ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance
A listed company's board wants to make sure shareholders can see how directors have used the resources entrusted to them. Which governance principle is being addressed?
The principle is accountability. Directors must report to shareholders on how they have managed the company's resources, typically via the annual report and accounts. Materiality and prudence concern the content of financial statements, and confidentiality is an ethical duty, so none of them describes this obligation.
- AAccountabilityCorrect
- BConfidentiality
- CMateriality
- DPrudence
Explanation
Accountability means directors must explain and answer to shareholders for how they have run the company, usually through the annual report. Confidentiality is an ethical principle, while materiality and prudence relate to financial reporting, not to the directors' answerability.
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