Corporate Governance Associated with Accountability

Accounting plays a very important role in corporate governance by ascertaining efficiency with which funds of shareholder and investor are used in a company. What is corporate governance? It is about how those entrusted with day to day management of the company’s affairs are held accountable to shareholders and another provider of finance. It is a system by which companies are directed and controlled. Everyone who is a part of the system is contributing to corporate governance. It is associated with accountability to the company’s equity shareholders. Equity shareholders pool their monies to run a business. Because of the size and complexities involved, they do not manage the business but let a group of executives operate it under the surveillance of a representative board of directors. Shareholders are residual claimants to the firm’s income. Gain or loss from good or bad performance is a lot of shareholders. To give good return to shareholders, efficient corporate governance is required an annual report of the company comprising profit and loss account, balance sheet, director’s report, and auditor’s report gives an idea of the efficiency of the resources employed in the business. An annual report reflecting corporate governance can be prepared if proper and adequate accounting records are maintained. Various tools of management accounting cost accounting and financial accounting are useful to know the performance of a company which is the basis of corporate governance.
Corporate governance as a concept has come to the forefront in recent years following major business failures worldwide. It has resulted in a redefinition of what is expected from the management and board of directors by the shareholders of a company. A new sense of responsibility on the board of directors and management is supposed to inform their working to shareholders and other investors. Branches of accounting (i.e. financial accounting, cost accounting, and management accounting) are very useful in this regard by giving comprehensive information on the working of management and board of directors by preparing an annual report of a company which is legally required to be given annually to every shareholder of a company. It may be made clear that good corporate governance is a key driver of sustainable growth and long term value creation for all shareholders. A company should be committed to the highest standards of corporate governance and should follow the basic tenets of integrity, transparency, accountability, and responsibility in all its activities. Accounts should be prepared in such a way that they exhibit a true and fair view of the profitability and financial position of a company and give a true and fair view of corporate governance. There should be no window dressing in the presentation of accounts to shareholders so that the performance of the management and board of directors may be properly ascertained which is the apex of corporate governance.