Understandability and Transparency of the Financial Statements of ...

charities can learn from them (Charity Commission, 2010d). This can be seen in the
recent publication of the Eelapatheeswarar Aalayam case which was published to raise
awareness of “the responsibility of charity trustees to safeguard their charity from the
risk of abuse, including terrorist abuse” (Charity Commission, 2010c, p. 5). In relation
to inquiry reports the commission reports the outcomes of all formal inquiries unless
publication would be detrimental to the charities sector (Charity Commission, 2010b).
In Australia, the Australian Taxation Office (ATO) monitors the sector by investigating
the eligibility of taxation concessions. The ATO work on the premise that charities are
highly compliant and seek to abide by the requirements of their special taxation status.
Accordingly, it will review only 200 non-profit entities to determine continued
eligibility for concessions in the 2009-2010 tax year (Australian Taxation Office, 2009).
To aid charities, the ATO publishes a non-profit news service which highlights the
common errors they have identified (Australian Taxation Office, 2010) .
By comparison, New Zealand is in its infancy in terms of monitoring the charities
sector. This can be seen on the New Zealand Charities Commission web site
(http://www.charities.govt.nz/about/index.html ) which states:
The Commission also investigates and will shortly be monitoring charities.
Currently, the Charities Commission appears to be focusing on investigating individual
complaints about charities rather than monitoring Charities‟ Annual Returns and
financial statements to ensure charities are doing what their rules require. As Trevor
Garret, the Commission‟s Chief Executive Commission has stated on Television New
Zealand‟s Close-up programme:
Bear in mind we‟ve registered close to 23,000 organisations, that‟s 23,000 sets
of financial statements that are going to come in every year. So we‟re not
necessarily going to look at every single organisation (Television New Zealand,
27 July 2009).
To utilise the Charities Commission as a mechanism for discharging accountability, it is
essential that the Commission develop a structured monitoring service similar to those
of the England and Wales Charity Commission or the Australian Taxation office, which
proactively monitors accountability within the charities sector.
5.4.2.2 Rating agencies
Another mechanism is the use of rating agencies as a tool for disseminating
accountability information in an easily accessible format via the internet. In England
and Wales the Charity Commission supported the establishment of GuideStar UK,
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