Module: | Statutory Audit, NFRA & ICAI Standards
Q50: Consider the following statements regarding the Social Audit Standards (SAS) applicable to the Social Stock Exchange (SSE) framework for 2025-2026:
1. Social Audit Standards are formulated to guide Social Auditors in assessing the impact of social enterprises listed on the Social Stock Exchange.
2. A statutory financial auditor of a company is automatically qualified to act as its Social Auditor without requiring any additional certification from the National Institute of Securities Markets (NISM).
3. Social Audits must culminate in a Social Audit Report that evaluates the entity's performance against its stated social impact goals, such as poverty alleviation or education.
Which of the above statements is/are incorrect?
2. A statutory financial auditor of a company is automatically qualified to act as its Social Auditor without requiring any additional certification from the National Institute of Securities Markets (NISM).
3. Social Audits must culminate in a Social Audit Report that evaluates the entity's performance against its stated social impact goals, such as poverty alleviation or education.
Which of the above statements is/are incorrect?
✅ Correct Answer: B
🎯 Quick Answer:
B. Only 2 is incorrect.Structural Breakdown: Statement 1 is correct; the SAS framework was created specifically for entities utilizing the new Social Stock Exchange.
Statement 2 is incorrect; a financial auditor is not automatically qualified.
To become a Social Auditor, an individual must pass the specific NISM Series-XXIII: Social Auditors Certification Examination and register with a Self-Regulatory Organization (SRO). Statement 3 is correct; the final output is a verified impact report mapped to developmental goals.
Historical/Related Context: The Social Stock Exchange was launched to help social enterprises raise capital.
However, to prevent "impact washing" (similar to greenwashing), SEBI mandated that the social impact must be audited by specially trained professionals using standardized SAS.
Causal Reasoning: Assessing social impact (e.g., improved literacy rates) requires a completely different skill set and methodology compared to auditing financial ledgers, necessitating a separate, rigorous certification process.