The audit trinity: the key to securing corporate accountability

Purpose - The purpose of this paper is to distinguish between corporate accountability and corporate governance, explore the development of corporate accountability and examine the role of the tripartite audit function in securing this accountability. Design/methodology/approach - A normative approach has been adopted and the research is based, primarily, on an examination of relevant literature. Findings - Society facilities the growth of economic entities by providing them with resources. As their command over resources increases, these entities gain significant economic, social and political power and accountability is demanded of their managers as a check on possible abuse of this power. Historically, as companies have increased their power in society, those to whom and that for which their managers are held accountable have been extended. Today, the managers of large public companies are considered to be accountable to society as a whole for a wide range of corporate activities. The discharge of corporate accountability traditionally relied on the preparation and audit of accountability reports (financial statements). However, from the 1990s, responding to the increasing severity of the impact on society of unexpected corporate failures – and continued failures – responsible corporate governance was added as an accountability requirement. Further, as the activities for which companies are accountable have been extended (paralleling the growth of their “power” in society), so corporate responsibility information has featured as an element in their accountability reports. As these changes have occurred, the importance of the tripartite audit function in securing corporate accountability has come to be recognised and its members – the company's external and internal auditors and its audit committee – have become increasingly multi‐disciplinary in nature. Originality/value - The paper explores the questions of why corporate accountability arises and how it is discharged. It explains the relationship between corporate governance and accountability and the role of the audit function in securing corporate accountability. It also provides insights into changes occurring in the audit function and how these might develop.