As per ACCA, Stewardship is the responsibility to take good care of resources. A steward is a person entrusted with management of another person’s property, for example, when one person is paid to look after another person’s house while the owner goes abroad on holiday.This relationship, where one person has a duty of care towards someone else is known as a ‘Fiduciary relationship’.The steward is accountable for the way he carries out his role.
A fiduciary relationship is a relationship of ‘good faith’ such as that between the directors of a company and the shareholders of the company. There is a ‘separation of ownership and control’ in the sense that the
shareholders own the company, while the directors take the decisions at the company. The directors must take their decisions in the interests of the shareholders rather than in their own selfish personal interests.
Accountability means that people in positions of power can be held to account for their actions, ie they can be compelled to explain their decisions and can be criticised or punished if they have abused their position.
In a company this works as follows:
Accountability is thus central to the concept of good corporate governance – the process of ensuring that companies are well run.
Accountability is thus central to the concept of good corporate governance – the process of ensuring that companies are well run.
• It is the shareholders of the company who own the shares in the company and thus indirectly own the assets of the company.
• The directors are accountable to the shareholders and to society at large for:
– making decisions on behalf of the company’s owners (the shareholders)
– using the assets of the company efficiently and effectively.
• The shareholders in turn have the right to remove the directors by voting in a general meeting and are likely to do this if they are dissatisfied with the decisions taken.
• Additionally, if the directors have acted illegally while running the company, they can be fined or even sent to jail.
• The directors are accountable to the shareholders and to society at large for:
– making decisions on behalf of the company’s owners (the shareholders)
– using the assets of the company efficiently and effectively.
• The shareholders in turn have the right to remove the directors by voting in a general meeting and are likely to do this if they are dissatisfied with the decisions taken.
• Additionally, if the directors have acted illegally while running the company, they can be fined or even sent to jail.