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Quality Audit Tool for Managing Social Performance


MFI microfinance institution (MF Banks, non-banking financial ... Developed action plan reflects the real needs and does not irrationally overburden staff ... – PowerPoint PPT presentation

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Title: Quality Audit Tool for Managing Social Performance

Quality Audit Toolfor Managing Social
Acronyms Used
  • QAT Quality Audit Tool
  • ECA region of Eastern Europe and Central Asia
  • MFI microfinance institution (MF Banks,
    non-banking financial institutions,
    non-governmental organizations)
  • SP Social Performance
  • SPM Social Performance Management
  • SR social responsibility

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

Rationale ECA Region Context
Market trends
Social Performance reality
  • Since beginning in 1997 focus and pressure on
    MFIs self-sustainability
  • Withdrawal of donors to less developed countries
  • New comers commercial investors (i.e. Deutche
    Bank, Raiffaisen Bank)
  • Post soviet negative connotation of social
    for free
  • Commercialization of MFIs
  • Mission drift observed
  • Still huge interest in impact, but no resources
    to measure
  • Difficulties in promoting Social Performance
  • No commitment to social goals at the level of
  • Interest in easy and effective tool bringing
    quick measurable results

QAT Purpose
in order to
QAT aims at
  • Assessing status and effectiveness of systems in
    managing SP
  • Helping MFI realize its strengths and weaknesses
    in SPM
  • Helping MFI prioritize actions for improvement of
    their SPM
  • Ensuring institution-wide understanding and buy-in
  • To ensure MFI is on track how effective are
    your systems in aiming at achieving your
  • To optimize resource investment build on what
    you have and invest in what you really need
  • To prevent MFI from doing everything at once and
    burn out shortly lets improve step by step
    and look for quick wins
  • To create enabling environment for change to
    prevent SPM be one person project

QAT Target Markets
  • MFIs concerned about their Social Performance and
    quality of their management systems for SP
  • MFIs planning social rating exercise and willing
    to prepare themselves
  • Donors / Investors / Partners willing to support
    their partnering institutions in improving their

SP Dimensions Assessed by QAT
Intent and design
SP information system
Management systems
SPTF Dimensions in QAT
QAT Uses for MFI Manager
  • To check if an MFI is at right track towards
    their mission achievement
  • To identify strengths supporting their SPM
  • To identify weakness gaps and areas for
    improving their SPM
  • To use prioritized initiatives for developing
    action plan for improvement, allowing step by
    step SPM institutionalization
  • To buy in staff at all levels to build
    understanding SPM is overarching theme rather
    than project or tool
  • To monitor progress in SPM institutionalization
    (in case of repeated audit)
  • To prepare for social rating

QAT Uses for MFI Manager - Examples
  • Horizonti QAT lessons learnt
  • This was very important for we did the audit
    before implementing anything conducting the
    audit we knew the gaps where we need to pay
    more attention.
  • One of the outcomes we do know what we are
    doing, we are targeting the right people and
    doing a good job, but we need to work on systems
    to support this.
  • We saw that the MIS cannot support performance,
    so we will have a new one improved.
  • We collect a lot of information which can be used
    for SP indicators.
  • ED, Horizonti, Macedonia
  • Zene za Zene QAT next steps
  • Define more specific objectives for better
    understanding what it means for the terms of SP?
  • To experiment with MIS reports content
  • To improve internal communication
  • To measure drop-outs
  • To use client satisfaction form across the
  • SPM Champion, Zene za Zene, BH

QAT Uses for Donor / Investor / Partner
  • To help MFI improve in SPM through diagnosing
    strengths and weaknesses and developing action
  • To optimize its support through financing or
    helping implement the initiatives from action
  • To better understand the institution, its mission
    orientation and rational behind its translation
    to action
  • To monitor progress in SPM institutionalization
    (in case of repeated audit)

QAT Desired Impact MFI Level
  • Outcome - setting the stage for change process
  • Clearer operational understanding of SPM
  • Clear understanding by staff of what needs to be
    done to improve SPM
  • Internal champion and sponsor identified
    infrastructure for change established
  • Better communication of social orientation and
    required support to stakeholders
  • Quick wins implemented
  • Short term impact
  • Process of SPM improvement kick-off
  • Consistent effort of MFI to improve SPM in a
    manageable steps
  • There is on-going buy-in of staff, leadership of
    champion and support of senior management and
    board for implemented changes
  • Medium term impact
  • Internal systems are improved to be better
    aligned with double bottom line goals
  • Long term impact expected
  • Institution gets all aligned to double bottom
    line and results are improved

QAT Impact Examples From MFIs
CARD, the Philippines
Gap description of the target group was vague
and mixed with eligibility criteria for the loan
Quick win through a series of half day workshops
defines what is meant by saying we want to reach
economically and socially challenged families
and comes up with the indicators based on housing
materials, asset base, etc.
Moznosti, Macedonia
Gap At fast growth, new staff dont understand
and commit to mission
Quick win re-design of training program for
newly hired staff to ensure mission perspective
Micro Development Fund, Serbia
Gap collects lot of information, which is not
used later on
Quick win review the new set of MIX SP
indicators to see which information they can
start using immediately
More examples of MFIs quick wins in MFC
Newsletter Issue 1/2008
QAT Desired Impact
  • Investor / Donor / Supporter level
  • Increased number of partners refocus from
    assessing SP to improving SPM ? more supportive
    and longer term cooperation on SPM improvement
  • More informed partners make better decision in
    selecting more likeminded partners
  • More efficient allocation of resources to
    likeminded MFIs and activities that can bring
    greatest value in improving SPM at MFI
  • Industry level
  • More MFIs aware of their SPM status and
  • More MFIs improve in their SPM
  • Less mission drift
  • Better public image of Microfinance

QAT Benefits for Various Stakeholders
  • MFI Managers
  • Clear current picture of SPM systems quality
  • Good basis for effective implementation plan
  • Efforts oriented on mission acknowledged
  • Staff understands better and is bought-in through
    discussion about SPM
  • Allows improving before future social rating
  • MFI staff
  • Better understanding of how their tasks fit into
    social goals and strategy
  • Donors / investors / supporters
  • Better understanding of MFIs commitment to
    mission and its translation into practice
  • Assessment of MFIs SPM quality
  • Effective identification of MFIs needs in terms
    of supporting their SPM institutionalization

QAT Uses Extracts from 5th SPM Working Group
Meeting Minutes
  • In March 2008, the representatives of 10
    organizations members of MFC facilitated SPM
    Working Group, met in Warsaw to discuss lessons
    learnt in SPM institutionalization. Among other
    subjects they discussed QAT uses
  • It can be used before the process of SPM
    implementation it is nice to have gaps
  • Could be used for process evaluation a good
    diagnostic tool
  • Could be useful for taking on board those who
    were not directly involved e.g. IT people
  • Gives an understanding where the gaps are and
    what actions need to be taken
  • The format is very useful the SPM team might be
    biased but through interviews one gets more
    objective information
  • Could be used multiple times especially before
    the strategic planning
  • Provides awareness of different opinions and
  • Stimulates additional discussions at the
    institutions on SPM
  • Gives better understanding of HR needs where
    there are gaps in assumed and actual way the
    processes work
  • Remind and refresh the mission and social
  • Reveals information flow bottlenecks

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

4 Steps in QAT
0,5 day
2 - 3 days
1-2 days
0,5 day
1 day
1 day
Gap analysis
Follow up interviews
Audit panel
Final report
Analysis draft report
  • ED
  • Senior management (Finance, Operations, HR,
    Marketing, )
  • Board
  • Senior management
  • Internal auditor
  • MIS staff
  • Research staff
  • Regional level
  • Branch level
  • LO
  • Clients
  • All

Staff participating
Total time from 6 up to 8 days
External Internal Assessor
QAT is implemented by the team of two people
external and internal assessor
QAT Implementation Steps (1)
  • Gap analysis presents detailed questions which
    are used to assess SPM sets up a base for more
    in-depth follow-up
  • Source ED and senior management
  • In-depth follow-up gathers more detailed
    information to verify and better understand gap
    analysis checks status and effectiveness of
  • Source Interviews with senior management, staff
    clients review of documents and internal
    reports and information flows.

QAT Implementation Steps (2)
  • Analysis and draft report combine information
    and draft report highlighting strengths and
    weaknesses of issues in gap analysis it captures
    perspectives of different stakeholders to be
    discussed during audit panel.
  • Analysis include
  • Qualitative data analysis using triangulation of
    different information sources (interviews with
    different staff, focus groups with clients,
    review of written documents)
  • Tally sheet is used to identify common themes and
    divergences around strengths and weaknesses of
    MFI systems, notes from the interviews are
    reviewed for evidence and rationale behind
    emerging themes
  • Draft report is written addressing strengths,
    weaknesses, evidence and issues to further
    discuss/explore that serve as basis for
    discussion with representatives of different
    stakeholders during an audit panel.

QAT Implementation Steps (3)
  • Audit panel Presentation of findings to key
    organizational stakeholders, including staff from
    all levels of organization and clients, where
  • Audit panel allows for further verification of
    the audit results and finalize the report
  • The initiatives for addressing gaps are
    identified and prioritized in order to develop
    action plan for SPM improvement
  • Final report finalized based on audit panel
  • Includes prioritized activities to be undertaken
    by MFI in order to improve SPM by addressing the
    identified gaps and by building on identified

Source of Information and its Validation
Data Collection Methodology
  • Gap analysis questions basic set of questions
    defining the framework of SPM assessment
  • i.e. do you seek to be socially responsible
    organization in relation to your target clients?
  • Status questions questions validating the status
    of SPM components their presence in the
  • Asked to Loan Officer How do you communicate
    interest rate to clients? How do you ensure they
  • Effectiveness questions
  • Asked to clients How do you learn about interest
    rate? How do you know what is it?

QAT questions examples
Source QAT Handbook
QAT Report Structure (1)
  • Report is divided according to dimensions and/or
  • Each dimension / sub-dimension includes
  • to be discussed during audit panel
  • List of institutional strengths supported by
  • List of institutional weaknesses supported by
  • Points for discussion when there are different
    and not coherent opinions and evidence, they can
    be clarified and agreed during audit panel
  • after audit panel
  • key elements of the action plan

QAT Report Structure (2)
  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

QAT Attributes - Time
  • Depends on skills and experience of assessor
  • With external facilitator the process is more
    intensive and shorter
  • Internal Assessor can adjust duration to the
    internal dynamics

Process steps
  • Preparation (documents review)
  • Gap analysis
  • Individual interviews
  • Focus Group Discussions with Loan Officers and
  • Analysis
  • Audit panel
  • Final report
  • 1 2 days
  • 0,5 day
  • 1,5 2 days
  • 1 day
  • 0,5 -1 day
  • 0,5 days
  • 1 day

TOTAL 6 8 days
QAT Attributes Cost
  • Staff time
  • Internal Assessor
  • Staff in interviews
  • Staff in audit panel
  • Travel to branches for FGDs
  • Snacks for FGDs
  • Includes
  • 6 8 days
  • 1,5 h per person
  • 3 h per person
  • Travel costs
  • Costs of drinks and snacks

MFI costs
  • External facilitator time
  • Lodging
  • Travel
  • 6 days daily rate
  • 6 nights daily allowance
  • Cost of plane ticket

External facilitator
MFC estimated cost for external assessment 6000
USD staff time cost
QAT Attributes Breadth of Functionality
QAT Attributes Infrastructure and Resource
  • Resources required
  • Staff time
  • Funding for external facilitator budget
  • Infrastructure required
  • Computer for assessors, recorder
  • Separate room for conducting interviews
    (preventing noise, securing proper concentration)
  • Convenient room for 2 FGDs (with Clients and Loan
  • Transportation to branch (if needed)
  • Conference room for holding audit panel
    (including LCD projector, flipcharts, markers)

QAT Attributes Ease of Use
  • In case of external assessment
  • MFI needs only to set up logistics and select
    internal assessor
  • Additional benefit MFI is trained on how to
    conduct the assessment to do it independently
    next time
  • Challenge securing the funding
  • In case of self-assessment
  • Pre-assessment training is required
  • Timing adjusted to the internal dynamics of MFI
  • Challenge the selection of internal assessor
    must be more careful

QAT Attributes Customer Satisfaction
  • Assessing both strengths and weaknesses makes the
    audience appreciate the objective assessment
    they are motivated to improve as their up to date
    efforts to achieve the mission are acknowledged
  • Involvement of many stakeholders into process and
    allowing them commenting during audit panel make
    them owe the findings in opposite to external
    findings (external assessor becomes perceived
    rather as facilitator)
  • Developed action plan reflects the real needs and
    does not irrationally overburden staff
  • Clear and easy to follow structure of the report
    makes it a handy document for further work

QAT Attributes Customer Satisfaction in Citations
  • I am pleasantly surprised how everything is now
    clear the role and the goals of SPM
  • External assistance in the audit is very helpful.
    I wonder whether to us people would say what the
    external auditor found out. I have a feeling they
    tell us what they think we want to hear.
  • It was good that loan officers and branch staff
    were included in this audit. They gave a needed
    perspective for the understanding of the issues
    they face in their work. The fact that all staff
    was included means we will have full support for
    the changes
  • I am the SPM team member. During this week it
    became clear that we did a lot of stuff,
    discussed and decided on many points. I now see
    what will be the result of the entire SPM effort.
  • Social audit made me realize that we are already
    working on many aspects of SP in our
    organization, but have not given it the right
  • I am now better aware of the importance of the
    right loan for the client. I will pay more
    attention to how I do my work, how the loan is
    used and whether the client is advancing. This is
    giving me an encouragement for my future work
  • Partner, Bosnia and Herzegovina
  • In our case, this tool revealed many weak points
    in the systems and management processes and
    resulted in creating an institutional strategy
    with a holistic approach
  • AgroInvest, Montenegro, Serbia

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

  • QAT Overview
  • QAT Process
  • QAT Attributes
  • QAT vs. Other Tools
  • QAT Implementation

QAT vs. Other Tools (1)
Compliance audits social accounting by Social
Audit Network (UK)
Social Performance Audit Tool (SPA) by USAID
QAT vs. Other Tools (2)
Social Performance Indicators by CERISE
MFIs Implementing QAT Worldwide
  • ECA region
  • AgroInvest and MDF, Serbia
  • Aregak, Armenia
  • FinDev, AzerCredit and Viator, Azerbaijan
  • Horizonti and Moznosti, Macedonia
  • Partner and Zene za Zene, Bosnia and Herzegovina
  • The Philippines
  • MENA Region
  • Tamweelcom and DEF, Jordan
  • Till end of 2008 ARDI and AMOS, Morocco

Contact Details
  • For more information on QAT, please contact
  • Ewa Bankowska, Project Coordinator
  • E-mail Ewa_at_mfc.org.pl
  • Phone 48 22 622 34 65
  • Skype bankowska
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