ACCOUNTABILITY IN CORPORATE GOVERNANCE

8 Mar

ACCOUNTABILITY IN CORPORATE GOVERNANCE

DEFINITION OF ACCOUNTABILITY

To account is to give a description or depiction of something that happens or happened. Accountability would therefore be taken to literally mean the process of giving an account of an event. The tricky part; about it, is that for the people to whom the account is being given, the accuracy and probity of the story is very important. To achieve this, accountability usually moves hand in hand with seven other principles. These include, “delegation, responsibility, disclosure, autonomy, authority, power and legitimacy.”- Chansa (2006).

IMPORTANCE OF ACCOUNTABILITY

The separation of ownership from management can cause conflict if there is a breach of trust by managers either by intentional acts, omission of key facts from reports, neglect, or incompetence. One way in which this can be avoided is for entities (in their entirety) to act with transparency and be accountable to the shareholders and other stakeholders. Therefore apart from just being a component of corporate governance, there are many advantages of accountability.

Firstly, it is a key to economic prosperity. If there is poor accountability by players in the economy, stakeholders may lose the confidence they have in it and hence become reluctant to put in their best. For instance; for some developing countries, lack of accountability may lead to a fall in the participation rate in their development programmes by their co operating partners- a situation that leads to further deterioration in the development process. Accountability is also a key to performance measurement. The more accountable corporate governors are, the more likely it is that results of performance measurement processes are going to be a true and fair representative of the performance being measured.

CONCLUSION

Accountability is a very important pillar of corporate governance. Without it, the agency problem would be hard to defeat. With it, the confidence of stakeholders is increased. It is achieved through faithfulness in various aspects of corporate governance especially reporting. The strength and accuracy of the reporting is also strengthened by various standards and regulations.

REFERENCES

Karen Chabala Chansa (2006) Project paper “Accountability: A case study of ZSIC”

Byrne Kaulu (2010) Project paper.”Accountability in Zambia:A case study of the Zambia Institute of Chartered Accountants (ZICA)”.

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2 Responses to “ACCOUNTABILITY IN CORPORATE GOVERNANCE”

  1. melarndlovu September 24, 2011 at 17:02 #

    A VERY SCARCE COMMODITY IS ACCOUNTABILITY

    • Esaus June 3, 2012 at 20:13 #

      Accountability will always remain a scarce commodity in some organisations, especially if accountability and quarterly performance reviews are regarded as mere compliance rather than a commitment to minimize risks. Commitment does not come out alone,but comes out with some elements of engagement,relevant levels of job satisfaction and self-efficacy. Therefore accountability, cannot be related to deligated powers. In deligated powers,my assumption is that there is no six sense in meeting targets especially when it turns into abdication, leaving accountability a scarce commodity undermining the same strategic and operational plans we set on our own

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