Accounting, accountability and governance: the roles of financial reporting

The historical origins of (financial) accounting are strongly linked to accountability. However, in recent decades standard-setters have turned away from accountability and have instead highlighted the usefulness for valuation decisions of capital providers as the official objective of corporate financial reporting. The current chapter traces the development from accountability to valuation usefulness, which becomes most apparently manifest in the conceptual frameworks developed by the financial reporting standard-setters in the United States and at the international level. This chapter evaluates the standard-setters' reluctance to consider accountability as a separate objective of financial reporting in light of analytical and empirical evidence in the accounting literature. On this basis, the chapter provides a critical discussion of the standard-setters' views and concludes with some thoughts on the future role of accountability in corporate financial reporting and further research potential in this area.