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When giant corporations collapse overnight, the root cause is almost never bad luck—it is a catastrophic breakdown in how the company was monitored and run.
To prevent these disasters, organizations rely on corporate governance, which is the formal system of rules, practices, and controls by which a company is directed, administered, and held accountable to its stakeholders.
So where did this strict oversight system come from, and why are accountants at its center?

The Governance Framework & Cadbury Principles

In 1992, Sir Adrian Cadbury led a committee in the UK to investigate financial scandals like Polly Peck and Coloroll, producing the landmark Cadbury Report that defined modern corporate governance codes worldwide.
The framework established that boards must maintain sound internal controls—the automated checks, separation of duties, and authorization rules designed to safeguard assets and prevent fraud.
It also mandated an audit committee, which is a specialized committee of independent non-executive directors who monitor financial reporting, risk management, and the work of auditors.
Financial and management accountants don't do the exact same job—so how does each role support this governance framework?

Financial vs. Management Accountants in Governance

Financial accountants handle external stewardship by preparing financial statements under strict accounting standards (such as IFRS or GAAP), ensuring disclosures provide a true and fair view to outside investors.
Management accountants look inward, designing cost controls, running operational budgets, and measuring performance metrics to help directors make informed strategic decisions.