Financial Accountability, in the name of Enron and so many more

Scandalous to say the least...the subject of Financial Accountability, especially in terms of upper level management, has made its way to the media spotlight. With large conglomerates including the household names of Enron, WorldCom, Lehman Brothers and more declaring bankruptcy, while management to continues receive million dollar bonuses, stockholders and often employees are often left out to dry. Management must be held accountable for their actions and decisions in regards to the financial well being of their companies.

Financial Accountability refers, "to the rules that businesses (both large and small) must follow to be accountable to their stockholders and stakeholders and the general public” (Ehow.com). Management must be held accountable for effectively conducting the financial activities of the business as transparently as possible. Rules/procedures, a well-defined financial accountability structure, should be set in place through all key principles: planning, recording, internal controls and monitoring.

Accountability of various procedures throughout the accounting process are often delegated to set individuals by a governing group within the company. These individuals become the delegated authority to handle various activities throughout the financial process. Activities may include purchase requisitions, invoicing, invoice payment, expense reimbursement and more.

According to the financial accountability procedures set forth by UC Santa Cruz, “each individual is accountable for successfully completing his or her assigned activity.” They go further to state that financial activities involve processing a financial transaction in conformity with the set control standards on campus and that each financial transaction must have an audit trail leading back to the initial documentation. UC Santa Cruz is only one example of a clearly defined accountability process.

Regardless of whether a company has a clearly defined procedure to maintain Financial Accountability within the organization, effective follow up/monitoring must be conducted to ensure that key processes are followed. A financial audit, “is the review of the financial statements of a company or any other legal entity, resulting in the publication of an independent opinion on whether or not those financial statements are relevant, accurate, complete and fairly presented” (Wikipedia.com). An audit provides the assurance and credibility to the sound business decisions of a company. It also serves as a method to reduce the possibility of fraudulent business practices. A Financial audit adds overall value to the shareholders of a company through the assurance of accurate accounting and financial positioning.

Financial Accountability. Ehow.com. 4, June, 2010.

UC Santa Cruz, Financial Management. 4, June, 2010. < http://financial.ucsc.edu/ Pages/Management_Accountability.aspx>

Financial Audit, Wikipedia. 4, June, 2010. http://en.wikipedia.org/wiki/Financial_audit