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WHAT DOES ACCOUNTABILITY MEAN FOR DIRECTORS AND CORPORATIONS?
NON-FINANCIAL ACCOUNTABILITY
HOW DOES ONE ACCOUNT
WHY ACCOUNT
SPECIFIC MANDATES FOR ACCOUNTING

In a global community supported by communications and other technology that “break down” distances, an organisation cannot be oblivious to its environment.

What happens in one country has world wide ripple impacts. If company ”X” is exposed as a violator of child labour because its suppliers use children in production, the negative effect on “X’s” share value is immediate.

If a state violates its citizens’ political rights, pressures through the international community mounts for it to change.

International non-governmental organisations provide a vibrant and strong conduit for information flow regarding multinational and governmental practices with regard to human rights, labour standards and the environment. Given this reality, the issue of accountability is relevant for all sectors.

Civil Society Organisations
Boards of directors/trustees are entrusted with donor funds to provide oversight for the voluntary sector organisations for which they are responsible. Like their corporate counterparts, their fiduciary duties are clear: DUTY OF CARE; DUTY OF LOYALTY; DUTY OF OBEDIENCE.

Although their accountability is not to shareholders they are accountable to a multiplicity of stakeholders.

Non-profit are challenged to provide credible information that clearly
demonstrates their relevance, their efficiency and added value,
their observance of relevant legislation, and the ethical conduct of administrative personnel as well as board members.
Private Sector
“Interest in corporate citizenship and social responsibility is growing as the role of business in society increases. The role of government is retreating to that of a referee, setting standards, originating legislation and working as a facilitator rather than a provider. A number of news stories have put corporate citizenship at the top of the agenda in recent years and alerted the public to issues of social responsibility.”
(McIntosh, Leipziger, Jones and Coleman, Corporate Citizenship, p43)
Recent scandals such as ENRON (US), the “arms deal” (South Africa), and others (WorldCom, Qwest, Tyco, Xerox, Merck, and Arthur Andersen) have galvanised government and civil society to take action regarding the exclusive prerogatives of private corporations. More transparency and accountability from corporate directors and senior management is required.
Corporations are juristic persons and, therefore, they assume obligations, as do ordinary citizens, for the respect, protection, promotion and fulfilment of human rights. They are also accountable and legally liable to their shareowners.
Corporations are called to account for their performance/impact regarding sustainable development based on “international” standards.
Consumer activism and civil society pressure for the observance of human, labour and environmental rights cannot be ignored. Only through rigorous performance management systems can corporations credibly demonstrate positive impact at all links in their supply, production, retail, and service provision chains.
Governmental/Quasi-Governmental
The accountability mandate is most direct for the institutions, administrations, and political processes of democracies with a culture of human rights, such as South Africa, because the state has legal duties to ensure the respect, protection, promotion and fulfilment of basic human rights. The measurement and enforceability of such obligations presents a significant challenge in that it requires the state to anchored its development plans in its human rights obligations and to balance this with the realities of resources limitations. In this regard, the state needs to design, develop and implement appropriate performance management systems that generate credible information to concretely show its “progressive realisation” of its human rights obligations.

 

 

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