AA – L2 – SA – Q2.1 – Board Accountability

To whom is the board of directors accountable?

Question

As agents of a company, the board of directors of a company are accountable to

A All the shareholders

B The majority shareholder(s)

C The shareholders and each other

D Each other

Answer

Explanation:
The board of directors, as agents, is accountable to all shareholders (A), who own the company and appoint the board to act in their interests. Accountability is not limited to majority shareholders (B), nor does it include mutual accountability among directors (C, D) as their primary duty is to shareholders. Thus, A is correct.

Tags: Accountability, Board of Directors, Corporate Governance, ICAG, Shareholders
Level: Level 2

Topic: Introduction to Audit and Assurance Engagements

Uploader: Salamat Hamid