This paper provides a review and synthesis of past research regarding financial disclosure management by nongovernmental nonprofit organizations and suggests directions for future study. The primary purpose of this review is to summarize the evidence on financial disclosure management to help regulators and other stakeholders understand why, how, and to what extent nonprofits engage in this behavior. The paper begins by defining disclosure management in nonprofit organizations and exploring the motivations for why it might occur. Next is a survey of the nongovernmental nonprofit financial reporting environment: objectives, common practices, and the informational needs of users of nonprofit financial reports. Research exploring the motives, methods, and consequences of disclosure management is summarized. The evidence suggests that nongovernmental nonprofit managers have a variety of incentives to manage reported numbers and that they do in fact alter spending decisions, choose accounting methods, and design cost allocations to achieve certain performance benchmarks. (M.A. Hofmann). 3 The papers included in this review cover a time period of about 25 years. However, due to the many changes in reporting standards and data availability in the recent past, the focus is primarily on the more recent studies as they are likely to be the most relevant going forward. 4 Political costs refer to the costs of additional regulation, including higher taxes, borne by large or high-profile firms (Watts and Zimmerman, 1986). Nonprofits are exempt from tax on their program-related activities but are taxed on business activities that are unrelated to their mission. Private non-operating foundations are also subject to taxes on undistributed income. Posnett and Sandler (1989) find that their sample of U.K. charities ''maximize the surplus available for expenditure on charitable output,'' which makes them service maximizers.

Nonprofit organizations are often evaluated using the program ratio: the proportion of mission-related program expenses to total expenses. Nonprofit managers have incentives to manipulate the reporting of financial information to enhance the program ratio. This article reviews the scholarly literature on program ratio management in nonprofit organizations. Prior research has identified several motivations for and methods of program ratio management and provided limited evidence that it occurs. Researchers have explored the consequences of program ratio management and provided a list of factors mitigating such behaviors. The emerging consensus is that the program ratio is of limited usefulness in evaluating nonprofit performance. Keywords: program ratio; program ratio management; nonprofit organizations; earnings management; nonprofit performance measures EXTANT LITERATURE PROVIDES CONSIDERABLE EVIDENCE of many publicly traded, profi t-seeking corporations manipulating reported numbers to infl uence the perceptions and decisions of fi nancial statement users (Dechow and Skinner 2000;Graham, Harvey, and Rajgopal 2005;Habib and Hansen 2008;Healy and Wahlen 1999;Schipper 1989). However, for-profi t corporations are not alone in the practice of intervening in the fi nancial reporting process to present more favorable results. Nonprofi t managers also face pressures to manipulate fi nancial results. Although their success is not measured by profi t margins or rates of return, nonprofi t organizations are evaluated using fi nancial reports.Recently, the nonprofi t sector has grown substantially and has begun to attract more attention. Advances in technology, coupled with broader disclosure requirements by regulators, have increased access to nonprofit financial information. Internal Revenue Service (IRS) Form 990 annual reports are now publicly available through various websites. Th is increased access has resulted in heightened scrutiny of how nonprofi ts spend their money, especially in light of several high-profi le scandals in recent decades (Dimsdale 2009;Shepard and Miller 1994;Simross 1992). Th e role of charity "watchdog" agencies has grown, and donors have become more discriminating when disbursing their scarce resources. Competing with thousands of other nonprofi ts for resources and knowing they are commonly judged on their Nonprofi t Management & Leadership DOI: 10.1002/nml 402 GARVEN, HOFMANN, MCSWAINfi nancial results, some nonprofi t managers may resort to playing a numbers game to make the organization look as favorable as possible. Figure 1 describes the elements of this game.Although management of fi nancial results by profi t-seeking corporations tends to focus on net income, management of fi nancial results by nonprofi ts is more likely to focus on the program ratio (Khumawala, Parsons, and Gordon 2005)-the proportion of total expenses dedicated to providing programs that fulfi ll an organization's mission. Th e program ratio is typically computed as program expenses divided by total expenses. An alt...

ChatGPT, a language-learning model chatbot, has garnered considerable attention for its ability to respond to users’ questions. Using data from 14 countries and 186 institutions, we compare ChatGPT and student performance for 28,085 questions from accounting assessments and textbook test banks. As of January 2023, ChatGPT provides correct answers for 56.5 percent of questions and partially correct answers for an additional 9.4 percent of questions. When considering point values for questions, students significantly outperform ChatGPT with a 76.7 percent average on assessments compared to 47.5 percent for ChatGPT if no partial credit is awarded and 56.5 percent if partial credit is awarded. Still, ChatGPT performs better than the student average for 15.8 percent of assessments when we include partial credit. We provide evidence of how ChatGPT performs on different question types, accounting topics, class levels, open/closed assessments, and test bank questions. We also discuss implications for accounting education and research.

a b s t r a c t a r t i c l e i n f o Available online xxxxWe examine the association between economic climate and auditor risk acceptance as measured by the auditors' reaction to internal control weaknesses. We hypothesize and find that auditors address risk in a way that is conditioned on the economic environment. In particular, we find that during periods of weak economic activity, auditors tend to assess lower risk premiums and are less likely to resign in response to an adverse ICFR opinion. However, we find evidence that economic factors do not influence fees assessed by incoming auditors following a resignation in the presence of an ICFR weakness. Our results indicate that auditors modify their engagement risk strategies during challenging economic times and accept higher levels of risk to attract and retain clients. For the riskiest clients, however, economic factors do not appear to influence auditors' risk pricing.