Accounting information and non-profit religious organisations
The accounts of non-profit organisations (NPO's) have been the
subject of increasing amounts of research and pronouncements by
otficial bodies in rec,ent years. Much of the research to date has
been addressed to the improvement of external accounting
statements of NPO's and is therefore normative in approach. There
have however been a number of recent suggestions that this
normative approach has not ,taken sufficient account of the
realities of the NPO environment and that research has proceeded
as if NPOs were nearly the same as organisations in the profit
seeking sector of the economy (PSOs).
In an attempt to redress this balance and to provide an insight
into accounting in the context of the NPO, this study has
attempted to describe accounting information, particularly
external financial reports, and its users in five organisations
from one part of the NPO sector, churches. The study is
essentially descriptive and seeks to approach NPO sector accounts
with as little PSO sector bias as possible. The study is also
inductive in approach in that it seeks to generate hypotheses for
testing in later deductive research.
The use of a descriptive approach has necessitated the
development of new techniques, particularly in the analysis of
accounts, and has demonstrated the use of questionnaires and
interview techniques in a descriptive accounting study.
The empirical part of the research, carried out in five case
studies, consists of three distinct areas: a study of external
financial reports, their content, structure and context. a
questionnaire survey of users of external financial reports. and
finally interviews with a selected number of users of accounts.
The main findings and hypotheses generated by the study fall into
fifteen major areas. Some of these relate to accounting
information in general: that accounts are models and that users
employ an information search procedure in reading accounts.
However, most ideas and hypotheses relate specifically to the NPO
environment: consolidation issues, balance sheet construction,
absence of expert users, non-decision uses for accounts, lack of
fund accounting, the budgeting process as a key vehicle for
allocating funds, understanding of accounts by users, pressure
for changes in accounts and measurement bases in use. These ideas
and hypotheses for further research arose from key observations
in the study and give rise to a number of areas for future study
in the context of information and NPOs.
The research has yielded a number of new insights about the
accounting reports of churches suggesting that the structure and
content of the reports are closely contingent on the economics.
structure and funding of church organisations and that there are
several common patterns in the diversity of accounting statements
found, especially in balance sheet construction and use of fund
The study of recipients of accounts has given some detailed
information about how accounts of NPOs are used by 'external' and
'internal' users and provided a useful profile of users. This
profile is useful in helping to rank the relative importance of
users of accounts and also shows an apparent lack of expert users
of accounts, there certainly being no identifiable group of
expert users. This part of the study also identified only slight
pressure from users for changes in accounting reports.
Although the study of users also identified little decision use
for accounting information there does appear to be a widespread
interest in accounting information, probably for monitoring
Among the practical recommendations form the study are that: NPOs
should give a clear description of how their accounts are
structured; there should be clear disclosure of the measurement
basis used in the accounts; budgets would be a useful addition to
accounting reports; and an attempt ought to be made to provide an
overall movement of funds statement.