

below.

Table 5.11 Comparing examples of social accounts of sampled INGOs & their

associations, and their shadow accounts

INGOs’ accounts Government accounts Other surrogates Rights and empowerment Stakeholders viewed our significant impact on child rights, women rights and education. Women have been empowered a lot and few have been the member of parliament as well (NGO1). The biggest achievement is women empowerment. And there is reduced number of malnourished children, and families are food secured (INGO4).

My experience says their real positive impact is not more than 20% (compared to 100% investment) (LG1)

Many times the commission does not agree with the reports (human rights, child rights, women rights reports produced by INGOs), ... past experiences have enabled us in thinking from that angle. Many times the reports are found different from the reality (C1). Ethical conflict is due to INGO in the name of community empowerment. Social fabric has been damaged by them so ethnical issues have come up which is causing instability in the country (J2).

Overall impact/changes You can see the contribution of NGOs inside it. When compared to 1990s the poverty has been reduced to be in 23% from 56%. This is the evidence of impact (NGOF). Rehabilitation of women drug users, success rate is 60% which is great impact (NGO2).

There are more than 40,000 NGOs and around 250 INGOs, but where is the impact of change they claim for? If they could have brought a single change each, there would be 40,250 changes at a time. .. Their social services are stuck to the funding they receive, otherwise they even don't aware their neighbourhoods (CG5). We wish to see the beneficiaries been graduated from their poverty level ….But we are not seeing this in any level of their indicators. .. I have appraised

The fact is that the NGOs report of 10 times more than they really did but opposite is the case with what the commission does. Many of them have found taking ownership of the success of this commission and revealing to mass media as their success (C1). Our experience is around 95% impact they report is just for the sake of report without having any impact in communities (J1). It seems with good outcome in papers, but the ground reality differs a lot (CSO1).


around 1600 projects in my working life … But I could not see such type of impact in any of them. (SWC2). But the reality is that there is very less visible evidence to show the impact. It is somewhat confusing as a whole (CG4).

They say awareness has gone up, poverty has gone down, many more children are going to school and so on. But they have happened due to remittance, not due to the work of INGOs. We have a study and proof. They are just taking credit (J2).

Accountability What I want to sum up is the condemnation over NGOs not being logical is not real to many extents. The NGOs have been conducting social audits, public audits and making their reports public in periodical manner. (NGOF). People saying INGOs are not accountable to government. That is not true. We have agreements, .. have midterm and final evaluations, .. we submit our audit statements to tax office (INGO2). We have very good accountability system as we are scrutinised by three different entities: local country government, head office and donors (AIN).

My understanding and the reality is that they work less and write a lot. I don't want to indicate that their roles are unimportant but alongside, there is always suspicion over their accountability, transparency and good governance (CG5). Many INGOs in the district are implementing project, and some of them coordinate with us but we local government even do not know many of them (LG4).

Well, the commission does not fully accept and rely on such reports. … For example, some incidents occurred in some places. The reports produced by NGOs seem many times leaned to protect their followers, are biased to some extent and are to keep them on safe side (C1, Secretary-NHRC). I did not want to participate in such activities except some counted ones. The reason is that there is no space for neutral opinions (CSO1). Some of them even have good governance, advocacy, transparency and accountability project and ask government and others to be accountable but they themselves are quite far (J1).

Stakeholders engagement Our responsibility is only to support the government in addressing its priority issues. The plan reaches to us after passing through 14 different processes (NGOF). And within those areas we have a very wide coverage of work to respond to community’s priorities (INGO2).

The NGOs have been identifying the issues by themselves and addressing them (LG1). What I want to conclude is that the donors should be approached only after having approval of SWC on detailed activities for addressing real need of communities (SWC1).

This is the development process. If they do not reveal their reports like this (bottom up approach and the changes were possible only with the participation of communities), they will stop getting fund from their donors (CSO1). Project should start from designing in the community. Bottom up approach should be applied. All approaches are top down now. We feel that INGOs are more bureaucratic and their report is so perfect they include everything in saying bottom up approach (J2).

Hence, the comparison of management-driven and surrogates-driven social audits

and resulted accounts of NGOs in Nepal are simply communicating that it is

absolutely difficult for stakeholders to rely on social accounts produced by NGOs. It

is because many social accounts produced by them are challenged by their


surrogates. The next section further looks at the gap between management-driven

social auditing and surrogates-driven social audit.

(Expectation) Gap Between Management-Driven and Surrogates-Driven Social Audit

Most of the social accounts analysed above have clearly shown the enormous

tensions, contradictions, and differences between social accounts produced through

management-driven social audits and surrogates-driven social audits. The surrogates-

driven social accounts seemed to acknowledge the impacts/changes made by INGOs

primarily in the community awareness and empowerment, increasing sanitation and

hygiene, and positive role in supporting democracy in the country. However, other

social accounts discoursed by INGOs in Nepal have been directly challenged by the

surrogates. Having shown gaps in social accounts, the analysis also portrays that

there is a profound gap between management-driven social audit and surrogates-

driven social audit. For example, according to interviews with CEOs of INGOs and

their disclosures, management-driven social auditing is undertaken for:

Improving organisation services and performance (NGO2, INGO1, NGO3,

INGO2)

Making NGOs responsible for overall accountability (INGO2, NGO1, NGO3,

INGO4; UMN, 2012; ACN, 2016)

Preparing and assessing organisation vision, mission, strategy and policy

(INGO1, NGO2; UMN, 2010; UMN, 2009)

Improving transparency and enhancing community trust (INGO2, NGO1,

NGO3, NGOF; UMN, 2011)

Impact measurement and its process (WVI Nepal, 2014; NGO1, NGO2,

NGO3)

Publicity, credibility and recognition (INGO1, INGO2, NGO1)

Donor and other compliances (INGO1, INGO2)


Good governance of organisations (NGO1, NGO2; UMN, 2011)

Measuring beneficiary satisfaction (NGO1)

Providing assurance of effectiveness or as assurer (NGO1, NGO3, INGO2)

Improving community and government accountability (WVI Nepal, 2014)

On the other hand, surrogates view that INGOs are undertaking social auditing

neither for improving organisation performance and impact measurement of their

work, nor for assessing their mission vision and own accountability. They express

that it is done just to be seen as transparent and accountable (CG1, CSO1, SA2, J1,),

which they call rhetoric transparency (SWC2), for publicity (LG2, LG5, LG6) or to

appear good in front of stakeholders (CSO1, LG5) and to claim the changes they

have made (CG1, LG4), for compliances such as donor and reporting (LG1, CG1,

SA1, SA2, LG5), and as a tool of good governance to attract money (LG4, LG5).

Even though surrogates would prefer to see social auditing done in reality as they

have claimed for different purposes in their disclosures and during interviews; they

have not seen them in practice. Thus there is a significant gap between management-

driven social auditing and surrogates-driven social auditing. In this context,

surrogates hardly believe that NGOs’ social auditing practices are supportive for

creating changes and accountability. This thesis analyses, in the next section,

whether surrogates-driven social auditing facilitates for changes and accountability.

Does Surrogates-Driven Social Audit Facilitate to Create Change?

5.5.3.1 Accountability Standards, Their Compliance Information and Sanctions

Briefly, in section 4.3.2.5, there was discussion on how surrogates-driven auditing

retains the capacity to create changes. In addition to this, hundreds of social accounts


depicted above contain both anticipated social accounts primarily constructed by

NGOs, and unanticipated social accounts (shadow accounts) produced generally by

surrogates. Among those social accounts, there were many expectations of

beneficiaries and other stakeholders from NGOs, as well as several commitments

from NGOs in order to create changes/impact from their operations, and therefore

accountability. Now these expectations from stakeholders and commitments of

NGOs together with their working practices, this study analyses the accountability

mechanism of NGOs in light of standard accountability and surrogate accountability

notion and their components: standard, information and sanction; and looks at how

standard accountability seems to fail to create changes, and how surrogate

accountability is facilitating for real change and accountability.

On the basis of social accounts discussed above, the standards for INGOs generally

can be viewed in three levels: minimum regulatory standard, surrogates expectations’

standard, and international working standards and principles. These standards,

including compliance report and their verification from third party, have been

presented in the table below for illustration.

Table 5.12. Minimum standard for NGOs, their compliances, third party verification

on compliance, and response of accountability holders in (non)compliance.

Standard Information on compliance (Example)

Third party verification Sanction

Regulatory standard examples


5-year plan agreement to SWC

Only 20-25% admin and overhead costs Regular report submission to government including local government

Local government bottom up planning approach SWC and ministry guideline on social auditing

We register with SWC, and 5-year agreement with SWC. That’s our legal centres in Nepal (INGO2). No compliance information Government reporting is very much through CPAC meeting and of course they do evaluation of us (INGO2). We do documentation and reporting from community level to donors. …separate report to district government (NGO1). This is a participatory method for assessing the changes of interventions where different stakeholders are involved for the assessment (INGO4). The plan reaches to us after passing through 14 different processes (NGOF). We decided that actually although it might be nice to say yes we do organisational social audit, actually it would not add any value, and much better to focus at other way of being accountable and transparent (INGO2).

For these things to take effect, our agreement guidelines should be improved and amended accordingly where the performance audit could be a must (CSO1). This is being skilfully cheated putting salary under technical cost (NGOF). INGOs keep a high amount for overhead which is sometimes more than 60% of their total budget (CSO1). They do not want to show their administrative and salary cost” (CG2). We have been informed that various organisations including Oxfam are working [in the affected areas] but nothing has been reported to us (The Kathmandu Post, 2016, Jan 4). I have not seen social audit report distributed to stakeholders (LG4, CSO2), I did not even receive when I asked few times (LG5). Project should start from the designing from community. Bottom up approach should be applied. All approaches are top down now. We feel that INGOs are more bureaucratic. Their paper is so perfect they include everything in saying bottom up approach (J2). INGOs hesitate to support issues coming from 14-step planning process (LG4). There was a gap in social audit policy and SWC has brought up that from last year which is compulsory for all the NGOs, INGOs and GOs (SWC2). I attended few social auditing but they have not followed ministry guideline (LG4).

INGOs are in Nepal are registering with SWC, which is a minimum requirement. Besides this, third party verification shows that they have partially fulfilled the country and local level regulatory standards. However, no sanction records were found except one regarding submission of disaster response report to local government in which INGOs were not allowed to participate in a meeting. They did not submit relief report to government though the report has been asked for seven times. INGO do not conduct their social auditing (hearing approach). Still there is no sanctions.

Community expectations (standard) examples Working with communities during project design to incorporate their agendas/problems

Reporting to communities and beneficiaries

Before designing project, we visit communities to get their generative themes, when we make decision to design project then we go and work with them (All INGOs).

A social audit invites beneficiaries, stakeholders and donors to join together in a process of reporting (UMN, 2011). Oxfam is

Their planning process is always of top-down way, they may sit with some 'yes man' stakeholders and implement their desired projects irrespective of community concerns and without the consensus of relevant government agencies (LG1). If they do not reveal their reports like this (bottom up approach and the changes were possible only with the participation of communities), they will stop getting fund from their donors (CSO1).

Many beneficiaries expressed that if NGOs do not work as per local need and their interest, they said they cannot do anything. Some of answers were: they are our guest, its


We expect our poverty to be reduced, to have food security for children and safe drinking water (Beneficiaries) Honesty and integrity in the work, and being transparent and accountable Capacity building of NGOs

primarily accountable to people living in poverty (Oxfam, 2012). AIN highly values accountability and transparency through guiding principles among its members (AIN). We have an organisation capacity building focus for our NGO partners (INGO2)

They often say that they share their report to everyone concerned. But the practice is different in my view. My understanding is that they mostly use this for their organisational purpose and donor compliances (LG2). What we think is the report is for their donor compliance only (SWC2).

We feel everything is made ready for monitoring and evaluation but when we go personally in the same place again the story is different (SA2). None of the agencies provided complete budgetary information. Hence, all agencies have failed on their claim that they were transparent and accountable (CSO1). NGOs are being treated as puppets to dance with the instructions of INGOs (NGOF). We are concerned over rumours regarding international aid flow violating mandates especially by minimising the roles of the local organisations regarding supply and distribution of relief support to the affected communities (NCFS, 2015).

good if many NGOs come in village (whether they do good or not), and they will disappear one day. Most of them expressed that they cannot do anything by themselves. And no any records of sanction to any INGOs by community

International standard examples GRI reports and INGO Charter, humanitarian principles Poverty reduction and global sustainable development agenda

Oxfam and world vision in international level seem to report in GRI format, but Nepal country office do not. When compared to 1990s the poverty has been reduced to be in 23% from 56% (NGOF).

They gave us very bad shampoo which is causing hair fall. A staff from office of Drinking Water Supply and Sanitation also said the hygiene and sanitation stuffs given by Oxfam and World Vision have been useless (Kaini, 2016). We wish to see the beneficiaries been graduated from their poverty level ….But we are not seeing this in any level of their indicators (SWC2).They say awareness has gone up, poverty has gone down; many more children are going to school and so on. But they have happened due to remittance, not due to the work of INGOs. We have a study and proof. They are just taking credit (J2). INGOs are not contributing for overall development of the country as per the expectations (C2).

No sanctions

5.5.3.2 Failure of Standard Accountability Mechanism

It has been found that NGOs in Nepal are hardly complying with reviewing

minimum regulatory standards, community expectations, and few international


principles, and their dissemination of information to the community who are

accountability holders. NGOs are complying with minimum regulatory standards in

relation to registration process and submitting project documents to get approval.

NGOs’ commitment on poverty reduction and sustainable development in Nepal, and

other expectations of community in their operations are not complied with by NGOs

as demonstrated by third party verification. In other words, when this study

scrutinised their compliance in relation to community expectation standards, there is

no compliance, and no information has been disseminated to their accountability

holders. In addition, the third party verifications in the table above also show that

NGOs lack transparency and thus they do not provide enough information to

accountability holders; and if they did provide information this would be

manipulated concerning their overall performance and impacts. Similarly, no

accounts have been noticed in which accountability holders have taken a minor step

to sanction INGOs despite their entire non-compliance with the standards. Thus the

functioning of standard accountability mechanism of INGOs as perceived by them is

failing to be accountable and create real change towards their beneficiaries.

5.5.3.3 Surrogate Accountability Mechanism as an Alternative

The above finding, the failure of standard accountability, is due to having a huge

power gap between INGOs and beneficiaries as clearly illustrated under section 5.2.

Therefore, as suggested by Rubenstein (2007), surrogate accountability mechanisms

where a third party gets involved on behalf of accountability holders to set standards,

collect information and to sanction power wielders until the accountability holders

empowered, would be useful. In this accountability mechanism, the other

stakeholders besides people from the community who are beneficiaries of INGOs are


the surrogates who work to protect the interest of communities in the short and

medium run. Local and central government, media, civil society, national

commissions, audit facilitators etc. are the surrogates for the study. The table above

also depicts an account in which local government has taken a step of sanction to

INGOs due to their non-compliance on submitting a relief report.

For in-depth understanding on surrogate accountability mechanism in the context of

Nepal, these surrogates were asked how they can play a role to ensure the

accountability of INGOs towards community/accountability holders so that their

interests are protected. Examination of their accounts can be categorised in four

different ways through which they can ensure the accountability of INGOs:

Active monitoring and reporting by surrogates

Minimising gaps between existing policy and its implementation

Developing strong policies for INGO regulations

Community empowerment

The initial idea surrogates revealed is active accounting and reporting of INGOs

work through monitoring and auditing by them as accountability holders

(beneficiaries) themselves are not able to make INGOs accountable at this stage.

Such accounting and reporting would include triangulating and cross checking

beneficiaries accounts on impacts and NGOs accounts, doing quick field visits

(SA2), making environment to distribute social auditor’s report to all stakeholders

(SA1), monitoring strongly by government line agencies, civil society and journalist

independently (J1).


The second idea discussed by surrogates is minimising gaps between existing

policies and their implementation. All surrogates including senior government

officers said that there are some good policies both in national level and district level

but their implementation is very weak. For example, SWC has brought the social

auditing guidelines (social hearing approach) to be implemented primarily by INGOs

in Nepal, and local government also has policy regarding NGOs on how they are

expected to operate in the district.

There was a gap in social audit policy and SWC has brought up that from last

year which is compulsory for all the NGOs, INGOs and GOs. The major contents

to be covered in this are: the project period, project location, budget constraints,

funding partners, beneficiary groups, correspondence and representation in local

government line agencies and media, and other components mentioned in the

format we provide to them. The evaluators from SWC will be focusing on those

aspects (SWC2).

We have set a policy for last three years which was approved by district level

council according to which no one of the NGOs should directly enter into the

communities without the permission of DDC, none of them is allowed to do top-

down planning but should follow all the 14 steps in their planning, and everyone

should submit their periodical and other event reports to DDC. Despite this

policy, the reality is still continued (LG1).

However, our analysis shows that INGO do not undertake their own social auditing

(hearing approach) but rather exert pressure to NGOs to do it (as discussed under

section 5.3.6), which is a direct violation of policy. Minimising gaps between

existing policies and their implementation makes INGOs accountable towards

beneficiaries.


Moreover, most surrogates also expressed that development of strong policies are

required to make INGOs accountable. The first and second alternatives as discussed

above are something surrogates can implement right away whereas the development

of strong policy would need a certain time period. Bringing ‘one door policy’–

channelling money from one account, strong monitoring policy, amendment of few

existing policies, and strong legal provision to break up the strong nexus of

‘commission culture’, and ‘contracting system’ (contracting the project to NGOs like

construction project approach) is the necessity to make INGOs accountable (Many

Surrogates).

As I earlier said, they should come through one door policy in coordination and

consultation of government (SWC2). Contracting system like construction project

approach do not bring impact to communities. This ‘contractor approach’ should

be abolished (SA1).

The final idea brought by surrogates is to empower the beneficiaries (accountability

holders) so that they themselves make INGOs accountable. When beneficiaries and

stakeholders in the communities are capable to identify, analyse and solve problems;

then they could work together to make INGOs accountable towards them. Hence

overall stakeholders agreed that the above mentioned alternatives are useful to make

INGOs accountable, but empowering beneficiaries is the best option. This concept

mentioned by stakeholders based on their experiences supports the notion of

surrogate accountability mechanism – surrogates are needed until community is

empowered, and empowerment should be done within the surrogate accountability

mechanism which will lead to function standard accountability mechanism:


For that the communities should be careful on some legal tools like right to

information act, good governance act, and others. There is a sharp need of

creating a critical community which could demand the accountability and

pressurise the entire system for. We need to train and equip them

accordingly. The educational development has made literate people available

in almost every village of Nepal. We need to develop the aware people from

grass root levels (CSO1).

This study also explored the idea with accountability holders to understand

perspectives on their potential attempt to create accountability among NGOs. Their

narrative was, “we do not have any choices except taking support from these

organisations partly to support our livelihoods. We cannot do much to them as we

know nothing, but we can approach to other stakeholders such as journalist, local

government offices, political parties, and social activists for help” (Many

Beneficiaries). Beneficiaries’ views also seem to indicate that further capacity

building of communities is necessary for their empowerment so that they would be

able to have a choice for their livelihoods and even can make the decision to discard

INGOs who are not accountable without necessarily approaching surrogates.

However, as suggested by surrogate accountability mechanism especially for the

short and medium run, other stakeholders (surrogates) need to take that responsibility

on behalf of beneficiaries.

5.5.3.4 Surrogate Accountability When Surrogates are Weak

Accounts on how third parties verify the information from INGOs according to their

several commitments, and whether they are sanctioned by accountability holders

directly or in a support from surrogates for not complying with standards as tabulated

above also demonstrated that INGOs were not sanctioned in many instances. For


example, accountability holders’ expectations to be lifted up from poverty have not

been fulfilled for decades from NGOs’ operations, but there were no accounts of

whether they are sanctioned. Such instances even suggest that some surrogates such

as government appeared as a weak stakeholder to sanction INGOs as a surrogate.

Many accounts from government officers from local government to central

government also reveal, as illustrated time and again in this study, that there are

standards in central and local government to be followed by INGOs, but their

compliances are very weak. Despite non-compliances, they are not sanctioned, and

operations of INGOs have been continuing. A government officer account further

supports it:

There are provisions to make them accountable, such INGOs should be

registered in Social Welfare Council, there should be annual review, INGOs

should submit progress report to the Council. These are being happened in

several cases. But there is a need to implement it strictly (CG2).

Therefore, some even argued that media is the only right surrogates to protect

community interests, and it represents the common people’s voice (for example, J2).

The case study of WFP after the earthquake as discussed earlier also showed that

media has played a strong role as surrogates to make WFP accountable to some

extent. Unfortunately, in the same case, despite government commitment to take

WFP action, it has not been sanctioned at all, and the organisation has been operating

in the country as if nothing has happened (Adhikari et al., 2016).

The failure of a surrogate – the government – in developing country to play the role

of surrogates appeared to strongly connect to the idea of neo-liberalism as previously

explained. For example, NGOs in the community tell people to become involved in


their programs saying ‘we do better than government’ (LG6). Hence, NGOs provide

legitimacy to neoliberal globalisation providing an alternative to the states

undermining Southern state government capacity through bilateral donors funding

through international and local NGOs (Schuller, 2009). The overall findings

including extreme weaknesses created in the government system also suggest that

neoliberalism globalisation has been working in the case of Nepal. As a result

government has been so weak that they face difficulty in playing the role of

surrogates in creating accountability. In such case, surrogates-driven auditing also

faces difficulty in creating real changes and accountability mechanism, and

accountability towards accountability holders is compromised. In an unequal world,

accountability holders cannot go to the police, administration or court as well due to

ignorance, and the independence of such institutions is also under question. This

further compromises their accountability. However, having multiple surrogates

between accountability holders and INGOs, weakness in one surrogate also would

not let accountability be fully compromised. Hence, surrogate accountability still

would significantly create real change and accountability in comparison to

management-driven social auditing.

5.6 CONCLUSION

The chapter reviewed the overall findings on the nature of management-driven social

auditing and surrogates-driven social auditing, and how they create change and

accountability within the NGOs sector through explaining, exploring and comparing

the social accounts and shadow accounts. In addition, this chapter also identified that


the NGOs sector is a very powerful sector in Nepal, even more powerful than

government, and thus they behave as a power wielder, while their beneficiaries

(accountability holders) are one of the weakest, deprived and marginalised groups.

Hence, there is a huge power gap between them, and therefore the standard

accountability mechanism claimed by management-driven audit could not create real

changes and accountability. To create accountability among NGOs primarily towards

accountability holders, surrogate accountability as evidenced by surrogates-driven

social auditing would be useful in the short and medium run until accountability

holders are empowered.

On the basis of findings in this chapter, Chapter six focuses on the discussion and

conclusion of this study.

Chapter 6: Discussions and Conclusions 191

Chapter 6: Discussions and Conclusions

6.1 INTRODUCTION

This chapter provides a summary of the findings from Chapter five. In addition, in

light of the theoretical notion of surrogate accountability and with existing literature

in mind, the results of this study are interpreted to identify implications of the

findings, the contributions of the study, and the further research in the field of social

auditing/accounting and accountability.

6.2 SUMMARY OF FINDINGS

The thesis attempts to address primarily two research questions. First, what is the

nature of social audit within the NGO sector in Nepal? And second, whether and how

are management-driven social audit and surrogates-driven social audit used to create

NGOs’ accountability in Nepal? This thesis answered those research questions

through rigorous and empirical analysis of management-driven social audit and

surrogates-driven social audit using semi-structured interviews and document

analysis as research methods. NGOs’ managers through management-driven social

auditing proclaim social audit facilitates stakeholders’ empowerment; it is a

comprehensive social impact accounting and disclosing process; and it creates and

demonstrates full accountability. However, surrogates-driven social auditing

identified that social accounts produced by managers via their social audit are

completely contradictory to shadow accounts produced by surrogates or

stakeholders. Surrogates interviewed argued that international NGOs’ claims about

192 Chapter 6: Discussions and Conclusions

stakeholders’ empowerment through social auditing is questionable; and their social

auditing process is entirely controlled, and thus the impact accounts and their

disclosures appeared to serve the purpose to legitimising operations, but not to create

the change. In addition, they viewed that NGOs are not accountable to accountability

holders and stakeholders, and their operations have resulted in serious negative

impacts such as the creation of additional inequalities and dependency in the country.

Hence, shadow accounts through surrogates-driven audit completely interrogated,

overshadowed, and challenged the social accounts and accountability claim of

NGOs, which now questions the existence and significance of NGOs in Nepal.

The first claim of NGOs is management-driven social auditing facilitates extensive

stakeholders’ engagement and their empowerment including most marginalised

people such as the illiterate and poor, whose voices are often not heard. Among four

different social auditing approaches: social hearing, stakeholders’ feedback, project

assessment, and capacity building and empowerment NGOs are practising within a

broader framework of development approach (Hughes, 2005; Kemp et al., 2012);

they further argued that the stakeholders’ empowerment approach also facilitates

organisations for reviewing their decision making body. Hence social auditing

ensures true empowerment of stakeholders. In addition, NGOs asserted social

auditing is a two-way process, that is, it facilitates empowerment of stakeholders, and

empowerment leads to enhance the essence of social auditing for assessing the

performance of organisations. Social auditing is aimed to empower the stakeholders

through capacity building, and participation and representation. The prior one is done

following three steps: capacity assessment, providing relevant education and training,

and social mobilisation and advocacy. They would enhance stakeholders’ existing


technical and organisational knowhow which are needed to increase interpersonal

skills and organisational assessment skills. The latter one is used for representation in

the decision making body of organisations to influence the decision making process.

Whenever organisations hesitate in stakeholder’s representation in the decision

making body, social mobilisation and advocacy are used to ensure representation.

This representation of stakeholders in a decision making body appeared as

‘happenings’ of much discussed issues in social accounting, the process how social

audits facilitate stakeholders’ empowerment (Adams, 2002; Friedman & Miles,

2002; O'Dwyer, 2005; Owen et al., 2000, 2001). Managers also claimed that within

the stakeholders’ empowerment process, there is extensive focus for illiterate and

poor people (accountability holders) whose voices are not heard. For example, during

social auditing, a ‘gallery’ is prepared where drawings, codes, and pictures are used

for dialogue with those people. In addition to this, such people use a ‘score card’ to

assess the performance of organisations, and a ‘post social audit’ workshop in

villages is organised to discuss the social audit report. Thus NGOs claimed that the

social auditing process empowers the stakeholders including most marginalised

people. On the other hand, NGOs exerted empowered stakeholders have technical

and management knowhow which helps them to assess an organisations’ impact and

accountability, and thus organisations have very rare chances for emasculating the

social auditing process. Overall, NGOs proclaimed that adoption of four different

social auditing approaches including stakeholders’ empowerment demonstrate full

accountability towards stakeholders and beneficiaries.

However, surrogates-driven social auditing questioned the proclamation of NGOs

whether there is an adequate and balanced emphasis for stakeholders’ empowerment


including accountability holders. Surrogates have questioned three fundamental

issues on stakeholders’ empowerment process. The first concern is the continuing

unchanged capacity of a huge number of stakeholders particularly beneficiaries

despite many years of interventions in the community by NGOs. Surrogates claimed

that the level of ignorance, illiteracy and marginalisation of accountability holders

somehow have remained on a similar level for many years, thus there has not been

‘real’ empowerment of stakeholders. The second issue is meaningful engagement of

stakeholders in every level of decision making process (Lloyd, 2005), and surrogates

claim that they have no experience of engagement and involvement in NGO’s

planning process. Finally, the serious criticism of stakeholders is on representation of

stakeholders in the decision making body as surrogates believe that NGOs have

almost failed in doing so even though they advocate to have a representation of

stakeholders in other service-providing organisations. Surrogates argued that until

NGOs exert power with themselves, then empowering stakeholders would not work.

This claim seems consistent with development literature; NGOs have not

disempowered themselves to empower beneficiaries and stakeholders (Chambers,

1997).

Another pronouncement of NGOs is social impact/change accounts captured through

management-driven social auditing are the comprehensive social accounts that are

disclosed to all stakeholders. Almost all of those impacts appeared as positive

impacts on individual and family lives, the community, and the country. A couple of

them are significant improvement in individual and family socio-economic status,

increased level of awareness and empowerment of people, and sustainable impact in

the communities. Hence, overall impact accounting and disclosing through


management-driven social auditing claims that significant positive changes have

been made in the lives of beneficiaries and communities.

Conversely, surrogates-driven social auditing resisted accepting the claims about

substantial positive impacts made by NGOs. Rather surrogates challenged the

reliability of entire social impacts that are accounted by NGOs. Their view is besides

a few trivial positive impacts such as increased level of awareness on rights,

improved sanitation and hygiene; there are no significant positive impacts. This

suggests that performance of these organisations is not following stakeholders’

expectations (Deegan, 2009). Furthermore, surrogates claim that management

captures entire social auditing process for organisational interests, and social impact

accounts produced by NGOs do not reflect the true picture. Surrogates highlighted

many aspects of social auditing process controlled by management, but

outstandingly, two of them are unique. First, surrogates claimed that organisations

have an artificial setting in advance as part of the preparation for social auditing in all

approaches including social hearing approach. That is, teaching community people in

advance on what and how to speak during social auditing, and asking community in

villages to be ready for any monitoring or cross checking visits of social auditing.

This probably could be to hide unintended impacts or demonstrate only positive

impacts which do not exist in reality. The second concern of surrogates is on the

trustworthiness of social impacts accounted in disclosures. They believe that these

accounted and disclosed social impacts are all manipulated and exaggerated social

impacts, and only some of them have happened in reality in the communities. It

shows that there is a massive gap between what is disclosed as positive impacts on

disclosures and what the real changes are on the ground. As for surrogates, other


controls are particularly on stakeholders’ selection, information dissemination to

stakeholders, dialogue agendas, recruitment of social auditors or evaluators, and final

social accounts. A large amount of prior literature has discussed control of social

auditing process in those areas (see Deegan, 2009; Ebrahim, 2003a; Gonella et al.,

1998; Gray, 2000; O'Dwyer, 2005, 2011; Owen et al., 2000) for different

organisational interests. Those interests could be for managing competing interests

and pressures from stakeholders (Gao & Zhang, 2006); strengthening and enhancing

strategic management process for value addition (Gray, 2000); stakeholders’

management (Owen et al., 2000); legitimising their operations (Deegan, 2002).

Hence, surrogates argued that management-driven social auditing accomplishes the

management interest, but it has neither changed the dominant political, economic and

social structure that led people to be poor, marginalised and deprived nor improved

the living standards of those people.

Finally, management-driven social accounts emphasised the full accountability of

NGOs towards their stakeholders including accountability holders. They claimed that

they have regularly disclosed their social accounts to stakeholders including

government and beneficiaries, followed all regulations of the country,

comprehensively engaged stakeholders including accountability holders in project

planning and implementations, fulfilled the expectations of government and

stakeholders in the country; and thus they are very much accountable to

beneficiaries, government, donors and other stakeholders. Hence, NGOs perceived

that the standard accountability mechanism is well functioning as captured by

management-driven social auditing.


Nevertheless, surrogates also confronted NGOs’ claims regarding their full

accountability to stakeholders. Their claim is NGOs are fully accountable only to

their donors, but hardly accountable to their beneficiaries, government and other

stakeholders in the country where they operate. They argued that NGOs’ many social

impact accounts in terms of positive changes they have accounted in disclosures are

imaginary and documented by capturing the entire social auditing process to

demonstrate impacts and accountability to their donors for justification of investment

and credibility. Surrogates further proclaim that NGOs talk about stakeholders’

empowerment, but their projects are only known to community and stakeholders

when they are taken to community for implementation. Many of these projects are

only on paper as they rarely reach the community. Surrogates also argued that NGOs

use power, money, and tricks to manipulate and control episodic types of social audit

such as hearing approach, so that real stakeholders’ empowerment and poverty

reduction is still far away. These changes have happened on paper but hardly in the

communities. Alternatively, surrogates argued that NGOs are very much accountable

to stakeholders in their narratives, but rarely in their practices on the ground. Hence,

surrogates perceived that the functioning of standard accountability mechanism as

established through management-driven social auditing by NGOs seems failed in

creating accountability and real change. Instead, their operations have resulted to

very serious unintended/negative impacts including the creation of additional

inequalities in the society, weakening government, creating dependency through

NGOlisation and neoliberal globalisation.

The above discussion on social accounts and accountability of NGOs through

management-driven and surrogates-driven social auditing revealed subterranean


tensions between NGOs and their stakeholders. Particularly, questioning and

challenging most of the social accounts and accountability captured through

management-driven social auditing of NGOs by surrogates sheds light on the

prevalence of the extensive level of contradictions, tensions, conflicts, disagreements

and obstacles between organisations and stakeholders. After decades of presence of

NGOs in the country, surrogates appeared to be very critical of their operations, and

they seemed not to trust social accounts produced by them. Thus social accounts as

disclosed by NGOs capturing through management-driven social auditing seem to be

outweighed by the shadow accounts capturing through surrogates-driven social audit.

In doing so, surrogates have defied the social accounts of NGOs, which has now

raised a critical question on the existence and significance of both international and

local NGOs in Nepal.

6.3 ANALYSIS OF FINDINGS THROUGH THEORETICAL FRAMEWORK

Rubenstein’s (2007) surrogate accountability theory is a concept in which third

parties – the surrogates – are involved on behalf of accountability holders in

accountability mechanism to make power wielders accountable. This notion is

applicable where there are huge power gaps between accountor and accountee, and

the accountee cannot set standards to be followed by the accountor, cannot demand

standard compliance information, and cannot sanction the accountor for their

(non)compliances. Since the INGOs, the accountor, appeared as a powerful sector in

Nepal, and their beneficiaries or accountability holders, the accountees, seemed very

weak; they could not demand standard compliance information and could not

sanction the accountor for their non-compliances. This showed the huge power gap


between INGOs and their beneficiaries, and therefore other stakeholders, such as

media, civil society, and government as surrogates had to engage in creating

accountability among INGOs. Thus the concept of surrogate accountability applied

to explain and interpret the accountability of INGOs by this thesis.

Some prior studies have shown that when corporations do not follow their standards,

NGOs as their stakeholders have played an influential role to make them comply

with increased social and environmental disclosures (Arenas, Lozano, & Albareda,

2009; Bendell & Lake, 2000; Deegan & Blomquist, 2006; Doh & Guay, 2006;

Momin, 2013; O'Dwyer et al., 2005). In such cases, these NGOs are viewed to

represent the general public whose voices are often less heard (Kovach et al., 2003;

Momin, 2013; O'Dwyer et al., 2005; Unerman & Bennett, 2004). For example,

organisations such as Oxfam, a sample of this study, are involved in playing a key

role in making many supply chain MNCs to follow the standard (Clay, 2005; Oxfam,

2013b). On the other hand, these international NGOs and their operating partners in

Nepal also have certain standards such as regulatory standard, ethical and moral

standards, or accountability holders’ expectations to comply with. As was discussed

under summary of the findings, accountability holders are expecting their full

participation and engagement in the decision making process, which enables them to

be empowered; significant positive impacts in the communities such as noticeable

poverty reduction in accountability holders’ lives; and complete accountability and

transparency (including honesty and integrity) to them. These NGOs and their

associations are claiming their full compliances of those standards and their

communication to accountability holders and their stakeholders. In addition, other

stakeholders – the surrogates – also acting as a third party between organisations and


accountability holders appeared to verify whether the standards are complied with

and communicated.

However, surrogates’ accounts challenged the claims of NGOs on compliances of

accountability holders’ expectations. Surrogates argued that such claims have been

made on NGOs’ disclosures but they have not happened in reality on the ground. For

example, the Chair of a civil society organisation mentioned if NGOs do not reveal

their reports like this (bottom up approach and the changes were possible only with

the participation of communities), they will stop getting funding from their donors.

Such verification of accounts through surrogates shows the non-compliances of the

standard (Rubenstein, 2007). Hence, surrogates claim that a standard to engage and

empower accountability holders and other stakeholders has not been fully complied

with by NGOs in reality. Instead, a number of NGOs and their working approaches

resulted to marginalisation of accountability holders, derailing the funds, promotion

of malpractices, and so on. Surrogates called such practices NGOlisation and

NGOism. Within NGOlisation and NGOism, many NGOs are run by elite people and

their primary concern would be for personal resource mobilisation and wealth

accumulation. Similarly, the major surplus of INGOs funds is benefiting hotel,

airlines, consultants, and employees of INGOs (SWC2 – an interviewee). Likewise,

the number of people in need and their reach to services are inflated so that they can

demand and demonstrate their larger share of the national cake or donor funds, and

present the state capabilities negatively to manage the donor funds and divert funds

to INGOs (Xaba, 2014). The inflated number is related not only to their reach to

services but also the impact accounts with much manipulation and exaggeration;

even though many beneficiaries of NGOs on the ground are saying, “We are fed up


with NGOs”. Hence, the verification of compliance information from surrogates does

not only show NGOs have somehow failed to comply with the expectations of

accountability holders to be engaged and empowered; but also shows the

contravening of many other expectations resulted through their seen and unseen

operations.

The marginalised and deprived accountability holders are expecting to be released

from extreme poverty. This expectation is a common and wider standard for NGOs

working in any underdeveloped countries such as Nepal. A number of past studies

have shown that stakeholders have changed the views of notion of accountability so

far from short term project focus on outputs and activities to longer term

programmatic outcomes and impact, and from quantitative reporting and

administrative relationship to qualitative perspective and relationship based on trust,

understanding and learning (INTRAC, 2005; O'Dwyer & Unerman, 2007). Hence

NGOs’ accountability is determined whether they have had longer term positive

impacts to beneficiaries, the community and nation, and poverty reduction falls under

the idea of this longer term impact. Accordingly, NGOs claim their compliances on

longer term impact stating poverty level has significantly reduced in Nepal from 56%

in 1990 to 23% now (for example, NGOF – interviewee; The World Bank, 2016).

However, surrogates verification claims that NGOs are just grabbing the credit for

the changes that have been induced by other reasons, but not predominantly from

their interventions. While an interviewee (C2-Programs Director for National

Planning Commission of Nepal) mentioned NGOs are not contributing for the overall

development of the country as per expectations; another stated children are going to


school and poverty level has gone down, but the proof shows that this has happened

due to remittance in-flowed in the country, not by the work of NGOs (J2-Business

Head, The Republic media). It shows NGOs’ claim on compliance of accountability

holders’ expectation to be released from poverty is not fully true, and therefore they

appeared to fail on their compliances. Rather, the compliance information from

surrogates depicted that NGOs’ operations have resulted in making and supporting

disparities among people in different forms because of the huge power gap between

them and their beneficiaries and stakeholders. Such inequalities are now seen among

different groups. Even though NGO runners are one of the elite groups of the society

as they have access to INGO funds and resources (Head of regional bureau, Kantipur

media), one form of inequality is between INGOs and local NGOs due to the huge

difference in the staff benefits, and donor and receiver relationship. However, local

NGOs help INGOs in legitimising their work. Another form of inequality is between

NGO made elite class and beneficiaries or poor people. By providing employment to

local educated elites and funding projects through elite led NGOs, who are rarely

concerned about poor people and are not critical of international NGOs, they are

creating a huge gap between these local elite groups and poor people. As the same

local elite group has connection with international NGOs, and they represent or

speak on behalf of poor people, they hardly have access to INGOs. Thus such

practice helps continue the existing forms of inequalities in the society. Hence,

verification information as discussed above on compliances of NGOs shows that

NGOs have hardly complied with them.

The other major expectation of accountability holders including surrogates is full

accountability and transparency of NGOs towards them. It also would include


honesty and integrity in NGOs’ operations. If NGOs become accountable to their

accountability holders and their government, it helps them automatically to be

accountable to international principles and policies. Accountability and transparency

have been quite dominant issues in the sector and thus NGOs’ disclosures very

openly claim their full accountability towards their beneficiaries and stakeholders.

The compliance information of NGOs shows that they have followed all government

regulations, have reported impact accounts to all stakeholders; have massively

engaged and empowered beneficiaries regularly, and so on. Some of the sampled

organisations such as Oxfam and World Vision also produced standalone GRI

reports, INGO charter report, and accountability reports to demonstrate higher level

of accountability and transparency both on a national and international level.

Nevertheless, surrogates verification information/accounts questioned strongly on the

claims of full accountability and transparency of NGOs in Nepal. Some examples

cited by interviewees, and the surrogates, have been mentioned here: although NGOs

account full engagement and participation of accountability holders and stakeholders,

their planning process is top down; such accounts and reports are for their donors

only (The Chair of a civil society organisation); none of NGOs provide their full

information, thus they have failed on their claim that they are accountable and

transparent (FF, 2012); international NGOs minimise the role of local organisations

(NCFS, 2015); NGOs skilfully cheat government; and if government is about to take

action on any international NGOs, embassies put pressure on us not to take action

(Under Secretary, Government of Nepal). These examples show that NGOs have

barely met the expectations of accountability holders on accountability and

transparency, even though their disclosures/reports extensively focused on their


compliances. It suggests that the management-driven social audit and associated

social accounts of NGO hardly reflect the ground reality in terms of real

accountability and changes. This discrepancy between narratives (both rhetoric and

disclosures) and actual practices also show that NGOs are, as businesses, trained to

provide ‘correct’ answers to donors and government to show their compliances, but

this gap appears as “auditing fraud” (Lund-Thomsen & Lindgreen, 2014).

Furthermore, their non-compliances have reached very far as their long term

presence and operations in the country have had negative consequences such as

increasing dependency of the community and nation, very weak government,

representing NGOs as an alternative to government and so on. Thus social audit and

associated practices of NGOs are supporting neo-liberal ideology.

Many symptoms of neoliberalism can be seen in the country now. The donors

empower NGOs (Xaba, 2014) and channel funds primarily through them rather than

the states (Schuller, 2009). NGOs are seen as an alternative to government

(Executive Head, Learning Group-Media) as they try to control people in the

community to avoid involvement in other NGOs and government programs, (LG6-

Women, Children and Social Welfare Officer). Likewise, INGOs, charities, private

sectors and communities have been providing services which would be provided by

the state in the past; lives have already been governed by economic logic in which

the market mechanism allocated goods and services to meet the needs of people

(Castree, 2008); and the public developed aid is generally given to NGOs for

‘privatization of the state’ (Leve & Karim, 2001). Perhaps, as expected, Nepal is now

having a weak government and powerful NGOs, and therefore another ‘unequal

world’ (as primarily discussed under section 5.2); and more poor and vulnerable


communities who have been empowered for their rights but have no food to feed

their family. Few past studies also have explored how a neoliberal agenda weakens

government (see Bello, 2003; Schuller, 2009). In Nepal as well, NGOs’ major role

seemed to provide legitimacy to neoliberal globalisation providing an alternative to

the states undermining southern state government capacity through bilateral donors

funding through international and local NGOs (Schuller, 2009). Definitely, this role

of NGOs in supporting neoliberal globalisation was not an expectation (a standard

for NGOs), and this now appears to limit the government capacity to regulate NGOs,

making them a powerful entity who are working with very weak actors in the

community.

Moreover, examining carefully on the verification information of surrogates whether

NGOs complied with standards, the expectation of accountability holders, it has been

found that NGOs either show the full non-compliances or very minimum

compliances. However, there is no other information whether accountability holders

sanctioned NGOs for their non-compliances. More importantly, this study identified

that the power wielders did not only comply with the expected standards, but also

caused many unexpected unfavourable effects through their operations. In such

serious circumstances too, the accountability holders could not sanction INGOs.

Hence, the standard accountability mechanism, in which accountability holders

sanction the power wielders, as claimed by NGOs through management-driven social

auditing, failed to ensure their accountability. An alternative as discussed earlier for

ensuring accountability in an unequal world in this context is the surrogate

accountability mechanism.


According to Rubenstein (2007), in surrogate accountability mechanism, a third

party gets involved on behalf of accountability holders to set standards, collect

information and to sanction power wielders until the accountability holders are

empowered. Depending on the power of accountability holders, surrogates may only

be involved to set standards, or receive information or sanctioning power wielders or

involved in any two functions such as receiving information and sanctioning power

wielders (Rubenstein, 2007). In other words, the surrogates might work on behalf of

accountability holders only in the stage or all stages of accountability mechanism.

This study appears to suggest that accountability holders are very weak, and thus

surrogates might be needed in all stages of surrogate accountability. Such

involvement of surrogates helps in creating accountability. For example, the case of

WFP and Save the Children, and a story of a freelance writer discussed in the

findings chapter on how the stories published and broadcasted in media created

pressure on INGOs and compelled them to be accountable in some extent shows

surrogate accountability helps to create accountability and change in the short and

medium run. Indeed, this study also highlights “NGOs that seek to make a virtue out

of highlighting the failures of governments, business and other institutions should be

subjected to the same degree of scrutiny that everyone else faces. They too need to

be accountable for their actions” (Adair, 1999, p.11). In the case of Nepal, where

INGOs appeared to create an ‘unequal world’ and undermined the government, they

are to be accountable for their actions. Hence surrogates-driven social audit helps to

create a pressure to be accountable, and minimises the power gap between INGOs

and stakeholders. Therefore, this study argues that surrogates-driven social audit is

an alternative for the short and medium run to make powerful INGOs accountable to

some extent until accountability holders are empowered. A few alternative


approaches for surrogates to make INGOs accountable could be active assessment

and reporting of INGOs’ work, surrogates-driven social auditing; minimising gaps

between existing policies and their implementations, developing strong policies for

regulation, and accountability holders’ empowerment. When power gaps between

stakeholders and INGOs would be significantly minimised together with empowered

stakeholders in the longer term, standard accountability will start functioning. In

addition, the growing phenomena of assurance from a third party (O'Dwyer, 2011)

and any other such processes also can come under surrogates-driven social auditing.

How does surrogates accountability work when surrogates are very weak? This thesis

also highlights that surrogates, primarily government, appear very weak in the case

of Nepal. For example, there are many guidelines and policies with local government

and central government (following bottom up planning approach, sending regular

reports to government, staff and administration costs should be minimum etc.), but

the surrogates representing government offices critically identified how these

policies are not complied with by NGOs. However, there were no accounts whether

NGOs are sanctioned. It suggests that some surrogates such as government appeared

as a weak surrogate to sanction NGOs. Such weakness in surrogates would lead to

the weak surrogate accountability mechanism, and compromise the accountability of

NGOs towards beneficiaries.

6.4 IMPLICATIONS OF FINDINGS

The above discussion revealed the extensive level of contradictions, struggles and

tensions between NGOs, and their accountability holders and stakeholders. While


NGO officials and management-driven social auditing claim extensive stakeholders’

engagement and their empowerment, wide-ranging impact accounting and disclosing

process, and complete accountability to beneficiaries and stakeholders; surrogates-

driven social auditing confronted those claims of NGOs and asserts that many such

proclamations have not been seen in practice on the ground. Surrogates’ accounts

have raised questions on the effectiveness, performance, wider impacts, democratic

process, and ethical disclosing practices of management-driven social auditing. Such

discrepancies would obviously have certain implications, as discussed below, for

NGOs, government, beneficiaries and wider stakeholders.

For NGOs, their good work, ethics, trustworthiness, and honesty are questioned by

stakeholders despite the strong commitment of many, and their selfless service and

generosity for the community and the nation where they are working. Instead, wider

stakeholders perceived that their operations, approaches, and methods are supporting

for weakening government, creating dependency and other forms of inequalities

(Schuller, 2009). Hence, this invites NGOs to sincerely review their operations,

policies, approaches and working methods to be accountable to accountability

holders and stakeholders where they operate, if they are intentionally not operating

for NGOlisation, neoliberalism, and creating inequalities. Only in this case will their

operations create real impact in the communities.

Furthermore, beneficiaries appeared to be the key group who are affected

tremendously. As attributed by surrogates, their level of marginalisation, poverty and

powerlessness would hardly be improved through the approach such as management-

driven social audit of NGOs. Consequently, their day to day lives would suffer


despite a number of interventions by NGOs. In addition, the additional inequalities

created by NGOs further helps to leave beneficiaries’ status unchanged. That is,

accountability holders would not be empowered in such way so that they make

NGOs accountable, the standard accountability mechanism. This situation together

with weak surrogates might upset the entire country mechanism leading the country

to a state of failure where none of the accountability systems would work.

Moreover, the government in Nepal is viewed as comparatively weaker than NGOs

primarily international NGOs, its staff are easily manipulated, and failed to make

NGOs accountable to beneficiaries and stakeholders (for example, Bello, 2003;

Xaba, 2014). As part of the solution for this, surrogates identified the need for strong

policies to make NGOs’ services streamlined for better results and accountability.

The strong policy also will work as standard for NGOs to comply on behalf of

accountability holders, and it will help to make them accountable in the short and

medium run. Hence, this study provides avenues to intervene with strong policy for

the facilitation of NGOs in Nepal by the Nepalese government.

Finally, this study sheds light on how surrogates are playing a vital role to create

pressure and accountability among NGOs when accountability holders are

underpowered and government also appears comparatively weak. Continuing the

strong role by surrogates together with empowering stakeholders from their side

would at least lead to making INGOs accountable in the short and medium run.

6.5 CONTRIBUTION OF THE THESIS


This thesis contributes primarily in four different ways. It contributes to existing

literature of social auditing and accounting, it has theoretical contribution on

accountability literatures, it contributes for practical understanding among NGOs,

government, and other stakeholders, and finally it contributes to research methods.

In relation to contribution to existing literature of social auditing and accounting, this

robust and empirical study does so in three different ways. First, this thesis revealed

in-depth studies of practices of social accounting and auditing (Free et al., 2009;

Gendron & Spira, 2009; Gray, 2002; Hopwood, 2009; Owen, 2008) within the NGO

sector in Nepal. In particular, it extends the notion of developmental social auditing

approaches (Hughes, 2005; Kemp et al., 2012) into four approaches to social

auditing, viz. social hearing approach, stakeholders’ feedback approach, project

assessment approach, and capacity building and empowerment approach through

critical examination of practices among NGOs. In addition, this explores the process

of facets of social audits: management-driven social audit and surrogates-driven

social audit. It also explores how NGOs construct social accounts via management-

driven social audit, and how this type of social audit fails to create change and

accountability; and how surrogates construct social accounts via surrogates-driven

social audit, and how it creates change and accountability among NGOs. By doing

so, this study also extended SAA into new areas (Power, 2003): social auditing

practices among NGOs in developing nation; non-market entities (Gray et al., 2014):

international and local NGOs; and from the non-western contexts (Gray et al.,

2009): one of the poorest non-western countries in the world.

Second, this thesis exposed in-depth underlying contradictions, tensions, conflicts,

and severe struggles between NGOs and their stakeholders including beneficiaries.


This intense level of contradictions revealed within the social accounting process

including stakeholders’ empowerment, impact accounting and disclosing process,

and creation of NGOs’ accountability. For example, NGOs strongly claimed that the

social auditing process has empowered stakeholders (Belal, 2002; Owen et al., 2001;

Thomson & Bebbington, 2004) including stakeholders’ representation into decision

making bodies; but their stakeholders challenged the claim with evidence. They are:

there is continuing unchanged capacity of a huge number of stakeholders, primarily

beneficiaries, despite many years of intervention in the community by NGOs;

stakeholders themselves have no experiences of engagement and involvement in

NGO’s planning process; and NGOs have almost failed stakeholders’ representation

in their decision making body though they do advocate to have a representation of

stakeholders in other service-providing organisations.

Third, this thesis also contributed with additional insights demonstrating through

empirical critical examination on how management emasculate the social accounting

process in the NGO sector in developing countries. NGOs extensively work for

artificial setting in advance as part of preparation for social auditing, and the

disclosed social accounts are all manipulated and exaggerated social impact

accounts. In particular, management extensively overstate the social impact accounts

in the disclosures in comparison to actual impacts on the grounds. Similarly, NGOs

also control stakeholders’ selection, information dissemination to stakeholders,

dialogue agendas, recruitment of social auditors or evaluators, and final social

accounts (see Ball & Seal, 2005; Gonella et al., 1998; Gray, 2001; O'Dwyer, 2005,

2011). Thus NGOs control the entire social accounting process.


Regarding theoretical contribution, the study contributes to existing accountability

literature by mobilising surrogate accountability notion in exploring the

accountability in unequal worlds. In particular, this study depicted that surrogate

accountability is a new notion to explain the accountability in an unequal world. In

the midst of the many accountability notions in creating accountability such as

vertical accountability (for example, Dixon et al., 2006; Ebrahim, 2005; O’Dwyer &

Unerman, 2008), downward and horizontal accountability (see Dixon et al., 2006;

Ebrahim, 2005; Unerman & O'Dwyer, 2006a), holistic accountability (O’Dwyer &

Unerman, 2008; Ebrahim 2005), they rarely explained how accountability is created

to the weakest group of people on this planet. Thus, this study demonstrates that

surrogate accountability is a promising accountability notion to create accountability

in an unequal world and hence the downward accountability too.

In relation to the practical contribution of this study, it contributes by unfolding the

extensive gaps of NGOs in the reporting (impact accounts) and real practices on the

ground. In other words, NGOs record and report social impact accounts from the

field in such a way it gives the impression that significant changes are brought into

the communities. But the reality on the ground differs a lot. Hence, this research

extends insights that there is a huge tendency to manipulate and exaggerate the social

impact accounts by NGOs in their disclosures to demonstrate their accountability and

impacts. Furthermore, this study also adds insights that positive impacts accounted

by NGOs are outweighed by their negative social impacts accounted by surrogates.

That is, stakeholders seemed to see NGOs’ negative impacts compared to their

positive impacts despite many years of huge interventions of NGOs in Nepal, and

these impacts appeared as risky to the country’s sustainable development.


NGOlisation of the country, creating other forms of inequality in addition to existing

inequalities, and supporting for neoliberal globalisation appeared to be a major

negative social impact of NGOs. In practice, these insights would communicate a

clear message to the government of any developing nations probably for policy level

intervention, and a potential surrogate to protect the interest of communities.

Finally, a minor contribution of this research is on its methodology of the study.

Incorporating the accounts of far-reaching wider groups of people including the

poorest of the poor on this earth to high level government officers, and very senior

people from national planning commission, national human rights commission, civil

society organisations, media, and NGOs and their national associations would yield a

broader platform to view the issues which gave thick descriptions, in-depth

understanding, and solid evidence for the study. Interviewing beneficiaries of NGOs

in the extreme remote areas of Nepal to understand their accounts is a unique

contribution of this study.

6.6 LIMITATIONS OF THE STUDY

While this thesis makes a number of theoretical and empirical contributions in the

field of SAA, there are limitations in terms of the scope of findings. This study

summarises its limitations into two areas. Firstly, this study chose four major

international NGOs and four local NGOs to examine their social auditing and impact

assessment practices among more than 250 international NGOs and 80,000 NGOs.

Among four major international NGOs, International Nepal Fellowship and United

Mission to Nepal are the first international NGOs to have started operations in Nepal.


The remaining two, World Vision International and Oxfam International, are

considered among the largest and most influential international NGOs in Nepal.

Even though sample size would be useful as thick cultural description (Marshall &

Rossman, 2011), and analysis of social auditing and impact measurement practices

extend an important understanding in the sector, the scope of such findings is

particularly limited in the context of Nepal.

Secondly, this study has limitations regarding the findings as well. Findings did not

aim to demonstrate all anticipated and unanticipated social impacts, and social

impact accounts captured by social auditing. Rather, they were used for illustration to

address the central research questions.

6.7 FUTURE RESEARCH

Future research could focus on following four different aspects on the basis of

discussion and findings undertaken in this thesis. First, more empirical study is

needed to explore the stakeholders’ empowerment aspects of social auditing. The

management-driven social auditing depicted how social auditing empowers

stakeholders. In particular, it identified that NGOs are using capacity building, and

participation and representation methods to see stakeholders’ empowerment.

However, surrogates-driven social audit critiqued that adequate stakeholders’

empowerment has not been considered by international NGOs especially on having

representation from accountability holders in the decision making process within the

NGOs even though they advocate for representation in the decision making bodies of

other organisations. Hence there is a future research opportunity for more empirical

study looking at the stakeholders’ empowerment process particularly looking at


representation of stakeholders in decision making bodies, and whether the

representation in decision making bodies as discussed by NGOs is the same as the

corporate governance restructure (Adams, 2002; Friedman & Miles, 2002; O'Dwyer

et al., 2005; Owen et al., 2000, 2001). In this process, exploring accountability

holders’ representation in a decision making body using surrogates-driven social

audit would offer more insights to understand social accounting as an empowerment

process.

Moreover, this thesis briefly explores how the most poor and powerless people, the

illiterate and most marginalised are engaged in the social auditing process by NGOs

and how their voices are heard. NGOs are found to use tools like ‘gallery’ or ‘score

card’ or post audit workshops to hear and address the concerns of those groups. A

case study method to look at how such people are engaged and how their voices are

recognised based on process observation would yield new avenues in social auditing

to learn how the voices of the powerless are heard and accounted.

Third, this study did not look at NGOs’ accountability in relation to very specific

areas such as climate change mitigation, disaster risk reduction, and bio-diversity.

Accountability study having specific focus on such areas also would explore new

insights on understanding of NGO accountability.

Furthermore, this study finds that there is a huge gap on what NGOs disclose through

disclosures (reports) in relation to social impact accounts and accountability, and

how they really practice on the ground. A study focusing on disclosures of NGOs

also would provide new understandings on NGO disclosures and accountability.


Finally, the entire thesis looks at accountability mechanisms of NGOs with a lens of

surrogate accountability mechanism (Rubenstein, 2007). In the context of Nepal

where NGOs are the powerful entity, surrogate mechanism at least would create

better accountability than standard accountability mechanism in the short and

medium run. However, this study also found that surrogates like government seemed

very weak. As a result, NGOs were not sanctioned many times. Besides government,

most of the surrogates appeared to be strong in the study. What would happen to

surrogate accountability mechanism if most of the surrogates are weak? Hence, an

in-depth study in the context where many surrogates are weak would provide new

learning, particularly how surrogates accountability works when many surrogates are

weak.

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Appendices 239

Appendices

Appendix A: The sampled international NGOs and local NGOs

SN International NGOs Local NGOs Remarks on local NGOs 1 World Vision International

(WVI), Nepal PEACEWIN A partner NGO of World

Vision 2 Oxfam International Asal Chhimekee Nepal

(ACN) An independent NGO

3 United Mission to Nepal (UMN)

Disabled Rehabilitation & Rural Development Organization (DRRDO)

A partner NGO of both UMN and INF

4 International Nepal Fellowship (INF), international

INF Nepal A major partner NGO of INF international

Total 4 international NGOs 4 local NGOs

240 Appendices

Appendix B: Summary of the background of major NGOs, and their

associations under the study

Organization

Country of origin

Mission/vision Areas of interventions in Nepal Intervention coverage

Websites

Oxfa-m International

The United Kingdom

Our vision is a just world without poverty. We want a world where people are valued and treated equally, enjoy their rights as full citizens, and can influence decisions affecting their lives.

Oxfam has been supporting the people of Nepal for more than 30 years with the vision to create a just society without poverty; Through its Sustainable Development Program, Earthquake Response Program and Media, Advocacy and Campaign, Oxfam in Nepal aims to provide people with livelihood opportunities, ensuring that development-related activities are demand driven and sustainable and that the most vulnerable are empowered to claim their rights.

National

https://www.oxfam.org/en/countries/nepal

WVI Nepal

United States of America

Our vision for every child, life in all its fullness. Our prayer for every heart, the will to make it so

World Vision started its development initiatives in Nepal in 1982 by donating funds to local groups for building hospitals and providing health care. World Vision formally started its long-term development work in Nepal after signing both general and project agreements with the Social Welfare Council, in 2001. World Vision is working to address the immediate poverty issues confronting children and vulnerable communities in Nepal integrating its work efforts in advocacy, development and humanitarian emergency affairs.

National

http://www.wvi.org/nepal

UMN United mission of people from many organizations from different parts of the world

Fullness of life for all, in a transformed Nepali society.

United Mission to Nepal (UMN) is an international non-governmental organization (INGO) that has been working exclusively in Nepal since 1954. UMN works in five different areas: education, health, peacebuilding, sustainable livelihoods and hospitals.

National

http://www.umn.org.np/

INF /INF Nepal

Few individuals from UK started working in Nepal which yielded INF

Nepali people in Nepal and beyond experiencing fullness of life in Jesus Christ and serving with others to promote health, peace, justice and harmony with God and His

Established in 1952, INF is Nepal’s longest-serving international non-government organisation. INF helps people effected by leprosy, spinal cord injuries, and disability, facilitates development in some of Nepal’s most remote and poorest communities, runs medical outreach programmes and provides medical training as well as supporting and providing assistance for Nepali migrants travelling to India and

National

https://www.inf.org/ https://www.inf.org/INF-nepal/

Appendices 241

world. beyond in search of employment.

Asal Chhim-ekee

Nepal Asal Chhimekee Nepal (ACN) envisions healthy lives, clean environment, peaceful and moral communities, educated and self-sustained society, as well as honest and able leadership in the nation.

ACN was registered with the local district administration office in 2003. It aims to work amongst and for disadvantaged, orphans, drug users and alcoholics, sex workers, people at risk, street children, helpless, physically challenged, illiterate, imprisoned, refugees, victims of natural disaster and internal conflicts.

Few districts

http://acn.org.np/

Peace-Win

Nepal Every child & woman of PeaceWin working areas of Nepal fully enjoyed with basic human rights & development facility. Ensured opportunity and self-esteem of human being by eliminating all forms of injustice and discrimination based on caste, gender, class, age, property. All will be entertained the well-off life in friendly social relations, justice and equality.

This is the organization initiated by rural farmers in 1990 as community based organization at Far-Western region of Nepal. We work with rural children, women and youth. It has been working with 996 civil society organizations and 12 national and international level civil society networks. It trusts on Collective cooperation, accountable participation, responsible equity, committed equality and efficient work. Working with multi partners in different issues for the sake of children for their better future and well-off society.

Many districts

http://PeaceWin.org.np/

DRRDO

Nepal DRRDO-Nepal working to ensure the rights of disables and give them respectful life in the society since (http://un.org.np/3w/view.php?id=192)

DRRDO-Nepal was established in Mugu district after registration with the district administration office in 2060. At present DRRDO is involved in the integrated rehabilitation programme implementation in Seri and Shreekot VDCs in Kathyad belt and has been working in the implementation of disability awareness raising programme by actively involving 2 self help groups and 4 inclusive child clubs (http://un.org.np/3w/view.php?id=192) .

One district

NA

242 Appendices

AIN Nepal Recognizing the growing need to work in a country afflicted by endemic conflict, AIN is committed to expand its resources on behalf of all disadvantaged people in Nepal, especially those affected by the ongoing struggle.

The Association of International NGOs (AIN), formed by INGOs working in Nepal in September 1996, is an important network in the development sector of Nepal as members have been implementing various people-centered development programs throughout the hills, mountains and Terai areas. AIN has come together to promote mutual understanding, exchange information and share experiences and learning of our work in Nepal for more effective collaboration.

http://www.ain.org.np/

NGO Federa-tion

Nepal NGO Federation of Nepal (NFN) emerged as an umbrella organisation of NGOs.

Since its establishment in 1991, the NFN apart from defending NGOs’ autonomy has been fighting for promoting human rights, social justice, and pro-poor development.

http://www.ngofederation.org/

Appendices 243

Appendix C: Interview and Interviewees details

SN

Name of Interviewee

Position Organization and/or description

Place Date and time

Total duration

Code

International NGOs’ CEO or their associates 1 Not shown For Country

Director (Monitoring, Evaluation, Learning & Strategy Director)

World Vision Nepal, Kathmandu

World vision Office, Kathmandu

13/01/2016, 5:07pm

1:05:55 INGO4

2 Not shown Program Quality Coordinator

Oxfam Nepal Oxfam office, Kathmandu

20/01/2016, 4:25pm

52:13 INGO3

3 Not shown Executive Director

United Mission to Nepal (UMN)

UMN office, Kathmandu

19/01/2016, 2:12pm

45:09 INGO2

4 Not shown Good Governance Manager

United Mission to Nepal (UMN)

UMN office, Kathmandu

19/01/2016, 3:04pm

54:35 INGO2

5 Not shown Executive Director

International Nepal Fellowship (INF), Nepal

INF office, Pokhara

21/12/2015, 3:00pm

50:52 INGO1

Local NGOs’ Chair, or CEO 6 Not shown Executive

Director Asal Chhimekee Nepal (ACN)

ACN office, Pokhara

23/12/2015, 12:43pm

38:58 NGO2

7 Not shown Programme Manager (Executive Head)

PEACEWIN, Bajura (partner of world vision)

PEACEWIN office, Bajura

13/12/2015, 8:20am

58:10 NGO1

8 Not shown Chairman Disabled Rehabilitation & Rural Development Organization (DRRDO) (Partner of UMN)

DRRDO office, Mugu

01/12/2015, 8:49am

53:05 NGO3

Chair of I/NGOs’ associations 9 Not shown Chairman

(Executive Head of Search for Common Ground)

Association of INGOs in Nepal

Search for Common Ground Office, Kathmandu

20/01/2016, 3:18pm

26:35 AIN

10 Not shown Chairman NGO Federation of Nepal

NGO Federation office, Kathmandu

13/01/2016, 11:57am

56:04 NGOF

Beneficiaries 11 Not shown Mugu

district Women Mugu 05/12/2015

, 2:45pm22:13 B3

244 Appendices

12 Not shown Mugu district

Also a local political representative

Mugu 05/12/2015, 3:21pm

26:22 B4


Mugu 05/12/2015, 3;59pm

21:40 B5



Mugu 05/12/2015, 4:28pm

18:34 B2


Women & Dalit

Mugu 05/12/2015, 3:07pm

14:50 B6

16 Not shown Bajura district

Women Bajura 07/12/2015, 5:56pm

20:14 B7



Bajura 08/12/2015, 8:44am

23:28 B8



Bajura 09/12/2015, 3:38pm

21:35 B9


Disabled and Dalit

Bajura 09/12/2015. 4:26pm

17:58 B10


Women and Dalit

Bajura 09/12/2015, 6:49pm

19:51 B1

Central government Officers 21 Not shown Joint

Secretary Nepal Government

His residence, Kathmandu

27/12/2015, 7:08pm

53:26 CG1

22 Not shown Joint Secretary (non-audio)

Nepal Government

Through email

Email on 30/01/2016

NA CG2

23 Not shown Under Secretary

Ministry of Federal Affairs and Local Development, Nepal Government

His office, Kathmandu

12/01/2016, 12pm

28:38 CG3

24 Not shown Under Secretary

Ministry of Women, Children and Social Welfare, Nepal Government


11/01/2016, 10:36am

38:15 CG4

25 Not shown Director Social Welfare Council, Nepal

Her office, kathmandu

03/01/2016, 1:44pm

12:40 SWC1

26 Not shown Deputy Director

Social Welfare Council, Nepal


03/01/2016, 12:09pm

57:17 SWC2

27 Not shown Section Officer

Ministry of Federal Affairs and Local Development


11/01/2016, 12:01pm

34:20 CG5

Appendices 245

, Nepal Government

Local Government Officers 28 Not shown Local

Development Officer (Head of the development work in district)

Local Development Committee, Dang district

His office, Dang

16/12/2016, 4:30pm

12:31 LG3

29 Not shown Senior Agricultural Development Officer

Agricultural Development Office, Bajura

His office, Bajura

14/12/2015, 7:42am

43:57 LG2

30 Not shown Acting Local Development Officer

Local Development Committee, Bajura district

At a hotel, Bajura

13/12/2015, 6:24pm

32:13 LG7

31 Not shown Women, Children and Social Welfare Officer

Women, Children and Social Welfare Officer, Bajura

Her office, Bajura

13/12/2015, 3;47pm

44:09 LG5

32 Not shown Women, Children and Social Welfare Officer

Women, Children and Social Welfare Officer, Dang

Her office, Dang

17/12/2015, 12pm

29:32 LG6

33 Not shown Social Development Officer

Local Development Committee, Dang district

His office, Dang

16/12/2016, 1:58pm

27:53 LG1

34 Not shown Information Officer

Local Development Committee, Banke district

His office, Banke

18/12/2015, 12:03pm

25:03 LG4

Journalists 35 Not shown Editor Kantipur

Publication, Kathmandu


29/12/2015, 2;13pm

31:22 J4

36 Not shown Business Head

Republica and Nagarik , Kathmandu


30/12/2015, 12:16pm

55:22 J2

37 Not shown Executive Head

Learning Group


06/01/2016, 2:23pm

54:57 J5

38 Not shown Member of the editing desk (Ex- General Secretary of Education Journalist group)

Kantipur Publication, Kathmandu

His residence, Kathmandu

19/01/2016, 7:17pm

36:54 J6

39 Not shown Regional Bureau Head

Kantipur Publication, Nepalgunj

District Development office,

18/12/2015, 12:35pm

43:53 J3

246 Appendices

Banke40 Not shown District

Reporter Kantipur Publication, Dang

Hotel Rapti Super, Dang

16/12/2015, 7:10pm

30:37 J1

Civil Society Organizations 41 Not shown President Gogo

Foundation, Civil Society Organization


13/01/2016, 1:30pm

38:01 CSO2

42 Not shown Director (Ex-Chair of Nepal Journalist Federation)

Freedom Forum, Civil Society Organization


18/01/2016, 3:28pm

53:00 CSO1

Social Auditors 43 Not shown Social Audit

Facilitator Mugu In a hotel,

Mugu 01/12/2015, 10am

40:14 SA1

44 Not shown Social Audit Facilitator

Bajura In a hotel, Bajura

12/12/2015. 6:01pm

52:45 SA2

National Commissions 45 Not shown Secretary National

Human Rights Commission


05/01/2016, 1:47pm

26:34 C1

46 Not shown Program Director (non-audio)

National Planning Commission

Her office, Kathmandu

19/01/2016 (non-audio)

NA C2

Appendices 247

Appendix D: Interview guide including questionnaire

Background The research project, social auditing: practices and challenges of NGOs in Nepal, is adopting interview as a tool/method for the study with a aim to understand the underlying issues, ideas and knowledge related to the subject. For the objective, interviews are being conducted among international NGOs and their local NGO partners, government officials, journalists, other stakeholders and beneficiaries in Nepal. This document has been prepared as a guide for this interview process. Most of the common ideas found in different literature divide interview process in three different stages (Creswell, 2003; 2007): the preparation for the interview (b) the constructing effective research questions and (c) the actual implementation of the interview. Similarly, literature explains that there are eight principles (McNamara, 2009) in general to follow while using interview method for the study. This interview guide also has been prepared based on these three different stages and principles of interview process.

Stage of Interview

Interviewee category

Preparation for the interview

International NGOs

Local NGOs Government official

Journalist, civil society, national commissions etc.

Beneficiary

8 principles are followed (McNamara, 2009)

Choosing Interview setting

CEO ‘s (or his/her equivalent) office or place they recommend or Skype or phone

Country director’s (or his or her equivalent) office or place they recommend

Their office or a Café where no noise at all

Their office or a Café where no noise at all

Their home or any suitable place in community

Explaining purpose of interview

The purpose of the interview is to have real, sound and practice based understandings, experiences and knowledge of impact measurement practices from practitioners and their close stakeholders; and this is part and a requirement of fulfilment of the research study being done under Queensland University of Technology.

Mentioning terms of confidentiality

The written consent form will be provided to participants name their name will not be used

Mentioning format of interview

Standardized Open-Ended Interviews will be used. Identical questions will be asked and they are worded so that responses are open-ended (Gall, Gall, & Borg, 2003). Such open ended questions will allow to you to give in-depth views/answers as you like. In the process researcher will ask some probing questions as a means of follow-up (Turner III, 2010).

Stating time period for interview

Around half an hour

Contacting after interview if

Mukunda Adhikari Azizul Islam [email protected] [email protected]

248 Appendices

needed

Asking whether they have any question before starting interview

If yes, handing them nicely

Making recorder and notes ready

Interview is to be recorded to transcribe later. Some important points are even written in the notes, for example some specific body language that make strong sense in the context

Constructing effective research questions:

Three research questions and other sub questions relevant for each interviewee groups have been mentioned.


International NGOs

Local NGOs Government official

Journalist, civil society, national commissions etc.

Beneficiary

R.Q. 1 What is the nature of management driven social audit and surrogate driven social audit within the NGO sector in Nepal?

a. How is your organizational understanding on social auditing?

b. Would you share your experience on social auditing and impact measurement? Or how they are related with each other?

c. Among the tools being used for impact measurement, does your organization use social auditing?

d. If yes, why your organization has chosen social auditing as impact measurement tool?

e. Would you

a. How is your organizational understanding on social auditing?

b. Would you share your experience on social auditing and impact measurement? Or how they are related with each other?

c. Among the tools being used for impact measurement, does your organization use social auditing?

d. If yes, why your organization has chosen social auditing as impact measurement tool?

a. How government does ensure impact is measured by NGOs?

b. Is there any particular policy requirement for NGOs for impact measurement?

c. Would you share your experience based on what I/NGOs are doing in Nepal on social auditing?

d. What is the expectation of regulator from social

a. How do Journalists evaluate/report the social impact of particular NGOs?

b. How do you report for or against social impact reports (Whether by commenting on social impact reports of NGOs or independently collecting information (counter accounts) to assess social performance of particular NGOs)?

c. Would you share your

a. Would you share your experience (while participating “NGO A” social auditing) with us on how this event measure changes being made in your livelihood?

b. Would you please briefly share how does “NGO A” disclose impact measurement report to you including other beneficiaries in this

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share your practice and experience with us on how well social auditing measures impact?

e. Would you share your practice and experience with us on how well social auditing measures impact?

auditing practices of NGOs?

e. How would you think I/NGOs use outcomes of this impact measurement and how do they disclose impact measurement report to stakeholders?

experience based on your participation, on significance of social auditing?

d. How would you think I/NGOs use outcomes of this impact measurement and how do they disclose impact measurement report to stakeholders?

community? Have you ever received any disclosures such as social auditing report “from NGO A”?


Aid agency CEO or equivalent

Aid agency’s partner CEO or equivalent

Government official

Journalist Beneficiary

R.Q. 2 Whether and how management driven social audit and surrogates driven audit are used to create NGOs’ accountability in Nepal?

a. Define your stakeholders who expect to see results of social impacts?

b. Who are your most important stakeholders?

c. How stakeholders are impacted by your operations and social impact measures?

d. How stakeholders’ react to your evaluations, social impacts outputs?

a. Define your stakeholders who expect to see results of social impacts?

b. Who are your most important stakeholders?

c. How stakeholders are impacted by your operations and social impact measures?

d. How stakeholders’ react to your evaluations, social impacts outputs and so on?

a. How does government hold NGOs and aid agencies accountable to the community?

b. How does government ensure aid agencies and NGOs are operating for community interests?

a. In general how do you protect the interest of community?

b. How do you report when there is critical case (where community interest is not under priority)

a. Generally what does community does when NGOs are not for their interests?

Concluding question

Are there any other insights you would like to share with us regarding social auditing?

Are there any other insights you would like to share with us regarding social auditing?

Are there any other insights you would like to share with us regarding social auditing based on your experience

Are there any other insights you would like to share with us regarding social auditing based on your experience

Is there any other insights you would like to share with us regarding social auditing

250 Appendices

working/reporting with/on I/NGOs in Nepal?

working/reporting with/on I/NGOs in Nepal?

based on your experience being a beneficiary?

Concluding Remarks

Thanking individual and/or their organization for kind support, time and assistance

Actual implementation of the interview

There are some dos and dons already been recognized to consider while conducting an interview. This is applicable to all types of interviewees. In the whole interview process, McNamara (2009) recommendations will be adopted as illustration. Some recommendations are: occasionally verifying the tape recorder is working asking one question at a time attempting to remain as neutral as possible (that is, don't show strong emotional reactions to their responses Encouraging responses with occasional nods of the head, "uh huh"s, etc. being careful about the appearance when note taking (that is, if you jump to take a note, it may appear as if you're surprised or very pleased about an answer, which may influence answers to future questions providing transition between major topics, e.g., "we've been talking about (some topic) and now I'd like to move on to (another topic);" Not losing control of the interview (this can occur when respondents stray to another topic, take so long to answer a question that times begins to run out, or even begin asking questions to the interviewer

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Appendix E: Construction of social accounts

After implementation of their planned interventions, I/NGOs expect to see social

changes in the communities and these changes accounts are constructed through

assessing the situations before and after I/NGOs interventions by using different

tools and techniques. This is called the social accounts construction stage. Such

assessment and measurement reveal the changes made by interventions, and these

changes are recorded as social (impact) accounts. Some of the major tools and

techniques used to construct social accounts are summarised below.

CANSA method

CANSA stands for Common Approach and Social Accountability method to

construct social accounts. INGO3 explains, “A platform for monitoring and

evaluation is CANSA which includes many tools within it, and used this for impact

measurement”. CANSA has been designed in international level of the organization

and it is revised in country context (INGO3).

Participatory Learning and Action (PLA) method or approach

This is a participatory method for assessing the changes of interventions where

different stakeholders are involved for the assessment (INGO4) using mapping tools,

ranking tools and rating tools that help to see changes brought by interventions

(INGO4). Other INGOs call it learning review (INGO3). The learning reviews

generally are:

Country learning review (INGO3)

Review meeting with partners including stakeholders such as government

(INGO2, INGO3, NGO1, and NGO3).

Effectiveness review (INGO3). It is a six dimensions tool on the basis of

which survey questionnaires are designed that looks at the status of the

people before project interventions and how project impacted their lives

after interventions. In addition, it includes cross check questions.

Monitoring

252 Appendices

Monitoring is one of the key methods used by I/NGOs primarily to see whether

changes are in-lining with the expectations or plan. Generally, monitoring helps to

check the progress of impact of the work, and account them. This progress is then

accounted which gives rise to social accounts. I/NGOs use different types of

monitoring for assessing their progress. Through disclosures’ text analysis and

interviews, following types of monitoring are explored being practiced by I/NGOs.

Community monitoring (INGO1): monitoring of work by community

people

Organizational monitoring (INGO1, NGO2, NGO3): monitoring by

organization itself, which also includes blind monitoring – monitoring by

organization without letting anybody know (NGO3)

Monitoring through progress sharing forum, and a review meeting

including government agencies (INGO1, NGO3)

Joint Monitoring (LG1, NGO3): monitoring by organization with

engaging stakeholders such as government

For the monitoring, I/NGOs use different tools which help them to see and measure

the changes, and then to construct the social accounts. Some of the tools that are used

during monitoring mentioned in the disclosures and expressed in interviews are

listed.

Observation during home visits (INF, 2011)

Interviewing beneficiaries (INF Australia, 2014, NGO2)

Multiyear budget and planning tool (WV Nepal, 2013)

Focal group discussion (NGO2)

Internationally adopted tools such as Bartel index to demonstrate the

degree to which individuals have been rehabilitated (INF, 2009).

Evaluation

Another method to measure the progress or changes is evaluation. It represents the

assessment of work or intervention or program or organization or policy or practices

of NGOs to look at how they have done. Most of the organizations do have separate

department in their organizations for evaluation or assessment, and thus it seems to

Appendices 253

be a dominant method among I/NGOs to assess social changes. In addition, there is

wider use of terminology in the sector. Evaluation is termed, categorised and used

variously. Some of its types are discussed below including some quotes from

disclosures.

Internal evaluation (INF, 2009; NGO3): evaluation from within the

organization

External evaluation (Oxfam, 2014): evaluation by external people outside

of organization

Participatory evaluation: evaluation together with government or other

stakeholders such as donors

Independent/Midterm evaluation (LG2; UMN, 2014; Oxfam, 2013;

INGO3): evaluation being done in the midterm of the project

Final (end term) evaluation (LG2; UMN, 2014; INGO3): evaluation

carried out at the end of the project

Impact evaluation: evaluation being done after few years of project

completion

Real time evaluation (Oxfam, 2013)

Partnership evaluation (UMN, 2010)

As in monitoring there are different tools used for evaluation. Some of the tools

being practiced to measure changes and construct accounts are:

Interviewing beneficiaries and stakeholders (LG2)

Observation (LG2)

Focal group discussion

Impact study/survey

Depending on nature of interventions, aid agencies even use term, impact survey, to

account the impact of particular intervention. INGO3 mentions household survey and

baseline survey which also construct social accounts. For example, survey is used to

see whether income of family has increased, training provided has been implemented

(INGO4). Impact study is also quite common.

254 Appendices

WVIN partnered with the Association of Community Radio Broadcasters to

broadcast Public Service Announcements (PSAs) on five preventable

solutions to the death of under-fives from 185 radio stations all over the

country. A PSA impact survey indicates that those announcements have

increased local communities’ knowledge of those five preventable solutions

and reached 70% of the population of Nepal (World vision Nepal, 2013).

Research

Conduction of different research (INGO1) and study also are taken as impact

measurement methods. One disclosure has mentioned research as a method to look at

the impact of an approach adopted by an organization.

In 2013, however, one of INF’s primary donors, Transform Aid International

[TAI - formerly known as Baptist World Aid Australia], suggested that INF

should undertake some research in order to substantiate the long-term

sustainable effects of the GAP approach, and also to assist in shaping the

practiced methods and planning for the future, thereby looking to maximise the

effectiveness and efficiency of INF’s programmes (INF, 2014).

MEAL method

MEAL stands for ‘Monitoring, Evaluation, Accountability and Learning’ (NGO1).

INGO3 adds another component –planning- on it and has made P-MEAL to make it

comprehensive method to construct social accounts. In this process, I/NGOs have

mixed few assessing methods: monitoring and evaluation together with

accountability notion and learning to develop a new method for assessing and

measuring changes of their interventions. At this time of the era, it has been a famous

method for many INGOs for construction of social accounts.

Generally, the above mentioned tools are used to record changes both in quantity and

quality. These changes are now social accounts of organizations. These social

accounts are at first produced as stand-alone report such as mid-term evaluation

report, monitoring report, survey report etc. which may or may not be disclosed to

Appendices 255

stakeholders. The series of such periodical documents consist of social accounts

which are generally replicated in the periodic progress report of organizations. Thus

social accounts are constructed by using different tools and techniques.

For social hearing auditing purpose, a summary report which includes major social

(impact) accounts of the work is prepared and a presentation is made ready on the

basis of this to present among stakeholders (INGO2). The report includes some

specific information such as activities, its budget, project location, number of

beneficiaries etc. (NGO3). Inviting diverse stakeholders are important as sometimes

NGOs are blamed that ‘they are just digesting money without bringing impacts in the

communities’ (INGO2). Another important function is selection or recruitment of

Social Auditor who is also called Social Audit Facilitator (INGO2, NGO1). While

Social audit facilitator is recruited for hearing approach of social auditing, the

evaluation team or evaluator/consultant is selected for empowering approach and

project assessment approach.