Social audit in the service of co-operative democracy

This article deals with the urgent problem of retaining the principle of co-operative democracy in the administration of modern consumer societies. Since a co-operative society is a democratic organization, which is under constant supervision of its members, the fundamental co-operative principle is democratic shareholder control. The authors present the main stages of development of co-operative movement in Russia, which illustrate the importance of democratic shareholder control to preserve the basic ideas of co-operation. Performance of consumer co-operation in Russia reveals the fact that it is necessary to transform the traditional methods of bureaucratic control, which are focused on retrospective assessment of the financial and material state of co-operative societies, and assume that financial indicators dominate among the monitored parameters. The need for reviving democratic shareholder control in the modern conditions is proved by the analysis of statistical information on the activity of the regional unions of the Siberian Federal District. The decrease in the number of shareholders is observed in the Russia's system of consumer co-operation in the Siberian Federal District. The authors have determined that the main cause of decrease in the number of shareholders is the economic unattractiveness of membership in co-operatives, which is the result of the lack of systematic and transparent policy for economic participation of shareholders in the activity of the consumer society. The lack of accounting methods for economic participation of shareholders does not ensure that they receive co-operative payments. Due to irregularities in the process of keeping personal accounts, dividends on share capital are not paid. It is obvious that the lack of verifiable information on the use of co-operative property and financial performance entails creates obstacles for effective democratic shareholder control. The authors suggest social audit as an instrument for protecting co-operative democracy because social audit can contribute to the comprehensive assessment of the consumer co-operative social responsibility to its shareholders, employees and society. Thus, it is of importance to consider social audit in consumer co-operation both as a form of external control, implemented by the shareholders and as a form of internal control conducted by unions of consumer societies. The social audit methods for solving the problems of democratic shareholder control should contribute to the comprehensive assessment of compliance with the principles of mass-scale participation, openness, voluntariness, equality of members and with the policy of training and retraining as well as with the degree of shareholders' economic participation in management.

Keywords

Authors

References