Understandability and Transparency of the Financial Statements of ...

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There were also thirty-six follow-up interviews held, where aspects of the interview were clarified or additional information given by the interviewee that added depth to the data collected. Next the different aspects that need to be considered with regards to interviews will be covered, i.e. preplanning, conducting and recording interviews. 4.5.1 Preplanning the Interview The first steps in preparing for an interview were to see who would be able to give the data that was required, then there was a need to determine how to select, or rather sample, these prospective interviewees, which is discussed next (Ghauri & Gronhaug, 2005). INTERVIEW PARTICIPANTS For this research participants were: (1) people involved in the preparation or auditing of the financial accounts of charities; (2) managers of charities; (3) board members of charities; and (4) experts in charities. Experts included heads of supporting organisations within the not-for-profit sector in New Zealand. In order that as wide a view as possible was taken, interviews took place from September 2008 to February 2010. The research consists of seventy-five interviews comprising: twenty-two semi- structured interviews; seventeen informal conversations; and thirty-six follow-ups (Table 4-3). Type of Interview Initial interview Follow-up Totals Semi-structured interviews 22 23 45 Informal interviews conversation 17 13 30 Total Interviews 39 36 75 Table 4-3 Number of interviews Persons involved in small charities were excluded unless they were linked to one of the umbrella bodies within the New Zealand charitable sector and thus considered an expert due to their wider experience and knowledge. There were two reasons for excluding small charities from this research. First, small charities are likely to have less complex operations than larger ones which means that complex International Financial Reporting Standard accounting rules are not necessary (Accounting Standards Committee, 1984), and their rudimentary accounts would not allow the depth of discussion needed for this research. Second, small charities usually have fewer resources and preparing detailed accounts would be an unfair imposition on treasurers and auditors, most of whom are honorary (Accounting Standards Committee, 1984). 78
In England, Palmer and Randall (2002) considered that a small charity was one which, due to its size, did not have to prepare GAAP-compliant financial statements. At the start of this study the New Zealand Ministry of Economic Development had proposed criteria for small as those charities with income less than NZD100,000, as per Table 4-4 (Ministry of Economic Development, 2004), which was the measurement used in this study. Near the end of this research the Ministry of Economic Development and the Accounting Standard Review Board proposed different criteria that were referred to in Table 2-1 (Accounting Standards Review Board, 2007a; Ministry of Economic Development, 2009d). Income Possible reporting requirements Audit requirements Small Less NZD100,000 than Receipts and payments None Medium From NZD100,000 Accrual accounting Independent review to NZD2,500,000 Large Greater than Requirements based on Full audit NZD2,500,000 IFRS Table 4-4 Criteria for Small, Medium and Large Charities (MED, 2004, p. 40) The role of the participants is detailed in Table 4-5 below. A total of eighty-four participants were involved in this research, thirty-five individually and forty-nine as members of groups. Several participants wore „multiple hats‟, for example, they may be the treasurer for one charity, a board member for another charity, as well as being a chartered accountant. Thus a total of one hundred and eighteen „roles‟ were involved. The number or type of charitable organisations involved in this research was unable to be quantified as some interviewees had links to several hundred charities, especially accountants and auditors, whilst other interviewees only had links to one charity. New Zealand SAMPLING METHODS Managers Treasurers Board Experts NZICA Members Members 31 12 25 25 25 Table 4-5 Role of participants There are two major potential sampling methods: probability and non-probability sampling. Probability sampling is when the participants have a known chance, or probability, of being selected as sample subjects (Sekaran, 2003). Non-probability sampling is where the participants do not have any probability of being chosen 79
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Understandability and Transparency
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CHAPTER 2: REGULATORY & CONCEPTUAL
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4.3.3 Axiom 3 - The possibility of
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6.6 Summary .......................
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Appendix One - Statement of Financi
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Abbreviations AASB Australian Accou
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Related Research Outputs The follow
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Acknowledgements My journey through
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Abstract Access to charities‟ fin
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CHAPTER 1: INTRODUCTION 1.1 Introdu
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More importantly the study will loo
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Unerman and O‟Dwyer (2008, p. 801
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adopted here is clarified, as the l
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March 1999. Further, a study by the
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those by: Vatter (1947); Anthony (1
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CHAPTER 2: REGULATORY & CONCEPTUAL
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(k) The erection, laying out, maint
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Before looking at the legal structu
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2.3.4 Problems As with charity nome
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yet to be determined. This ensures
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per annum (Charities Commission, 20
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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
Page 95: clearer picture of the interviewee
Page 99 and 100: APPROACHING PARTICIPANTS Within the
Page 101 and 102: availability of charities‟ financ
Page 103 and 104: As credibility was usually achieved
Page 105 and 106: clarifications. This approach was u
Page 107 and 108: to understand the meaning behind an
Page 109 and 110: analysis is both complete and impar
Page 111 and 112: subjective realities (Chua, 1986).
Page 113 and 114: To assure the study was dependable
Page 115 and 116: CHAPTER 5: ACCOUNTABILITY 5.1 Intro
Page 117 and 118: emphasis on the definition of accou
Page 119 and 120: 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
Page 129 and 130: examiners and the Charities‟ Boar
Page 131 and 132: which was set up in 2003. Charity a
Page 133 and 134: Western Australia, all financial st
Page 135 and 136: The fourth level of independent exa
Page 137 and 138: What are the major areas of concern
Page 139 and 140: subset of good accountability pract
Page 141 and 142: Programme refers to a meeting of ob
Page 143 and 144: ecording property, plant and equipm
Page 145 and 146: 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
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the organisation pay to have those
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contributors twice - first to fund
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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
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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
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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
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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
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Fremont-Smith, M. R. (2004). Pillag
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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
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O'Sullivan, N., & O'Dwyer, B. (2009
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Robson, C. (1993). Real World Resea
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Television New Zealand (Writer) (27
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Appendix One - Statement of Financi
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Appendix Three - Semi-structured in
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Appendix Five - Participant informa
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Appendix Six - Transcriber’s Conf
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Heading 1 Heading 2 Heading 3 Prope
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