CMA Foundation · Fundamentals of Business Economics and Management · Organisation Structure, Responsibility, Accountability and Delegation of Authority
A sales manager at a Kolkata company delegates pricing decisions to a regional executive, who gives an unauthorised discount that causes a loss. The managing director questions the sales manager. Which analysis is most accurate?
The executive is responsible for the discount decision, but the sales manager remains accountable to the managing director for the outcome and for supervising the delegated work. Delegation shifts the task and authority downward, yet the delegator keeps answerability to his own superior.
- AOnly the executive is accountable, because the sales manager delegated fully
- BNeither is accountable, as the discount was unauthorised
- CThe executive is responsible for the act, and the sales manager remains accountable to the MD for supervising the delegationCorrect
- DThe managing director alone is accountable since he holds ultimate authority
Explanation
The executive bears responsibility for performing the delegated task properly and answers to the sales manager. The sales manager, as delegator, still owes accountability upward to the MD for the result and for adequate control. Saying only the executive is accountable wrongly assumes delegation removes the delegator's accountability.
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