Corporate accountability and governance.

The shareholders do not become involved in transactions. They contract specialized individuals to make the transactions on their behalf. This separates the shareholders from assuming direct responsibilities on a daily basis. The principal-agent concept is a “team production theory” as Blair and Stouts (REFERENCE) propose.

Researchers and experts in corporate governance practices reject the principal-agent concept assumed by the public corporation by modifying and extending the team production theory. These are viewed as useful when used with the activities performed by the team. (Albert, 2004, 45)

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The corporate governance and accountability over the environment imply that corporations become good environmental citizens. A number of state and federal environmental legislation have been enacted during the past two decades holding the corporations accountable for their environmental obligations.

The reporting of environmental costs and obligations has been debated within the accounting profession and authorities. According to Johnson [1, p. 118], the environmental obligations total hundreds of billions of dollars. (Berle, 2003, 51)

The environmental costs and obligations are increasing as society becomes more environmentally conscious, governmental regulations pertaining to environmental issues increase, and corporations are held responsible and accountable. The corporate accountability for environmental outlays and the accounting treatment for measurement, recognition, and disclosure of environmental costs and obligations should be addressed clearly. The primary purposes of this article are to:

In February 1993, the Federal Deposit Insurance Corporation issued Guidelines for an Environmental Risk Program. These guidelines require banks to investigate and review the hazardous waste conditions of properties held as security by the lending institution.

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