Companies are accountable for their financial activities to safeguard legitimacy and maintain autonomy. If the actions of a company bear legitimacy in the eyes of investors, it can effectively use the granted independence.Ĭonversely, a company’s independence will be short-lived if its activities lack legitimacy. Maintain and enhance legitimacyĪ clear legal ground for various accountability mechanisms can generate the legitimacy of a company. However, the powers that are necessary to achieve objectives usually limit the allocation of roles to other parties. It suggests that there is a hierarchy in which the principal retains the consequences of the responsibility. The two elements of accountability ensure that responsibility is delegated and not merely forsaken. Reporting the returns on a portfolio of investments in an accountable and transparent manner reduces the chances of corporate mischief, implying that the administration of a company is based on good governance. Improve a company’s governanceĪccountability, alongside other key underpinnings, such as integrity and transparency, has proven to be the driving force behind a good governance arrangement. Some of the key roles of accountability include: 1. In the case of structured accountability, business agencies now realize legitimacy and a high level of governance and financial positioning are needed to continue to exist. They come as a result of notable developments – such as the role of media, the emergence of participatory democracy, and the growing need to keep investors and the public up-to-date and directly involved in a company’s activities. As a result, accountability relations in the financial sector are becoming diversified. Shifts in the socio-political environment are driving the changes in accountability relationships. The view of accountability continues to broaden in modern times. If they suffice, the responsible party is held accountable. A reasonable level of care and accuracy is needed to curb possible errors – failure to which the company may incur a penalty. They also ensure proper communication of information by having established channels of communication where important information is communicated to shareholders, potential investors, and the public. Public companies have a fiduciary responsibility to their shareholders by ensuring accurate and timely reporting of earnings for the year and proper execution of trade. Shareholders are also interested in the concept of accountability in a company’s operations. It shows how the management utilizes the resources with which it is entrusted. The accountability objective is the basis for constructive dialogue between investors and management. In essence, the integrity of the capital markets depends on credible checks and balances. Agencies with structured accountability can realize legitimacy and a high level of governance, as well as better financial positioning.Īccountability helps to improve the quality of financial reporting.Accountability on checks and balances guarantees the integrity of capital market investment activities.Accountability refers to a situation where an individual or company is responsible for the outcomes of a particular activity.
The accountor gives the mandate and delegates the power, while the accountee receives power.
#Accountee on draft professional
Accountability commands care, knowledge, and skills during accounting practice since a slight omission or an act is tantamount to professional negligence. The auditor is, therefore, legally and criminally liable for fraud or breach of contract resulting from the audited financial statements. The benefit of accountability is that it assures that an auditor presented an accurate and fair view of a company’s financial health. The concept is further dependent on the ethical behavior of the party held to account for the activity and influence of regulations. Still, it is the accountor who takes responsibility and goes the extra mile to put measures in place to prevent future reoccurrence of a mistake. It is commonly practiced in the financial sector and the business world in its entirety.įor example, the two elements of accountability can be seen in a case where an accountor delegates the power to the accountee.
The principal party delegates roles to other parties but remains liable if an action is not executed well or in the event of a loss. Essentially, the accountable party is responsible for the execution of the desired role. Accountability is the concept of answerability by an individual or a department for the performance or outcomes of specific activities.
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