Understandability and Transparency of the Financial Statements of ...

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This view is supported by Fishman (2007, p. 15): The resources required to put in place an effective system of accountability would be immense, and with few exceptions it has never been thought efficient or worthwhile. Whilst several people consider that this is justification against charitable accountability, this does not hold true given the various frauds and other misdemeanours taking place within charities. As Eisenberg (2008, p. 1) further states: Inappropriate behaviour and excessive compensation are still a regrettable part of our world. Non-profits are fighting hard against more regulation and scrutiny, but self-reform, however attractive to a self-indulgent charity community, is not an adequate substitute for tougher regulations and enforcement. Ken Berger of Charity Navigator puts it succinctly by saying: We must get past the notion of doing the „good work‟ with no accountability. We must get past the idea that nonprofits are too complex or unique to be measured. The nonprofit sector must get its act together and make sure it is really helping provide meaningful change in communities and people‟s lives. It is life or death for many of those we serve whether we are effective or not (Berger, 2009, 1 December, p. 3). Accountability is seen as important for the charities sector in maintaining the confidence and financial support of the public by giving an account of charities‟ activities. As the charities sector plays such a rich and varied role in modern society, the sector‟s continued success is dependent upon the public‟s trust and confidence in their work. Thus a recognised definition of accountability, with all it entails, is an important aspect to the sector‟s continued success. 5.3 To whom - Stakeholders The concept of accountability seems inextricably linked with the view that accounting should provide information to satisfy the information needs of users, i.e. stakeholders. The user-needs model is now well established as a useful basis for a conceptual framework for charity reporting (Connolly & Hyndman, 2004). Gray et al. (2006) support this view by considering that the essence of accountability lies in the relationships between charities and the stakeholder groups to whom charities are accountable. Stakeholders are an individual, or group of individuals, who are affected by an organisation (Adams, 2004; Collier, 2008; Hung, 1998). England and Wales‟ Charity Commission identifies three main types of stakeholders: donors; beneficiaries and the 102
general public (Charity Commission, 2009a). Other authors (Accounting Standards Board, 2007a; Anthony, 1978; Bird & Morgan-Jones, 1981; Hancock, Izan, & Kilcullen, 2008; Kreander et al., 2009) have identified various external stakeholders for charities. Despite some overlap, the stakeholders can be grouped into five categories as shown in Table 5-1. Stakeholders of charities (1) Resource providers including: funders; donors; lenders; and creditors (2) Governments and their agencies including regulators and oversight bodies (3) Trustees or Officers of charities‟ Boards (4) The public (5) Beneficiaries Table 5-1 Charitable stakeholder groups Stakeholders can be split between upward and downward stakeholders. Upward stakeholders include regulatory bodies and financial supporters, including funders and donors, whereas downward stakeholders include beneficiaries of the charity‟s products or services (Connolly & Dhanani, 2009; Dhanani, 2009). As can be seen in Table 5-2 Flack and Ryan (2004) applied a different typology by differentiating between inside and outside stakeholders. The emphasis in both typologies is on those who provide resources - or upward/inside stakeholders who are considered to have power and the authority to influence the charitable organisation - and downward/outside stakeholders who are considered to lack a voice (Connolly & Dhanani, 2009). However, in Flack and Ryan‟s (2004) typology beneficiaries of charities do not have a clear „place‟ as they don‟t provide resources, but they also don‟t perform a review as they are the ones using the charities services or goods. Also there are differences in categorising, thus government regulators are considered an upward stakeholder by Connolly & Dhanani (2009), and conversely Flack and Ryan (2004) include them as outside stakeholders. Thus, to limit confusion this study will focus on the more commonly used terms of upward/downward (Connolly & Dhanani, 2009; Dhanani, 2009) rather than inside/outside (Flack & Ryan, 2004). 103
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Understandability and Transparency
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CHAPTER 2: REGULATORY & CONCEPTUAL
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4.3.3 Axiom 3 - The possibility of
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6.6 Summary .......................
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Appendix One - Statement of Financi
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Abbreviations AASB Australian Accou
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Related Research Outputs The follow
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Acknowledgements My journey through
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Abstract Access to charities‟ fin
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CHAPTER 1: INTRODUCTION 1.1 Introdu
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More importantly the study will loo
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Unerman and O‟Dwyer (2008, p. 801
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adopted here is clarified, as the l
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March 1999. Further, a study by the
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those by: Vatter (1947); Anthony (1
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CHAPTER 2: REGULATORY & CONCEPTUAL
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(k) The erection, laying out, maint
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Before looking at the legal structu
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2.3.4 Problems As with charity nome
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yet to be determined. This ensures
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per annum (Charities Commission, 20
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certain cases there will be concept
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The focus of the Charities Commissi
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Unlike incorporated societies, the
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2.4.4.4 Future conceptual framework
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problems with New Zealand‟s regul
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This research seeks to identify if
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charities” (Charity Commission, 2
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statements in different documents t
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seek to identify whether a lack of
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In the international arena transpar
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elevance is compromised. The link b
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3.2 Complexities in Charities’ Fi
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3.2.1 Accounting basis The „Accou
Page 69 and 70: application of the appropriate GAAP
Page 71 and 72: length transaction”. This definit
Page 73 and 74: There are four arguments against de
Page 75 and 76: Financial Accounting Standards Boar
Page 77 and 78: al., 2008; Newberry, 1992; Rees & D
Page 79 and 80: However, the notion of control is a
Page 81 and 82: Kilcullen et al., 2007b). Charities
Page 83 and 84: the amount of money spent on admini
Page 85 and 86: This research seeks to identify wha
Page 87 and 88: As a result of the literature revie
Page 89 and 90: the elements of the world, or rathe
Page 91 and 92: come about through the mutually sim
Page 93 and 94: Research reports from other organis
Page 95 and 96: clearer picture of the interviewee
Page 97 and 98: In England, Palmer and Randall (200
Page 99 and 100: APPROACHING PARTICIPANTS Within the
Page 101 and 102: availability of charities‟ financ
Page 103 and 104: As credibility was usually achieved
Page 105 and 106: clarifications. This approach was u
Page 107 and 108: to understand the meaning behind an
Page 109 and 110: analysis is both complete and impar
Page 111 and 112: subjective realities (Chua, 1986).
Page 113 and 114: To assure the study was dependable
Page 115 and 116: CHAPTER 5: ACCOUNTABILITY 5.1 Intro
Page 117 and 118: emphasis on the definition of accou
Page 119: supposition was that a lack of resp
Page 123 and 124: assumes the other is monitoring the
Page 125 and 126: performance reporting rather than f
Page 127 and 128: appropriate performance information
Page 129 and 130: examiners and the Charities‟ Boar
Page 131 and 132: which was set up in 2003. Charity a
Page 133 and 134: Western Australia, all financial st
Page 135 and 136: The fourth level of independent exa
Page 137 and 138: What are the major areas of concern
Page 139 and 140: subset of good accountability pract
Page 141 and 142: Programme refers to a meeting of ob
Page 143 and 144: ecording property, plant and equipm
Page 145 and 146: Figure 6-2 Dimensions of Financial
Page 147 and 148: Because the [charity‟s] finances
Page 149 and 150: „selling a story‟ makes them fo
Page 151 and 152: that you can use it [the stove] for
Page 153 and 154: the organisation pay to have those
Page 155 and 156: contributors twice - first to fund
Page 157 and 158: There is a need to record restricte
Page 159 and 160: charity will have control of a seco
Page 161 and 162: of accountants involved in Charitie
Page 163 and 164: their decision making. One auditor
Page 165 and 166: Whilst the sample in this thesis is
Page 167 and 168: Another problem my study found was
Page 169 and 170: framework funders would not be able
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The lack of professionalism must be
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New Zealand‟s charitable purpose
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We have since February of last year
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analysis was done of the first comp
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Also the idea of members „taking
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The transparency of their organisat
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7.3 Monitoring As discussed in Chap
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Zealand] Statistics Department poin
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There was a sub-committee running [
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useful for smaller organisation and
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change and they‟re doing a good j
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problem that you‟ve [pause] we‟
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legislation and monitoring. Of part
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CHAPTER 8: PERFORMANCE ACCOUNTABILI
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In New Zealand both the Controller
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what proportion of their charitable
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None of the above reasons includes
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Charities Commission publication
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achieve an appropriate level of per
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more effectively in order to increa
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eneficiaries‟ needs are met is an
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As well as setting aside reserves,
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The important aspect of the propose
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Mostly they [the funders] are worki
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eyond financial health to include
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8.4.4 Prescribed performance report
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impact they have on their beneficia
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statements, but also other mechanis
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compare different charitable organi
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shock when their accounts are eithe
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9.4 Academic Contribution This rese
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Outcomes (Effectiveness) Figure 9-1
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Charities Register, of which thirty
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success in their activities. For as
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Ahrens, T., & Chapman, C. S. (2006)
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Australian Accounting Standards Boa
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Bradbury, M. E., & Baskerville, R.
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Charities Commission. (2009f). A sn
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commission.gov.uk/Our_regulatory_ac
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Cordery, C. J., & Baskerville, R. (
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Eisenberg, P. (Ed.). (2005). Challe
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Fremont-Smith, M. R. (2004). Pillag
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Hui, D. (2006). Financial Reporting
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http://www.ifac.org/Members/DownLoa
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Maxwell, J. A. (1992). Understandin
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http://www.nzica.com/AM/Template.cf
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O'Sullivan, N., & O'Dwyer, B. (2009
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Robson, C. (1993). Real World Resea
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Television New Zealand (Writer) (27
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Appendix One - Statement of Financi
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Appendix Three - Semi-structured in
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Appendix Five - Participant informa
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Appendix Six - Transcriber’s Conf
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Heading 1 Heading 2 Heading 3 Prope
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