what is accountability 
the term accountability refers to the acceptance of responsibility for honest and ethical conduct toward others in the corporate world a company s accountability extends to its shareholders employees and the wider community in which it operates in a wider sense accountability implies a willingness to be judged on performance understanding accountabilityaccountability is an essential concept in corporate finance it is defined as an entity s actions to take responsibility for their actions this can range from accounting for financial discrepancies conduct toward employees financial mismanagement or losing shareholder confidence this concept is particularly relevant to the accounting practices that a company adopts when it prepares the financial reports submitted to shareholders and the government without checks balances and consequences for wrongdoing a company cannot retain the confidence of its customers regulators or the markets corporate accountability has come to encompass a company s activities as they affect the community a company s environmental impact investment decisions and treatment of its own employees all have come under public scrutiny each industry has its own standards and rules for accountability that may evolve over time for example the rules for social media accountability are being written now types of accountabilitythe concept of accountability runs throughout all industries sectors companies and professions here is an overview of where accountability is most prevalent in the business sector at its most prosaic accountability is about numbers every public company must publish a financial report quarterly and annually detailing its income and expenses 1 an independent auditor reviewing a company s financial statements is responsible for obtaining reasonable assurance that the financial statements are free from any material misstatements caused by error or fraud 2 this auditor is holding the company accountable for its reporting accountability requires corporate accountants to be careful and knowledgeable as they can be held legally liable for negligence an accountant is responsible for the integrity and accuracy of the company s financial statements even if an error or misstatement was made by others in the organization this is why independent outside accountants audit the financial statements public companies are required to have an audit committee within the board of directors their job is to oversee the audit 3political accountability can relate to political contributions and how candidates use resources for example the nonpartisan center for political accountability and the wharton school at the university of pennsylvania publish a joint annual index rating major public corporations disclosure and oversight policies regarding their donations to political causes and candidates 4these scandals resulted in tougher regulations and there are armies of regulators and private watchdogs working to make sure that companies report their earnings correctly that the exchanges execute trades in a timely fashion and that information provided to investors is timely and accurate the center for political accountability shines a spotlight on corporate spending that aims to influence politicians in 2021 kff health news reported in depth on a campaign by the pharmaceutical industry to head off a proposal to allow medicare to negotiate drug prices with vendors the report named the names of members of congress who accepted political donations from drugmakers 5 by 2023 the center for political accountability noted that 218 large public companies had adopted political disclosure policies 6accountability is subjective for instance merck was named the most responsible company in 2024 7 however according to newsweek hp was the highest rate company in regards to responsibility in 2023 8 meanwhile mckinstry was the top rated in terms of a corporate equality index 9 there s a spectrum of accountability that companies land on and where they land can constantly change the role of corporate cash is only one of the global issues regarding government accountability for instance the u s agency for international development usaid the federal agency that administers civilian foreign aid measures government accountability by the following key factors to aid in protecting citizens the government accountability project protects federal state and local whistleblowers who spot problems and report them to appropriate agencies 11 in this model governments are held accountable through unofficial internal audits anyone can report anyone else for improper behavior forcing accountability to be systematic and prevalent throughout organizations the media in the u s is uniquely protected by the first amendment from interference by congress however this does not mean that it is free from accountability the media has long been under the constant scrutiny of a number of watchdogs internal and external in the internet era these have been augmented by independent fact checking organizations such as factcheck org snopes and politifact these and other organizations monitor the media for bias and errors and publish their findings for all to see individuals can now easily contribute to the conversation thanks to social media there is a debate though whether platforms like facebook are publishers or if the users are the publishers in either case social media continues to be under fire for spreading dangerous misinformation providing a platform for hate speech and having a generally lacking sense of accountability accountability in the workplacefor companies to be successful employees must conduct themselves with accountability this is done in several ways let s first consider the soft skills of accountability this includes showing up to work when expected and showing up to work prepared for the tasks for the day accountability extends to every department and every employee as it starts with being present honest and engaged in everyday tasks outside of one s job there is also a deep rooted sense of accountability in specific positions professionals who handle physical or digital money have a standard of accountability to be honest and responsible with funds that do not belong to them personally managers have a duty of accountability to properly oversee employees treat them well and guide them through growth opportunities there are a few ways that a company builds manages and sustains accountable practices such as internal accountability vs external accountabilityinternal accountability refers to the practices within a company this type of accountability is maintained through internal controls performance evaluations audits and a strong corporate culture for example regular performance reviews and audits help identify areas where employees and departments may need improvement external accountability on the other hand pertains to a company s obligations and responsibilities to outside parties such as regulators investors customers and the general public this form of accountability is often enforced through legal requirements industry standards and public scrutiny companies must regularly disclose financial information comply with environmental regulations and meet consumer protection laws if they don t there may be legal consequences that are detrimental to the company s ability to function both forms of accountability must be present for a company s success and sustainability however there are different risks to each internal accountability ensures that the organization operates efficiently and ethically from within should this not happen it may be much more difficult to achieve external accountability note that external accountability whether by regulators or consumers is the more detrimental and costly of the two but it doesn t happen on its own in some cases a failure to uphold internal accountability leads to problems with external accountability benefits of accountabilityaccountability is different at every company however there are overarching benefits that accountability can provide should a business be able to appropriately execute accountability practices a 2022 research study by pew research found that 51 found that the so called cancel culture was a movement to hold people accountable for their actions while 45 saw the movement as punishment for people who didn t deserve it 12 studies like this demonstrate how accountability can be a blurred line example of accountabilitycorporate accountability can be hard to quantify but that doesn t stop anyone from trying one real world example of corporate accountability is the volkswagen emissions scandal often referred to as dieselgate 13 this scandal exposed how volkswagen one of the world s largest automobile manufacturers had deliberately installed software in its diesel vehicles to cheat on emissions tests in 2015 the united states environmental protection agency epa found that many vw cars being sold in america had a defeat device in diesel engines that could detect when they were being tested in reality cars emit up to 40 times the allowed levels of nitrogen oxides pollutants that contribute to the formation of smog and acid rain and are linked to various respiratory diseases the ultimate fallout was volkswagen faced hefty fines and settlements the company agreed to spend up to 25 billion in the united states alone to address claims from regulators car owners and dealers this included buying back affected vehicles funding environmental programs and compensating owners several executives were charged and in 2017 volkswagen pleaded guilty to criminal charges and agreed to pay 4 3 billion in penalties the scandal led to significant changes in volkswagen s leadership ceo martin winterkorn resigned and other top executives were either suspended or left the company vw undertook various internal reforms to improve compliance and transparency they implemented stricter environmental standards and compliance measures to prevent future misconduct volkswagen also issued public apologies acknowledging their misconduct and committing to making amends 