Understandability and Transparency of the Financial Statements of ...

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public. Incorporating the different categories of stakeholders provides the five key stakeholder groups shown in Table 9.2. Stakeholders of charities (1) Resource providers including: funders; donors; lenders; and creditors (2) Governments and their agencies including regulators and oversight bodies (3) Trustees or Officers of charities‟ Boards (4) The public (5) Beneficiaries Table 9-2 Charitable stakeholder groups Next for what charities are accountable for is reviewed. 9.4.2 For what are Charities accountable? Implicit in the concept of accountability is the question of „what‟ the accountor is accountable for in order to discharge accountability. Previous research has identified eighteen different types of accountability (refer Table 5.4). These are grouped into similar groups leading to an accountability typology with four types of accountability the first of which – Stakeholders has already been addressed in the model (refer Table 9.3). Stakeholders (refer Section 9.1.1) Downward Hierarchical Negotiated Political Public Upward Table 9-3 Accountability Typology As covered in section 9.3.3 the academic contribution to this research includes proposing a broadening of performance accountability to include not only the efficiency (outputs) and effectiveness (outcomes) of charities but their continued financial viability into the future (refer Figure 9.1). ACCOUNTABILITY TYPOLOGY Professional Accountability Financial Identity / Individual Personal Professional Performance Accountability (refer Figure 9.1) Managerial Performance Programme Social Fiduciary Accountability Fiduciary Fiscal Process 214
Outcomes (Effectiveness) Figure 9-1Performance Accountability Next, implications for practice and policy in this study will be considered. 9.5 Implications for Practice and Policy As some charities start reporting, or rather telling a clearer story, driven on by a media focus on financial statements, all charities will need to follow suit as the public will demand more than just „warm glow‟ stories. This will drive the need for several changes in practice in relation to reporting and standards, and policy, in relation to the New Zealand Charities Commission. First, the need for charity specific financial reporting standards will be considered. 9.5.1 Charities’ financial reporting standards Palmer and Randall (2002) considered that further study should be done on why charities were not complying with GAAP. The contribution to knowledge from this study includes the reason for charities choosing their particular accounting practice (Chapter Six) and the need for specific GAAP on key complexities identified in this research, in particular: the capitalisation of donated PPE; the recording of funds and reserves and the need for the „control‟ aspect of consolidation to be explained in relation to NFPs, including charities, rather than only for-profit organisations. It is hoped that the development of GAAP, reflected in charities‟ financial reporting standards, will lead to financial statements that are understandable and transparent to all key stakeholders of charities, rather than the opaque view that currently exists. This situation will be achieved only by education and by the Charities Commission having input into the „Simple Format Reporting‟ and prescribing the financial reporting standards. The current approach, i.e. having no prescribed format, by the Charities Commission is detrimental to the credibility of the charities sector. Next, charities‟ performance reporting is considered. Performance Accountability Financially viable (Economy) Outputs (Efficiency) 215
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Understandability and Transparency
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CHAPTER 2: REGULATORY & CONCEPTUAL
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4.3.3 Axiom 3 - The possibility of
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6.6 Summary .......................
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Appendix One - Statement of Financi
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Abbreviations AASB Australian Accou
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Related Research Outputs The follow
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Acknowledgements My journey through
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Abstract Access to charities‟ fin
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CHAPTER 1: INTRODUCTION 1.1 Introdu
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More importantly the study will loo
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Unerman and O‟Dwyer (2008, p. 801
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adopted here is clarified, as the l
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March 1999. Further, a study by the
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those by: Vatter (1947); Anthony (1
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CHAPTER 2: REGULATORY & CONCEPTUAL
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(k) The erection, laying out, maint
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Before looking at the legal structu
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2.3.4 Problems As with charity nome
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yet to be determined. This ensures
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per annum (Charities Commission, 20
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certain cases there will be concept
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The focus of the Charities Commissi
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Unlike incorporated societies, the
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2.4.4.4 Future conceptual framework
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problems with New Zealand‟s regul
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This research seeks to identify if
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charities” (Charity Commission, 2
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statements in different documents t
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seek to identify whether a lack of
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In the international arena transpar
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elevance is compromised. The link b
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3.2 Complexities in Charities’ Fi
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3.2.1 Accounting basis The „Accou
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application of the appropriate GAAP
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length transaction”. This definit
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There are four arguments against de
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Financial Accounting Standards Boar
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al., 2008; Newberry, 1992; Rees & D
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However, the notion of control is a
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Kilcullen et al., 2007b). Charities
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the amount of money spent on admini
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This research seeks to identify wha
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As a result of the literature revie
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the elements of the world, or rathe
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come about through the mutually sim
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Research reports from other organis
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clearer picture of the interviewee
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In England, Palmer and Randall (200
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APPROACHING PARTICIPANTS Within the
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availability of charities‟ financ
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As credibility was usually achieved
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clarifications. This approach was u
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to understand the meaning behind an
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analysis is both complete and impar
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subjective realities (Chua, 1986).
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To assure the study was dependable
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CHAPTER 5: ACCOUNTABILITY 5.1 Intro
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emphasis on the definition of accou
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supposition was that a lack of resp
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general public (Charity Commission,
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assumes the other is monitoring the
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performance reporting rather than f
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appropriate performance information
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examiners and the Charities‟ Boar
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which was set up in 2003. Charity a
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Western Australia, all financial st
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The fourth level of independent exa
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What are the major areas of concern
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subset of good accountability pract
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Programme refers to a meeting of ob
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ecording property, plant and equipm
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Figure 6-2 Dimensions of Financial
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Because the [charity‟s] finances
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„selling a story‟ makes them fo
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that you can use it [the stove] for
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the organisation pay to have those
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contributors twice - first to fund
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There is a need to record restricte
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charity will have control of a seco
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of accountants involved in Charitie
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their decision making. One auditor
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Whilst the sample in this thesis is
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Another problem my study found was
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framework funders would not be able
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The lack of professionalism must be
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New Zealand‟s charitable purpose
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We have since February of last year
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analysis was done of the first comp
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Also the idea of members „taking
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Page 183 and 184: 7.3 Monitoring As discussed in Chap
Page 185 and 186: Zealand] Statistics Department poin
Page 187 and 188: There was a sub-committee running [
Page 189 and 190: useful for smaller organisation and
Page 191 and 192: change and they‟re doing a good j
Page 193 and 194: problem that you‟ve [pause] we‟
Page 195 and 196: legislation and monitoring. Of part
Page 197 and 198: CHAPTER 8: PERFORMANCE ACCOUNTABILI
Page 199 and 200: In New Zealand both the Controller
Page 201 and 202: what proportion of their charitable
Page 203 and 204: None of the above reasons includes
Page 205 and 206: Charities Commission publication
Page 207 and 208: achieve an appropriate level of per
Page 209 and 210: more effectively in order to increa
Page 211 and 212: eneficiaries‟ needs are met is an
Page 213 and 214: As well as setting aside reserves,
Page 215 and 216: The important aspect of the propose
Page 217 and 218: Mostly they [the funders] are worki
Page 219 and 220: eyond financial health to include
Page 221 and 222: 8.4.4 Prescribed performance report
Page 223 and 224: impact they have on their beneficia
Page 225 and 226: statements, but also other mechanis
Page 227 and 228: compare different charitable organi
Page 229 and 230: shock when their accounts are eithe
Page 231: 9.4 Academic Contribution This rese
Page 235 and 236: Charities Register, of which thirty
Page 237 and 238: success in their activities. For as
Page 239 and 240: Ahrens, T., & Chapman, C. S. (2006)
Page 241 and 242: Australian Accounting Standards Boa
Page 243 and 244: Bradbury, M. E., & Baskerville, R.
Page 245 and 246: Charities Commission. (2009f). A sn
Page 247 and 248: commission.gov.uk/Our_regulatory_ac
Page 249 and 250: Cordery, C. J., & Baskerville, R. (
Page 251 and 252: Eisenberg, P. (Ed.). (2005). Challe
Page 253 and 254: Fremont-Smith, M. R. (2004). Pillag
Page 255 and 256: Hui, D. (2006). Financial Reporting
Page 257 and 258: http://www.ifac.org/Members/DownLoa
Page 259 and 260: Maxwell, J. A. (1992). Understandin
Page 261 and 262: http://www.nzica.com/AM/Template.cf
Page 263 and 264: O'Sullivan, N., & O'Dwyer, B. (2009
Page 265 and 266: Robson, C. (1993). Real World Resea
Page 267 and 268: Television New Zealand (Writer) (27
Page 269 and 270: Appendix One - Statement of Financi
Page 271 and 272: Appendix Three - Semi-structured in
Page 273 and 274: Appendix Five - Participant informa
Page 275 and 276: Appendix Six - Transcriber’s Conf
Page 277: Heading 1 Heading 2 Heading 3 Prope
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