Understandability and Transparency of the Financial Statements of ...

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fees; donations; grants; salaries and wages and investments (Charities Commission, 2006f). Question 25 also asks for a copy of the charitable entity‟s financial accounts for which there is no prescribed format (Charities Commission, 2009c). This means that charities can show similar information in different ways, thus limiting the comparability of charities. However, whilst the Charities Register has only been open since 1st February 2007 (Charities Commission, 2006c; Inland Revenue Department, 2004) three other Registers have been operating far longer i.e. Incorporated Societies, Charitable Trusts and Companies Registers. INCORPORATED SOCIETIES The Incorporated Societies Register contains details of 21,500 organisations (Tennant et al., 2006). Section 18 Incorporated Societies Act 1908 requires that Societies not only give their name and registered office to the Registrar, but also under section 23 they must file certified financial statements on the societies register – see: http://www.societies.govt.nz/cms. Certification requires that financial statements have been submitted to, and approved by, the members of the society at a general meeting (Ministry of Economic Development, 2008). Section 23(1) of the Incorporated Societies Act 1908 requires the following details: income, expenditure, assets, liabilities and all mortgages or charges affecting the property of the society within a given financial period. As with registered charities no prescribed format is given. Those incorporated societies that have registered as charities are no longer required to file financial statements as they attach them to their Annual Return on the Charities Register and the Charities Commission follows up if this is not done. Unfortunately, with regards to the Incorporate Societies Register, the Registrar, in this case the Companies Office does not follow-up societies that fail to file their accounts, which limits the transparency of financial information with regards to incorporated societies. CHARITABLE TRUSTS There are 15,000 organisations (Tennant et al., 2006) on the charitable trust register – see: http://www.societies.govt.nz/cms. Section 11 of the Charitable Trusts Act 1957, states that Trusts must have their name and registered office on the register. 28
Unlike incorporated societies, the Charitable Trusts Act 1957 does not require charitable trusts to file financial statements with the societies register unless they are also a registered charity. Hence it is up to the individual charitable trust as to whether they make any financial statements available. However, case law, i.e. Bassett [1934] NZLR 690, requires an obligation on the trust to maintain proper records and accounts with, again, no guidance on GAAP stipulated (Arthur Cox & Centre for Voluntary Action Studies, 2002), which severely limits the transparency of information about charitable trusts, particularly the third of charitable trusts who have chosen not to register as a charity. COMPANIES When organisations register as companies their details will be available for public viewing on the Companies Register - see: http://www.business.govt.nz/companies/app/ui/pages/companies/search. The register holds the companies‟ key details including: addresses; directors; constitution; Annual Return; and financial statements. Companies registered under the Companies Act 1993 must comply with the Financial Reporting Act for their financial reporting requirements. Section 11 of the Financial Reporting Act 1993 states that the financial statements must comply with GAAP and provide a true and fair view of the entity (Cordery, 2008). 2.4.4.3 Current conceptual framework New Zealand follows a sector-neutral philosophy in that there is one set of GAAP requirements for all entities. New Zealand GAAP is based on the IFRSs produced by the IASB, reviewed by New Zealand Institute of Chartered Accountants (NZICA‟s) FRSB and approved by New Zealand‟s ASRB, and amended to ensure they comply with New Zealand conditions. As IFRS requirements are quite arduous the NZICA has a process called „differential reporting‟ which applies to Small-to-Medium Enterprises (SMEs). Organisations that are defined as SME have simpler GAAP requirements. NZICA‟s definition of SME is where two or more of the following criteria have been met (New Zealand Institute of Chartered Accountants, 2007a): o total income under $20 million; o total assets of less than $10 million; and o fewer than 50 full-time equivalent employees. 29
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 and 38: 2.3.4 Problems As with charity nome
Page 39 and 40: yet to be determined. This ensures
Page 41 and 42: per annum (Charities Commission, 20
Page 43 and 44: certain cases there will be concept
Page 45: The focus of the Charities Commissi
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
Page 95 and 96: clearer picture of the interviewee
Page 97 and 98:
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
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,
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assumes the other is monitoring the
Page 125 and 126:
performance reporting rather than f
Page 127 and 128:
appropriate performance information
Page 129 and 130:
examiners and the Charities‟ Boar
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which was set up in 2003. Charity a
Page 133 and 134:
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
Page 171 and 172:
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
Page 183 and 184:
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
Page 193 and 194:
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
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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. (
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
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Appendix One - Statement of Financi
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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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