Understandability and Transparency of the Financial Statements of ...

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5.4.2 Accountability Mechanisms .................................................................... 110 5.4.2.1 Charities Regulatory Bodies ............................................................. 111 5.4.2.2 Rating agencies ................................................................................. 112 5.4.2.3 Assurance .......................................................................................... 113 5.4.2.4 Charities Boards ................................................................................ 117 5.5 Relationships .................................................................................................... 118 5.5.1 Transparency .......................................................................................... 118 5.5.2 Governance ............................................................................................. 119 5.6 Concepts of accountability .............................................................................. 121 5.7 Limitations of Accountability .......................................................................... 124 5.8 Summary .......................................................................................................... 124 CHAPTER 6: PROFESSIONAL ACCOUNTABILITY ......................................... 126 6.1 Introduction ...................................................................................................... 126 6.2 Accounting basis .............................................................................................. 128 6.2.1 Accounting basis used ............................................................................. 128 6.2.2 Certainty of receipts ................................................................................ 129 6.2.3 Matching concept .................................................................................... 131 6.3 Property, plant and equipment (PPE) .............................................................. 132 6.3.1 Recording Property, Plant and Equipment ............................................. 132 6.3.2 Fair value ................................................................................................ 134 6.3.3 Depreciation ........................................................................................... 136 6.4 Fund accounting ............................................................................................... 137 6.4.1 Type and Purpose of funds ...................................................................... 137 6.4.2 Recording of funds .................................................................................. 138 6.4.3 Separate entities ...................................................................................... 140 6.5 Key reasons why methods used ....................................................................... 143 6.5.1 Professional standards............................................................................ 144 6.5.2 Understandability ................................................................................... 147 6.5.3 Looking poor ........................................................................................... 151 vi
6.6 Summary .......................................................................................................... 152 CHAPTER 7: FIDUCIARY ACCOUNTABILITY ................................................ 154 7.1 Introduction ...................................................................................................... 154 7.2 Legislation ....................................................................................................... 154 7.2.1 Charitable purpose definition ................................................................. 154 7.2.2 Legal structure ........................................................................................ 158 7.2.3 Accountability for tax forgone ................................................................ 161 7.3 Monitoring ....................................................................................................... 165 7.3.1 Charities regulatory bodies .................................................................... 165 7.3.2 Charity Boards ........................................................................................ 168 7.3.3 Assurance ................................................................................................ 170 7.3.4 Internal controls...................................................................................... 175 7.4 Summary .......................................................................................................... 176 CHAPTER 8: PERFORMANCE ACCOUNTABILITY ........................................ 179 8.1 Introduction ...................................................................................................... 179 8.2 Current Performance Accountability ............................................................... 180 8.2.1 Difficulty in comparing ratios ................................................................. 181 8.2.2 Reluctance to fund overheads ................................................................. 182 8.2.3 Donating with your „heart-strings‟ ......................................................... 184 8.2.4 Financial statements „don‟t tell the full story‟ ........................................ 186 8.3 Proposed Performance Accountability Framework ......................................... 188 8.3.1 Outcomes................................................................................................. 189 8.3.1.1 Making a difference in beneficiaries‟ lives ...................................... 190 8.3.1.2 The need to evaluate performance measures .................................... 191 8.3.1.3 Difficulties in measuring outcomes .................................................. 192 8.3.2 Financial viability ................................................................................... 193 8.3.3 The enduring importance of outputs ....................................................... 196 8.4 Possible future impacts .................................................................................... 197 8.4.1 Funders ................................................................................................... 197 vii
Page 1 and 2: Understandability and Transparency
Page 3 and 4: CHAPTER 2: REGULATORY & CONCEPTUAL
Page 5: 4.3.3 Axiom 3 - The possibility of
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 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
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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
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
Page 155 and 156:
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
Page 181 and 182:
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
Page 191 and 192:
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
Page 201 and 202:
what proportion of their charitable
Page 203 and 204:
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
Page 213 and 214:
As well as setting aside reserves,
Page 215 and 216:
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
Page 227 and 228:
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
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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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