Measuring performance in the third sector

Purpose – This paper sets the scene for this special issue by synthesising the vast array of literature on performance measurement to examine what constitutes performance measurement, and why it is important for the Third Sector. It also analyses key issues of performance measurement and introduces the papers that comprise this special issue of Qualitative Research in Accounting and Management. Design/methodology/approach – This paper takes the form of a literature review. The authors draw on extensive research on performance measurement from a diverse range of disciplines to identify and explore key definitions, opportunities and challenges with performance measurement in the Third Sector. Findings – Economic/Financial efficiency approaches, Programme Theories, Strategic and Participatory Approaches all present opportunities and challenges when measuring performance in the Third Sector. The papers in this Special Issue demonstrate the manner in which different organisations have dealt with these. Research implications - This special issue of Qualitative Research in Accounting and Management aims to stimulate qualitative research into performance measurement frameworks within the Third Sector both inside organizations and to their external stakeholders (supporters, clients and the general public). Practical implications- Those charged with governance and management in Third Sector Organisations (TSOs) will seek to use appropriate approaches to measuring and managing performance in order to learn and to discharge accountability. The different aspects of performance measurement will also be of interest to funders, donors, and those who seek accountability from TSOs

Understandability and transparency of the financial statements of charities

Access to charities' financial statements has recently become possible in New Zealand due to the development of a Charities Register. However, the ability to discharge accountability through financial statements depends on the financial statements being transparent and understandable, which is not currently the case. This research focused on four complexities that impact on the transparency and understandability of charities' financial statements: the accounting basis; valuation of property, plant and equipment; fund accounting; and how charities report to stakeholders, in particular, the expenditure overheads ratio. The focus of this study was firstly, on gaining an understanding of what accounting treatments charities have adopted to deal with each of these complexities, but more importantly why charities chose these particular accounting treatments. This was achieved by conducting seventy-five interviews with eighty-four participants in the charities’ sector, in order to understand why charities act as they do. This study determined there were three key reasons behind the choices that charities make in accounting treatment. The first relates to the poor knowledge of appropriate professional standards by accountants working in the charities sector. This lack of professionalism must be addressed by accounting professional bodies to ensure the integrity of the accounting profession is maintained. The second is the low level of financial literacy among preparers and users of charities' financial statements. There is a need for charities and their stakeholders, to understand charities' financial statements to ensure charities produce meaningful financial statements that can be utilised for decision making. Third, it is the aim of many charities to 'look poor' as they seek to gain more funding. This impacts the accounting method charities use and so goes against the requirement for neutrality and freedom from bias when preparing financial statements. Accountability is seen as important for the charities sector in maintaining the confidence and financial support of the public by giving an account of charities' activities. For accountability to be successful it needs to be discharged. This study developed a charitable accountability model for charities to utilise in ensuring that accountability is appropriately discharged. This included the need for performance accountability where charities assess, and report on, their performance to ensure that they are making a positive difference in their beneficiaries' lives. Charities need to be proactive in communicating the success of their outcomes and outputs to attract monies and to differentiate themselves from other charitable organisations. Donors and funders also need to ensure that they are supporting financially viable charities who are prudently managing their future and achieving great success in their activities. Above all it is important that donors and funders donate to a good charity, not just to a great cause

Bridging the gap between academia and standard setters

Purpose This commissioned paper reviews literature outlining reasons for a perceived gap between academics and standard setters as policy makers. The aim of this paper is to emphasise how academics and standard setters can collaborate on accounting and audit research and assist standard setters to act in the public interest. Design/methodology/approach The approach is primarily a literature and document review of relevant issues, summarising New Zealand’s standard setting arrangements, providing examples of successful policy-changing research, and making recommendations on future research topics. Findings Despite the long-held views of a gap between academic researchers and standard setters, increasingly standard setters utilise research and request input from academics in their deliberations. Standard setters can increase the likelihood of relevant research by promoting critical issues for research and connecting their practitioner networks with academics. Academics can bridge the gap by selecting topics..

Understandability and transparency of the financial statements of charities

Access to charities' financial statements has recently become possible in New Zealand due to the development of a Charities Register. However, the ability to discharge accountability through financial statements depends on the financial statements being transparent and understandable, which is not currently the case. This research focused on four complexities that impact on the transparency and understandability of charities' financial statements: the accounting basis; valuation of property, plant and equipment; fund accounting; and how charities report to stakeholders, in particular, the expenditure overheads ratio. The focus of this study was firstly, on gaining an understanding of what accounting treatments charities have adopted to deal with each of these complexities, but more importantly why charities chose these particular accounting treatments. This was achieved by conducting seventy-five interviews with eighty-four participants in the charities’ sector, in order to understand why charities act as they do. This study determined there were three key reasons behind the choices that charities make in accounting treatment. The first relates to the poor knowledge of appropriate professional standards by accountants working in the charities sector. This lack of professionalism must be addressed by accounting professional bodies to ensure the integrity of the accounting profession is maintained. The second is the low level of financial literacy among preparers and users of charities' financial statements. There is a need for charities and their stakeholders, to understand charities' financial statements to ensure charities produce meaningful financial statements that can be utilised for decision making. Third, it is the aim of many charities to 'look poor' as they seek to gain more funding. This impacts the accounting method charities use and so goes against the requirement for neutrality and freedom from bias when preparing financial statements. Accountability is seen as important for the charities sector in maintaining the confidence and financial support of the public by giving an account of charities' activities. For accountability to be successful it needs to be discharged. This study developed a charitable accountability model for charities to utilise in ensuring that accountability is appropriately discharged. This included the need for performance accountability where charities assess, and report on, their performance to ensure that they are making a positive difference in their beneficiaries' lives. Charities need to be proactive in communicating the success of their outcomes and outputs to attract monies and to differentiate themselves from other charitable organisations. Donors and funders also need to ensure that they are supporting financially viable charities who are prudently managing their future and achieving great success in their activities. Above all it is important that donors and funders donate to a good charity, not just to a great cause

Construction of accounting identities in Vietnam : Experimenting with Bourdieu’s practice theory

This study aims to investigate the habitus of bookkeepers and professional accountants in Vietnam, a communist country, by experimenting with Bourdieu’s practice theory. Such theory seeks to examine the ways in which accounting individuals (or classes) inhabit a position, invoking practical knowledge which enables them to function in particular positions. Such functions are to be associated with habitus – durable, transposable dispositions which are both constitutive of and constituted by the context or field in which they operate Design/Methodology/Approach: This is a qualitative research and the naturalistic inquiry approach was selected for this paper. There were 14 bookkeepers and 15 professional accountants interviewed with the purpose of adding to a growing but still sparse literature on the work practices of bookkeepers who make up the majority of accounting practitioners in Vietnam. Findings All bookkeepers attach their identity to their daily routine work and highlight the importance of keeping updated on the new rules issued by the government. They, together with some professional accountants, have also found their identity formed through connections with government officials. Some locally qualified accountants have deviated their career or identity from the traditional pathway by the embarked on obtaining professional qualifications of ACCA or CPA (Australia). Originality/value: This paper offers insights of how the bookkeepers and professional accountants see themselves and what the gap is between bookkeepers and professional accountants, in the context in which the Communist rule-based country is getting involved more deeply in the globalisational process

Charity performance reporting: comparing board and executive roles

Purpose - The purpose of this study is to compare the use of performance information by board members and executives of a large Australian community service organization in order to ascertain what they focused on and how they worked together in effecting organizational governance. Design/methodology/ approach - Field based case study using stewardship theory. Findings - While board members and executives worked closely together within a mutually agreed organizational space, there was a clear bifurcation of focus with the board concerned more with the financial performance and the executive more with service performance. Further differentiation of role with respect to financial performance was observed such that the board's attention was directed most to issues that presented the greatest risk to the organization. The study found that board members and executives "cut across" traditionally assigned roles, thus demonstrating a joint mode of organizational governance that was underpinned by organizational policies, processes and structures. Research limitations/implications - This paper provides rich empirical evidence in relation to matters that have been subject to high levels of theorisation; by answering recent calls from scholars for in-depth research on governance processes; and by identifying the common threads that link research on not-for-profit governance with stewardship theory and the extended concepts of accountability. It contributes to practice by providing a comprehensive explanation of a contemporary governance arrangement. It contributes to the public policy debate since a key issue currently under review in Australia, and New Zealand, to name just two jurisdictions, is the attribution of responsibilities by key decision makers in charities, in particular, the vexed question of management involvement in governance processes. Originality/value - The paper provides rich empirical data about an issue of ongoing importance to third sector organizations. Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.Phil Sa

China's participation and resistance in adopting Western accounting practices

Purpose - The aim of this paper is to investigate China’s attitude towards adopting western accounting practices. In particular, its response to the expansion of western professional accounting bodies into China will be studied. Design/methodology/approach - The paper draws on the theoretical framework of new institutional sociology (NIS) and legitimacy theory to disentangle the symbolic from the substantive in respect of what government, accounting institutions and ‘actors’ say and the strategies they employ. Data are collected using semi-structured in-depth interviews and qualitative document analysis. Findings - The study reveals a strong coercive influence of western institutional networks (such as the western professional accounting bodies, the Big 4, multinational enterprises, the World Bank, the IASB, the IMF, and the WTO) on China, and China’s limited power to control these institutions. The authors find the intrusion of the western accounting institutions has been seen as a threat to China’s information secrecy and national security. As a result, there are signs of a push-back against the operations of the international accounting organisations in the Chinese market. Research limitations/implications – China’s participation in the areas investigated in this paper would promote the further globalisation of accounting, while China’s resistance may come about because China feels its voice in international organisations, professions, and accounting education is being undervalued. The extent of China’s participation or resistance will be of great significance for the future of accounting globalisation. Originality/value - It is against a background of China’s growing assertiveness that the research was undertaken and this study is, arguably, therefore able to make a contribution to the history of the Anglo-Saxon accounting profession and its move into overseas countries. The paper also makes a contribution to knowledge through the application of NIS theory to the field of the accounting profession