Understandability and Transparency of the Financial Statements of ...

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Report of the Inquiry into the Definition of Charities and Related Organisations (Charities Definition Inquiry, 2001) which recommended the establishment of an independent administrative body for the charitable and related sector; Disclosure regimes for charities and not-for-profit organisation (Senate Standing Committee on Economics, 2008) which also recommended a single independent regulator for NFPs; and Contribution of the Not-for-Profit Sector: Draft Research Report: (Productivity Commission, 2009) which again recommended that a national body for the NFP sector be established. To date, the Australian government has responded only by saying that they will consider this recommendation (Commonwealth Government of Australia, 2009). Pro Bono Australia (2009) expressed the frustration of many in the sector by lambasting the Government for their inaction, which leaves the Australian Taxation Office to monitor the sector through the income tax exemption (Arthur Cox & Centre for Voluntary Action Studies, 2002; Ferguson, 2006). This lack of government action is of concern considering that the NFP sector in Australia contributes AUD43 billion to Australia‟s GDP with over 600,000 NFPs (Productivity Commission, 2009). Given John Key‟s joint announcement with Kevin Rudd on closer ties to Australia (Ministry of Economic Development, 2009b) New Zealand will need to pay close attention to progress in this area to consider the impact for the New Zealand Charities Commission. 2.4.1.1 Regulatory framework Australia is a federation of states and territories with a resultant division of constitutional powers between the states and the federal government. Thus the regulatory environment for charities needs to be considered at both state and federal level (Arthur Cox & Centre for Voluntary Action Studies, 2002). Whilst at federal level there is a focus on sector neutrality, at state level New South Wales has introduced legislation that goes against the nature of sector neutrality. The Associations Incorporate Act 2009 establishes a scheme for the registration of associations engaged in small- scale, not-for-profit activities. This Act addresses the issue of small non-profits being overburdened by introducing a two-tiered financial reporting system that will distinguish small and large associations on the basis of a financial threshold, which has 20
yet to be determined. This ensures that small NFPs, including charities, have fewer requirements on financial reporting than the large associations. 2.4.1.2 Conceptual framework Recent studies and reports in Australia have focused on the NFP sector as a whole rather than specifically looking at the charities sector (Productivity Commission, 2009; Senate Standing Committee on Economics, 2008). With regards to the NFP sector, the Australian Accounting Standards Board (AASB) considers there is a need to review financial reporting guidelines in the NFP sector (Australian Accounting Standards Board, 2008). It considers that “there is a high risk that other information specific to private sector NFP entities and needed by users is not being disclosed, or is not being disclosed in a consistent manner" (Australian Accounting Standards Board, 2009, p. 1). Ferguson (2005) also highlights that even though some charities have available good financial statements, other charities do not release any financial statements as there is no legal requirement to do so. Australia also appears to still be in the „committee stage‟ with regards to a NFP conceptual framework. The publication of the report on „Disclosure regimes for charities and not-for-profit organisations‟, recognises that accounting standards are providing inadequate guidance on issues relating to charities, such as bequests (Senate Standing Committee on Economics, 2008). However, the AASB has followed England and Wales‟s (Accounting Standards Board, 2007a) stance by stating they would “not be inclined to look at standards specific to NFP organisations without first having an international precedent” (Senate Standing Committee on Economics, 2008, p. 107). This is contrary to CPA Australia (2006a, p. 1) which considers that “where the needs of NFP entities are not addressed by international bodies suitable domestic guidance should be developed”. A second report published in 2009 on the „Contribution of the Not-for-Profit Sector‟ (Productivity Commission, 2009) again acknowledges that reporting needs improvement. However, this report, as well as endorsing a „one-size fits all‟ standard chart of accounts for NFPs receiving government grants or service contracts, promotes a national register for Australia NFPs (Productivity Commission, 2009). The Commission considers that this would allow for „robust comparison‟ amongst NFPs but appears to ignore the mammoth task of registering the 600,000 NFP organisations in Australia. 21
Page 1 and 2: Understandability and Transparency
Page 3 and 4: CHAPTER 2: REGULATORY & CONCEPTUAL
Page 5 and 6: 4.3.3 Axiom 3 - The possibility of
Page 7 and 8: 6.6 Summary .......................
Page 9 and 10: Appendix One - Statement of Financi
Page 11 and 12: Abbreviations AASB Australian Accou
Page 13 and 14: Related Research Outputs The follow
Page 15 and 16: Acknowledgements My journey through
Page 17 and 18: Abstract Access to charities‟ fin
Page 19 and 20: CHAPTER 1: INTRODUCTION 1.1 Introdu
Page 21 and 22: More importantly the study will loo
Page 23 and 24: Unerman and O‟Dwyer (2008, p. 801
Page 25 and 26: adopted here is clarified, as the l
Page 27 and 28: March 1999. Further, a study by the
Page 29 and 30: those by: Vatter (1947); Anthony (1
Page 31 and 32: CHAPTER 2: REGULATORY & CONCEPTUAL
Page 33 and 34: (k) The erection, laying out, maint
Page 35 and 36: Before looking at the legal structu
Page 37: 2.3.4 Problems As with charity nome
Page 41 and 42: per annum (Charities Commission, 20
Page 43 and 44: certain cases there will be concept
Page 45 and 46: The focus of the Charities Commissi
Page 47 and 48: Unlike incorporated societies, the
Page 49 and 50: 2.4.4.4 Future conceptual framework
Page 51 and 52: problems with New Zealand‟s regul
Page 53 and 54: This research seeks to identify if
Page 55 and 56: charities” (Charity Commission, 2
Page 57 and 58: statements in different documents t
Page 59 and 60: seek to identify whether a lack of
Page 61 and 62: In the international arena transpar
Page 63 and 64: elevance is compromised. The link b
Page 65 and 66: 3.2 Complexities in Charities’ Fi
Page 67 and 68: 3.2.1 Accounting basis The „Accou
Page 69 and 70: application of the appropriate GAAP
Page 71 and 72: length transaction”. This definit
Page 73 and 74: There are four arguments against de
Page 75 and 76: Financial Accounting Standards Boar
Page 77 and 78: al., 2008; Newberry, 1992; Rees & D
Page 79 and 80: However, the notion of control is a
Page 81 and 82: Kilcullen et al., 2007b). Charities
Page 83 and 84: the amount of money spent on admini
Page 85 and 86: This research seeks to identify wha
Page 87 and 88: As a result of the literature revie
Page 89 and 90:
the elements of the world, or rathe
Page 91 and 92:
come about through the mutually sim
Page 93 and 94:
Research reports from other organis
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clearer picture of the interviewee
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In England, Palmer and Randall (200
Page 99 and 100:
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
Page 109 and 110:
analysis is both complete and impar
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subjective realities (Chua, 1986).
Page 113 and 114:
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
Page 121 and 122:
general public (Charity Commission,
Page 123 and 124:
assumes the other is monitoring the
Page 125 and 126:
performance reporting rather than f
Page 127 and 128:
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
Page 153 and 154:
the organisation pay to have those
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contributors twice - first to fund
Page 157 and 158:
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
Page 167 and 168:
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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The transparency of their organisat
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7.3 Monitoring As discussed in Chap
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Zealand] Statistics Department poin
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There was a sub-committee running [
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useful for smaller organisation and
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change and they‟re doing a good j
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problem that you‟ve [pause] we‟
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legislation and monitoring. Of part
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CHAPTER 8: PERFORMANCE ACCOUNTABILI
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In New Zealand both the Controller
Page 201 and 202:
what proportion of their charitable
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None of the above reasons includes
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Charities Commission publication
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achieve an appropriate level of per
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more effectively in order to increa
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eneficiaries‟ needs are met is an
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As well as setting aside reserves,
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The important aspect of the propose
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Mostly they [the funders] are worki
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eyond financial health to include
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8.4.4 Prescribed performance report
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impact they have on their beneficia
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statements, but also other mechanis
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compare different charitable organi
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shock when their accounts are eithe
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9.4 Academic Contribution This rese
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Outcomes (Effectiveness) Figure 9-1
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Charities Register, of which thirty
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success in their activities. For as
Page 239 and 240:
Ahrens, T., & Chapman, C. S. (2006)
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Australian Accounting Standards Boa
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Bradbury, M. E., & Baskerville, R.
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Charities Commission. (2009f). A sn
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commission.gov.uk/Our_regulatory_ac
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Cordery, C. J., & Baskerville, R. (
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Eisenberg, P. (Ed.). (2005). Challe
Page 253 and 254:
Fremont-Smith, M. R. (2004). Pillag
Page 255 and 256:
Hui, D. (2006). Financial Reporting
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http://www.ifac.org/Members/DownLoa
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Maxwell, J. A. (1992). Understandin
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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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