Understandability and Transparency of the Financial Statements of ...

9.4 Academic Contribution
This research hopes to address the varied and wide use of the term „accountability‟ by
proposing a multi-faceted model to use when considering charitable accountability. The
„Charitable Accountability Model‟ incorporates the different aspects of accountability
that charities must consider (refer Table 9.1).
CHARITABLE ACCOUNTABILITY MODEL
The process by which assets devoted to charitable purpose are put to their proper
purpose and information about their use is made available.
1. To whom? Stakeholders both upward (inside) and downward
(outside) - refer Table 9.2.
2. For what? Financial, performance and fiduciary accountability -
refer Table 9.3 & Figure 9.1.
3. Accountability discharge
documents
4. Accessibility of discharge
documents
5. Accountability discharge
mechanisms
Examples: Financial statements, annual reports &
performance reports
Examples: Charities‟ web sites, publically accessible
charities registers and rating agencies
Examples: Charities boards, charities regulatory bodies
and assurance engagements
Table 9-1 Charitable Accountability Model
The model recommends five facets that must be considered in relation to accountability:
(1) To whom are charities accountable; (2) For what are charities accountable; (3) What
accountability discharge documents charities use to discharge their accountability; (4)
How accessible the discharge documents are to their stakeholders; and (5) Which
accountability discharge mechanisms charities use to discharge their accountability. The
first two facets will be explored further.
9.4.1 To whom are Charities accountable?
Charities are accountable to its stakeholders but who are these stakeholders?
Stakeholders can be split into many different parts including (1) Upward and
Downward stakeholders; and (2) Inside and Outside stakeholders. Upward stakeholders
include regulatory bodies and financial supporters, including funders and donors,
whereas Downward stakeholders include beneficiaries of the charity‟s products or
services (Connolly & Dhanani, 2009; Dhanani, 2009). Flack and Ryan (2004) consider
that Inside stakeholders are those that provide resources such as donors and funders.
Whereas Outside stakeholders were those stakeholders that performed a review or
oversight function, for example, government regulators, the media and the general
213