Understandability and Transparency of the Financial Statements of ...

highlighted some difficulties in comparing expenditure overheads ratios, in particular
the lack of uniformity in the presentation of financial information.
Chapter Eight also highlighted the need to balance donation-making choice between the
„emotive‟ and other aspects including the „financial information‟ aspects of the donating
decision. Part of this is achieved by ensuring that the financial information, in the form
of financial statements, reflects the activities of charities. Unfortunately, this study
highlighted that financial statements often lacked transparency by not telling or
supporting the story of the charity, meaning that charities are left with financial
statements that don‟t reflect the activities of their charity.
This section examined the importance of ensuring that financial statements are not only
transparent and understandable to their users but tell the full story of the charity, which
currently is not achieved. Next, the overall conclusions about transparency and
understandability in the financial statements of charitable organisations are reviewed.
9.3 Conclusions about the research problem
The four complexities focused on in this study were examined in the previous section;
this section will highlight the insights uncovered during the interviews, some of which
have not been identified in the prior literature (Chapters Two and Three).
9.3.1 Professional accountability
One key reason for the low level of transparency and understandability of charities‟
financial statements was the poor level of professional standards of members of
accounting bodies, such as NZICA. However, one insight this research found (Chapter
Six) was that, while several interviewees utilised appropriate GAAP doing their main
accounting job, for their charities work they seemed to use no standards for auditing or
accounting. What was rather ironic was that for many interviewees their „paid‟ work
involved hundreds or thousands of dollars but their charity work involved at times sums
in the millions of dollars.
This state of affairs cannot continue without irreparably damaging the profession of
accounting. Well-meaning accountants are perpetuating this by continuing to accept
unpaid or low paid work and not giving that work the time and expertise expected of a
qualified accountant. This continues the expectation of charities that it is possible to pay
minimally for financial statements to be prepared, and means they will face a rude
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