Understandability and Transparency of the Financial Statements of ...

As a result of the literature review (Chapter Two and Chapter Three) the research will
focus on the responses of participants in four areas:
1. ACCOUNTING BASIS
a) Which accounting basis was used in the preparation of the charities‟
financial statements?
b) Why do charities use this basis?
c) How do charities account for donations, especially pledges?
2. PROPERTY, PLANT AND EQUIPMENT (PPE)
a) How do charities record PPE in their financial statements?
b) How do charities value donated PPE?
c) Why do charities do this?
d) Do charities depreciate their PPE? If so how?
3. FUND ACCOUNTING
a) Do charities have any funds or reserves? Yes / No
b) If Yes: What are the funds or reserves for?
c) Do charities distinguish between funds that are restricted, i.e. funds must be
used for a specific purpose, or unrestricted? Why?
d) Where do charities show funds and reserves on the financial statements?
e) Why do charities show them like that?
4. REPORTING TO STAKEHOLDERS
a) Do charities record the expenditure overheads ratio separately in the
financial statements? Yes / No
b) If yes: Why do charities chose to separately record the ratio?
c) If no: Do charities separately record administration and fund raising
expenses so that expenditure overheads ratios can be calculated?
d) If yes: Why do charities separate the expenditure?
e) If no: Why do charities not separate out the expenditure?
f) If charities are not reporting their expenditure overheads ratio how are
charities reporting to their stakeholders?
In considering the above questions, the multiple realities revealed through the
experiences of the interviewees included in this study establish a firm theoretical basis
for further research in this area and guide the development of practice aimed at
improving the readability of charities‟ financial statements through ensuring their
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