Understandability and Transparency of the Financial Statements of ...

statements are transparent and understandable to their users. The rationale for the
research methodology is discussed next.
4.3 Methodological approach
The methodological approach of any research influences the basis upon which data is
collected, analysed and evaluated. The following section discusses the naturalistic
inquiry approach to research, and its appropriateness as the methodological framework
for the present research.
The present study is a qualitative inquiry into the accounting methods charities in New
Zealand use with regards to: determining the accounting basis; recording property, plant
and equipment; recording funds; and accounting for the expenditure overheads ratio.
The qualitative inquiry seeks to gain a deeper understanding of the research moving
from what accounting methods charities use to why charities use those methods (Hill &
McGowan, 1999). Of particular relevance to this study is the naturalistic paradigm,
which is in line with the aim of this study to understand reasons charities act as they do
in their natural setting in order to present reality as it is (Grimwood & Tomkins, 1986).
Lincoln and Guba (1985) consider that there are five basic beliefs, or axioms with
naturalistic inquiry. Table 4-1 gives an overview of these five axioms relating to a
naturalistic paradigm after which an analysis of the meaning of each axiom and its
relevance for this research will be analysed to support the naturalistic inquiry approach
followed in this research.
Axioms Naturalist Paradigm
1 The nature of reality (ontology) Realities are multiple, constructed, and
holistic.
2 The relationship of knower to Knower and known are interactive and
known (epistemology)
inseparable.
3 The possibility of generalisation Only time- and context-bound idiographic
statements are possible.
4 The possibility of causal linkages All entities are in a state of mutual
simultaneous shaping, so that it is impossible
to distinguish causes from effects.
5 The role of values in inquiry
(axiology)
Inquiry is value-bound.
Table 4-1 Naturalistic Axioms (Lincoln & Guba, 1985, p. 37)
4.3.1 Axiom 1 - The nature of reality
Ontology is a branch of philosophy concerned with the nature of „being‟. Scapens &
Yang consider (2008) that ontology has two aspects. First, the „modes of existence‟, i.e.
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