Board Competencies, Network Ties And Risk Management Disclosure Practices In Non-Profit Organizations

In the current challenging economic environment, non-profit organizations (NPOs) are exposed to an array of risks and some of these risks are unique due to the characteristics of the organizations.  Understanding and managing these risks are crucial in ensuring sustainability of the NPOs and the responsibility lies with the board. However, risks management and disclosure of risks in NPOs is less well developed relative to for profit organizations and this may affect boards’ role in enhancing risk management practices of these organizations. As such, this study aims to examine the relationships between certain board characteristics: board competencies, network ties and risk management disclosure practices in NPOs. Information on these variables are obtained from content analysis of annual reports and Financial Information Forms of 219 NPOs registered with Companies Commission of Malaysia for the financial period 2011. Results of this study reveal that the overall extent of risk management disclosure practices is at a moderate level. In addition, only board competencies are significantly positively related to the extent of risk management disclosure practices while network ties are not. This infers that some board members acknowledge the importance of being engaged in risk management decision. However, lack of specific guide on risk management in NPOs may reduce the motivation of some board members to do so. The guidelines and relevant trainings to board members provided by relevant authorities may increase the understanding of key risks and management of these risks as part of good governance in NPOs

Board Composition And Accountability Of Non-Profit Organizations

Non-profitorganizations (NPOs) are generally subjected to less stringent regulatory requirementsthan for-profit organizations. As such, NPOs are generally reluctant to sharemore comprehensive information with the various stakeholders and may notrecognize the need for accountability. The purpose of this study is to examinethe influence of board composition on the level of accountability for NPOs inMalaysia. Board composition and the level of accountability are obtained fromthe content analysis of annual reports of 234 societies registered withRegistrar of Societies in Malaysia for the financial period 2010. The level ofaccountability (ADI) examined is based on two main components, transparency andcompliance while board composition examined in this study consists of boardsize, board professionalism and board members with political connections.Results of this study provide evidence that the overall level of accountabilityis low. This infers that more comprehensive regulatoryrequirements or at the very least, the existence of best practices with regardsto accountability can be a useful mechanism in enhancing the accountability ofNPOs. In addition, theresults also highlight that an optimum mix of board members mattersin ensuring efficient resource strategy and consequently enhance the level ofaccountability in NPOs. Overall,the findings in this study provide useful information to regulators in theircontinuous efforts to improve accountability in the non-profit sector. This inturn can enhance the credibility and sustainability of the NPOs

Organisational Characteristics and Accountability in Protecting Risk Exposures in Non-Profit Organisations

Non-Profit Organisations (NPOs) must rely on a variety of activities and resource providers to support their activities in achieving their goals. Thus, NPOs are accountable to various stakeholders that provide the funds and other resources. However, as NPOs are generally subjected to less stringent regulatory requirements, some NPOs are not acknowledging issues of accountability. Hence, the objective of this study is to examine the effect of organisational characteristics on the extent of accountability in NPOs. The organisational characteristics and the extent of accountability are obtained from the content analysis of annual reports of 224 societies registered with Registrar of Societies (ROS) for the financial period 2010. The level of accountability examined is based on two main components, transparency and compliance. Organisational characteristics used in this study consist of types of income received by NPOs, presence of auditor and size of NPOs. The overall results show that the level of accountability for NPOs in Malaysia is at a low level. Results show that only total income from generated funds and size of organisation has an effect on the level of accountability. Meanwhile, total income from charitable activities, total income from other income and the presence of auditor is insignificant to the level of accountability. This infers that lack of regulatory requirements or best practices with regards to accountability increases various risk exposures to NPOs including fraud risk. This is corroborated by the insignificant relationship between the presence of auditors and accountability, where auditors are generally more focused on compliance with mandatory requirements. Keywords: Non-Profit Organisations, Accountability, Transparency, Compliance, Organisational Characteristics,   Ris

Financial Vulnerability, Risk Management and Accountability of Non-Profit Organisations

The purpose of this study is to examine the relationships between financial vulnerability and accountability of non-profit organizations in Malaysia. Managing the risks associated with financial vulnerability can potentially enhance organizational ability in delivering its social objective and other accountability responsibilities. Information on financial vulnerability and accountability are obtained from the content analysis of annual reports of 130 societies registered with Companies Commission of Malaysia for the financial period 2011. Financial vulnerability indicators are efficiency, stability, solvency and margin while the extent of accountability is based on strategic accountability, fiduciary accountability, financial accountability, procedural accountability and best practice accountability. Results of this study revealed two important findings. First, the financial vulnerability indicators indicate that most NPOs in the sample are financially vulnerable. This in turn reduces their resources in fulfilling the various accountability responsibilities. Second, the only significant relationship between financial vulnerability measure, STABILITY and the extent of accountability indicate that the financial vulnerability model can be used by board members and management of NPOs in their decision making. Overall, findings in this study indicate that this model can be a useful tool that can facilitate screening, monitoring, and decision making processes for various stakeholders. Keywords: Financial Vulnerability, Risk Management, Accountability, Non-profit organisations