Understandability and Transparency of the Financial Statements of ...

At the time of writing, the ASRB supports the „Statements of Service Performance‟, as
promulgated by NZICA in Technical Practice Aid (TPA) 9 (New Zealand Institute of
Chartered Accountants, 2007b). TPA-9 provides guidance in relation to the
specification, measurement and reporting of service performance. Reporting „service
performance‟ is defined as “reporting the extent to which desired results have been
achieved” paragraph 5.1 (Audit Office, 1988 paragraph 5.1).
However, there are other formats that could be utilised for performance reporting
including the Charity Commission in England and Wales‟ „Summary Information
Return‟ which has a particular section on reporting outcomes (Charity Commission,
2009e). Some interviewees were keen to follow the public sector in preparing
Statements of Service Performances, but Interviewee 18 (A) proposed a „Statement of
Resources‟ which used to be mandatory for New Zealand schools:
A statement of resources was designed to capture the other things that it took to
run a school that may not be financially captured. For example, there are this
many teachers, we have a volunteer base of three hundred. The average
volunteer puts in this amount of time per year. We think, [based] on the average
wage, if we had to pay for these people it would be this amount. (Interviewee 18
A)
The New Zealand Charities Commission needs to consider which form, if any, would be
appropriate to broaden the focus of the Annual Return from accumulating information
about the sector for stakeholders, in particular Statistics New Zealand, into emphasising
the activities that support the charity‟s mission. Whichever format is utilised it must be
easy to complete and of high quality. The Controller and Auditor-General consider that
good quality performance reports must:
Have a clear format and layout; be presented within the context of the reporting
entity‟s strategic objectives, past performance, and current. Show clear, logical,
and easy-to-follow links between entity-level objectives, outcomes, outputs,
performance measures, and performance targets; be clear and concise in their
content; and be easy to read, expressed in plain English, and use words and
terms suitable for users (with adequate explanation of acronyms, jargon, and
technical terms) (Controller and Auditor-General, 2008, p. 48).
It is important that the Charities Commission is proactive in implementing changes to
the Annual Return form so that prospective donors visiting the Charities Register will
be able to access information on how charities have made a difference in their
beneficiaries‟ lives. Waiting for the relevant changes to the Financial Reporting Act to
be enacted could take some time and change is needed now not in the future.
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