Understandability and Transparency of the Financial Statements of ...

Another problem my study found was a lack of interest in the financial statements, even
from those preparing them, as well as charities not wanting to be bothered with the
financial statements, as they see them as a distraction from the Charities‟ purpose.
And the governing parties don‟t know about it [the timing of revenue] either and
normally don‟t want to know. (Interviewee 36 T/B/A)
I don‟t know what that is. The memorial fund is when somebody dies; you might
make a donation to the branch in memory of someone. I would think that‟s what
the cash fund is, but I didn‟t even know it was there. (Interviewee 7 T)
So, if we just have a look at your fixed assets … Do you know how that was
actually valued? (Researcher) Before my time. (Interviewee 7 T)
Again this supported Connolly et al‟s (2009, p. 10) study where some participants said:
85% of my funders give money each month but are not interested in the
accounts. (Preparer 8)
Depressing to think more people read the accounts in their drafting than on
publication in the final form. (Preparer 1)
What was particularly disappointing in this research was where charities took an interest
and tried to understand their financial statements and had asked for help from their
chartered accountant, but did not receive any. This unfortunately links with the previous
section regarding a lack of professionalism by many accountants:
And they [accountants] just wouldn‟t help me figure out how to do this. I knew
how to do the depreciation, but where I got stuck was how to record it in the
first instance. (Interviewee 15 M/B)
Nobody‟s ever really said to us you know, the operating of this Trust is actually
around restricted funds. And I‟d never even thought of that, even though I knew
that that was part of what we had to do as an accountable organisation.
(Interviewee 16 M/T/B)
More encouraging were instances where accountants had attempted to shed light on
aspects of the charities‟ financial statements, sometimes with success, but not always:
I would say in the last few years there has been much less jam jars which is
good. It has very much been education because we‟ve been trying to tell people
that equity is one big bucket. You put it all in there [equity] if you want to tag
things separately denote those by way of notes. (Interviewee 18 A)
I haven‟t been able to figure out a way to bridge to help them understand it; it
was bad enough introducing this idea of balance sheet. All they wanted was the
incoming expenditure, because they‟re into cash flows. (Interviewee 6 T/B/A)
Interestingly, one interviewee‟s response to his charity‟s move to full IFRS-compliance
financial statements which have been deemed very complicated by many business
stakeholders, was noted by:
I found it [IFRSs] slightly more complicated. We revalued all the properties. It
[IFRSs] seems more realistic as your end figure sounds more realistic than
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