Our summer posting disclosed pictures along with comments revealing why our auditors had taken them, highlighting the importance of taking a wide-angle lens approach in not overlooking any detail in an audit. WethicA's auditors also encountered poor auditing practices previously implemented by other companies and auditing agencies. To address this growing concern, this newsletter will focus on auditing practices and consequences starting with the picture on the left. The picture shows a cupboard with workers' individual cups and dishes in a Chinese factory. A very common practice in China, workers usually purchase their own set of cup and dish to use for tea and eating meals, hence it’s easy to assume the number of cups and dishes should more or less match the number of workers. This particular factory in a management statement listed 120 workers but our count of dish/cup sets exceeded 150 sets of cup and dishes. With this seemingly insignificant detail, we discovered 30 workers the factory was trying to conceal. The provided documentation was markedly complete with no records of non-compliance on age, discrimination, forced labor, etc. But now knowing 30 workers were off the files such as payroll and social insurance receipts, we obviously started to doubt the validity of those submitted “official” documents.

This factory is frequently audited by several auditing agencies. They showed us very favorable audit reports performed even a short few months ago. Auditors walking in with only a standardized questionnaire as the only auditing tool could easily overlook critical issues, especially if factories have gone through the trouble of concealing them.

Auditing is not only about carrying out a questionnaire, in particular on social aspects when still in its development stage. It is a complex and comprehensive process that involves gathering relevant information, cross checking, and pro-activeness to match the specific situation of the factory. An audit is not a hide-and-seek game either. We have to utilize information even if no formal evidence to prove such is happening has been found. WethicA treats it a major issue when a factory hides or produces fake information on highly controversial issues such as child labor, forced labor, etc.

Returning to the case above, how can we properly assess the working conditions of these 30 workers? Are they being paid? Are they of legal working age? Why has the factory risked hidung them? Obviously, there must be an important reason. Since we can not find out directly from the factory, we can only prepare for the worst scenarios.

To our customers, in such a case, we report the lack of transparency as a major problem and we point out the potential risks with the information that is hidden. Some criticize us for this practice reporting on risks not fully identifiable or definite. This is precisely where ethics finds all of its meaning. An audit is not a game when workers – real people- are involved and where some would be allowed to conveniently break the rules. In this particular factory, by counting the cup and dish sets we had a real indication of the actual number of workers, and subsequently opened our eyes to other telltale signs that further supported our suspicions. Hence, one of our primary responsibilities is to explain clearly to our customers the potential risks in this factory.

Here are typical consequences by not telling the companies about potential risks:

• Our customers are unaware of the exposure to risk. For example, a journalist would not necessarily have access to workers’ files but would interview workers.. The company finds out there were 30 workers not accounted for in the original audit and they were all child laborers in the media. The damage is already done.


• Our customers could encounter unethical practices in such factories and not know how to deal with it.



• Consequences also occur on the factory level. It makes it favorable for a factory to lie. Contrarily, it would be disadvantageous for a transparent factory in the audit report, leading to poor factories that lied to be selected over good ones.


• Credibility of CSR approaches is lost in production countries where the marketing approach dominates with no real involvement in finding out the real situation in the factories.

For all these reasons, we continue to analyze all gathered information beyond the standard questionnaire, and report to our customers on the real situations and potential risks in their factories to ensure the best informed decision is made.