Internal Controls and Audit: Integrating SPM into Microfinance Capacity Building

This guidance note emphasizes the importance of integrating social performance into internal controls and audit.

MFIs can develop their capacity and strengthen their social performance management (SPM) systems by extending internal audit and controls to social performance. The note offers guidance on how MFIs can check compliance with their social mission in key areas such as social responsibility towards stakeholders, client protection, quality of service to clients and monitoring impact on clients’ lives. It identifies emerging practices that help MFIs integrate SPM into internal controls and audits. They include:

• Raising awareness about the importance of monitoring social performance;
• Verifying progress in achieving social responsibilities;
• Preventing client over-indebtedness;
• Ensuring ethical collection practices;
• Mitigating client vulnerabilities and ensuring client protection;
• Ensuring quality service and transparency;
• Checking availability and reliability of social data in the management information system;
• Protecting staff against biases.

The note also recommends that MFIs stay focused on their social goals, prioritize the SPM process and ensure consistency as they integrate SPM into their internal controls and audit.