Understandability and Transparency of the Financial Statements of ...

To have trust is good but to support it with a system of internal control enhances that
trust.
Of particular concern is the large number of charitable organisations who have chosen
not to register and hence are not „caught up‟ in the Charities Commission‟s monitoring
„net‟. This gap in the monitoring of organisations that are potentially receiving taxation
concessions and benefits needs to be addressed by the New Zealand Government,
perhaps under the auspices of the Inland Revenue Department.
This study identified some serious weaknesses in the Charities Commission‟s Annual
Return, including the lack of care taken by some charities in completing their Annual
Return. This was compounded by the fact that the Charities Commission has not yet
incorporated any simple edit checks to highlight input errors.
Finally, another concern with the Annual Return was in relation to the Charities
Commission using it to monitor compliance with charities‟ charitable purpose. Given
the lack of information relating to the achievement, i.e. outcomes, of a charity‟s mission
on the Annual Return, this is an issue. Performance accountability in terms of the
reporting of financial information to stakeholders, in particular, reporting of outcomes,
will be further considered in the next chapter.
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