Understandability and Transparency of the Financial Statements of ...

assumes the other is monitoring the charity (Hyndman & McDonnell, 2009). Hyndman
& McDonnell (2009) also consider that an important role of charities governance is to
determine what accountability relationships exist and how this accountability should be
discharged. The issue of how this accountability can be discharged in terms of
information and monitoring are addressed next.
5.4 Discharge of Accountability
Implicit in the concept of accountability is the question of what the accountor is
accountable for in order to discharge accountability (Cordery, 2008; Patton, 1992). The
discharge of accountability, at a minimum, involves a required transfer of information
and the important thing is what form that „account‟ takes (Connolly & Hyndman, 2003;
Cordery, 2008; Hyndman & McDonnell, 2009).
For Christians, ensuring charity accountability was discharged was perhaps easier in the
middle ages in England, where the concern by accountees was that the failure to be
charitable would lead to “eternal damnation” (Fishman, 2007, p. 14). Islam has also
developed its own concept of accountability (Taklif) where everyone must accept all the
duties and liabilities as well as the benefits of any ownership or responsibility entrusted
unto them and this would be assessed on the „Day of Judgement‟ (Jayasinghe &
Soobaroyen, 2009).
Unfortunately, stakeholders cannot rely on „eternal damnation‟ to ensure charities
discharge accountability and with the major financial scandals involving charities, for
example embezzlement in United Way of America, there has been increasing concerns
raised about the accountability of charities in relation to the adequacy of current
reporting and accountability mechanisms (Keating & Frumkin, 2003) which, will next
be examined.
5.4.1 Accountability Documents
Upward accountability must show „inside‟ stakeholders how charitable organisations
used and spent their money and whether this was an appropriate use of their funds
(Agyemang et al., 2009). Accountability documents include: financial statements;
annual reports and performance documents (Agyemang et al., 2009), all of which will
be reviewed next.
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