Promoting charity accountability: understanding disclosure of serious incidents

Abstract

Charities are under increasing pressure to be accountable. Using a novel dataset, we provide the first analysis of the characteristics of charities voluntarily disclosing details of serious incidents that may threaten their organisation. Financial loss, fraud and theft, and personal behaviour account for a majority of serious incidents reported. Larger, older organisations that have previously been subject to a regulatory investigation are more likely to report serious incidents. However, it is smaller, younger charities where the regulator perceives there to be greater risk of organisational demise arising from the incident.

NGO accounting and accountability: past, present and future

“…These four papers demonstrate how NGOs have developed additional forms of accountability in the form of actions to meet their specific purposes (Munro, 1996), which allows us to recognise the possibility and capacity of NGOs to design different procedures of how accounts should be produced and exchanged (Roberts, 1991(Roberts, , 2003 with the clients, users, or beneficiaries, members, communities, partners, staff and supporters (Christensen & Ebrahim, 2006;Dixon et al, 2006Edwards & Hulme, 1996. The other papers in this special issue (Cordery et al, 2019;Kemp & Morgan, 2019;McDonnell & Rutherford, 2019) also problematise the capacity of formal financial reporting to satisfy all the accounting and accountability requirements of NGOs. Therefore, NGOs were observed to complement formal, accounts by producing customised, voluntary accounts (Christensen & Ebrahim, 2006) that enabled the NGO to "account" for a more holistic understanding of their responsibilities that extends beyond economic and legal compliance (Munro, 1996).…”

“…The interaction of the six definitional themes in the NGO ecosystem and the emergence of NGO-related scandals and frauds has a number of specific attributes that are also necessary to consider in academic research, and these are highlighted through the papers in this issue. First, the NGO sector is a significant and growing part of many nations' economies (Salamon et al, 2013), a matter which has led to the increase of regulation and reporting requirements (see Cordery et al, 2019;McDonnell & Rutherford, 2019). Secondly, NGOs within this ecosystem are diverse in terms of size however measured (O'Leary, 2017).…”

“…For example, an annual financial report could be considered satisfactory in terms of its full compliance with regulations, but inadequate from a stakeholder engagement perspective. This tension is identified in a number of papers in this special issue (for example, Cordery et al, 2019;Kemp & Morgan, 2019;McDonnell & Rutherford, 2019). Table 2 provides a structure within which to position the papers in this special issue.…”

“…However, there were clear conflicts associated with significant patterns of beliefs in the key stakeholder groups and that this will likely impact the development of financial reporting standards and practices. The starting point of McDonnell and Rutherford (2019) is that financial loss, fraud and theft, and problematic personal behaviour of those involved with charities are creating new accountability demands. In their study, they analyse charities' responses to a new regulatory requirement to voluntarily disclosing details of serious incidents that may threaten their organisation.…”

“…There are broadly two groups of papers presented in this special issue. The first group of papers (Cordery et al, 2019;Kemp & Morgan, 2019;McDonnell & Rutherford, 2019) highlights challenges in accounting and accountability related issues in formal financial reporting, auditing and disclosures aimed specifically at the regulators. The second group of papers (Denedo et al, 2019;Goncharenko, 2019;Uddin & Belal, 2019;Yates et al, 2019) examine more informal type of accounting and accountability related challenges related to NGOs' broader mission or social purpose.…”