Comments on the Australian Accounting Research Foundation's Legislation Policy Discussion Paper NO.4 (A framework for financial reporting by incorporated associations)

The Australian Accounting Research Foundation (AARF) recently issued Legislative Policy Discussion Paper No.4 which proposes a framework for financial reporting by Australian incorporated associations.This paper comments on both the merits and deficiencies of the proposal. In particular it notes that the proposal simply advocates that the application of differential reporting, accounting standards, and the conceptual framework be imposed on incorporated associations by amended statutes. It is noted that in light of long experience in the corporate sector, he espoused benefits of such a move may not eventuate. Further, concern is expressed that the proposal is a blank cheque one because of the inadequacy of existing relevant accounting standards and the proposal to introduce new relevant standards. Another major defect in the proposal is that it emanates from accountants who acknowledge in their conceptual framework, the need for external reports to report on performance through both financial and non-financial reporting methods. Despite that acknowledgment, the standard set of external reports prepared by accountants do not measure performance as defined in their own conceptual framework (SAC 2) and in their auditing pronouncements (AUP 33), and they have restricted their domain to financial reporting (SAC 2). Accordingly the proposal appears to be seriously deficient and it is suggested that it be rejected and a new proposal be prepared by a multi-party group free from vested interests.

The application of financial ratios in analysing nonprofit organisations

Historically ratios have been used to assess the financial standing of profit organisations. It would be expected the role which such ratios play in analysing nonprofit organisations would be considerably different due to the lack of profit motive. Many traditional ratios are based on profitability as a benchmark. The nonprofit sector plays an important role in society yet to date there has been no research carried out on financial statement analysis for nonprofit organisations in Australia. This paper examines ratios of a group of nonprofit organisations and assesses the applicability of the traditional profit-based ratios to nonprofit organisations. Financial statements of a sample of charities registered in Queensland are analysed. The traditional profitability, liquidity and financial stability ratios are analysed and calculated wherever practicable and compared to the typical benchmarks used in profit analysis.

A potential HIV epidemic among male street laborers in urban Vietnam

Background: Mass migration to Asian cities is a defining phenomenon of the present age, as hundreds of millions of people move from rural areas or between cities in search of economic prosperity. Although many do prosper, large numbers of people experience significant social disadvantage. This is especially the case among poorly educated, migrant unskilled unregistered male laborers who do much of the manual work throughout the cities. These men are at significant risk for many health problems, including HIV infection. However, to date there has been little research in developing countries to explain the determinants of this risk, and thereby to suggest feasible preventive strategies. Objectives and Methodology: Using combined qualitative and quantitative methods, the aim of this study was to explore the social contexts that affect health vulnerabilities and to develop conceptual models to predict risk behaviors for HIV [illicit drug use, unsafe sex, and non-testing for HIV] among male street laborers in Hanoi, Vietnam. Qualitative Research: Sixteen qualitative interviews revealed a complex variety of life experiences, beliefs and knowledge deficits that render these mostly poor and minimally educated men vulnerable to health problems including HIV infection. This study formed a conceptual model of numerous stressors related to migrants’ life experiences in urban space, including physical, financial and social factors. A wide range of coping strategies were adopted to deal with stressors – including problem-focused coping (PFC) and emotion-focused coping (EFC), pro-social and anti-social, active and passive. These men reported difficulty in coping with stressors because they had weak social networks and lacked support from formal systems. A second conceptual model emerged that highlighted equivalent influences of individual psychological factors, social integration, social barriers, and accessibility regarding drug use and sexual risk behavior. Psychological dimensions such as tedium, distress, fatalism and revenge, were important. There were strong effects of collective decision-making and fear of social isolation on shaping risk behaviors. These exploratory qualitative interviews helped to develop a culturally appropriate instrument for the quantitative survey and informed theoretical models of the factors that affect risk behaviors for HIV infection. Quantitative Research: The Information-Motivation-Behavioral Skills (IMB) model was adopted as the theoretical framework for a large-scale survey. It was modified to suit the contexts of these Vietnamese men. By doing a social mapping technique, 450 male street laborers were interviewed in Hanoi, Vietnam. The survey revealed that the risk of acquiring and transmitting HIV was high among these men. One in every 12 men reported homosexual or bisexual behavior. These men on average had 3 partners within the preceding year, and condom use was inconsistent. One third had had sex with commercial sex workers (CSW) and only 30% of them reported condom use; 17% used illicit drugs sometimes, with 66.7% of them frequently sharing injecting equipment with peers. Despite the risks, only 19.8% of men had been tested for HIV during the previous 12 months. These men have limited HIV knowledge and only moderate motivation and perceived behavioral skills for protective behavior. Although rural-to-urban migration was not associated with sexual risk behavior, three elements of the IMB model and depression associated with the process of mobility were significant determinants of sexual behavior. A modified model that incorporated IMB elements and psychosocial stress was found to be a better fit than the original IMB model alone in predicting protected sex behavior among the men. Men who were less psychologically and socially stressed, better informed and motivated for HIV prevention were more likely to demonstrate behavioral skills, and in turn were more likely to engage in safer sexual behavior. With regard to drug use, although the conventional model accounted for slightly less variance than the modified IMB model, data were of better fit for the conventional model. Multivariate analyses revealed that men who originated from urban areas, those who were homo- or bi-sexually identified and had better knowledge and skills for HIV prevention were more likely to access HIV testing, while men who had more sexual partners and those who did not use a condom for sex with CSW were least likely to take a test. The modified IMB model provided a better fit than the conventional model, as it explained a greater variance in HIV testing. Conclusions and Implications: This research helps to highlight a potential hidden HIV epidemic among street male, unskilled, unregistered laborers. This group has multiple vulnerabilities to HIV infection through both their partners and peers. However, most do not know their HIV status and have limited knowledge about preventing infection. This is the first application of a modified IMB model of risk behaviors for HIV such as drug use, condom use, and uptake of HIV testing to research with male street laborers in urban settings. The study demonstrated that while the extended IMB model had better fit than the conventional version in explaining the behaviors of safe sex and HIV testing, it was not so for drug use. The results provide interesting directions for future research and suggest ways to effectively design intervention strategies. The findings should shed light on culturally appropriate HIV preventive education and support programs for these men. As Vietnam has much in common with other developing countries in Southeast Asia, this research provides evidence for policy and practice that may be useful for public health systems in similar countries.

Creating new possibilities : using design processes to overcome constraints

This paper describes how a team from a large company, when faced with a challenge to develop new customers in fast growing international markets, carried out the exploration of the needs of new clients in the largely unexplored market space of a developing country. This team used design methods and processes to identify the latent needs of new customers in situations of major economic, geographical, cultural and financial constraints. This encapsulation of the life experiences of potential customers is used extensively in some new product development, but is largely novel to business practices and in processes of developing new services. This research links with the sub-theme of discovering creativity in necessity and highlights the potential benefits of design methodologies to create new possibilities for better accessibility of the company’s products to new clients, with future implications for organizational strategy. The overall theme of Design for the Colloquium encourages exploration of the ways and means of developing new ideas for new business with better outcomes, using design concepts and design technologies.

Waving or drowning? Managing resource constraints in entrepreneurial firm with bricolage as a response to the global financial crisis

These are challenging times for new entrepreneurial firms. The development of the Global Financial Crisis shook the very foundations of global markets and institutions that most firms relied on to do business (Claessens, et al., forthcoming). In the midst of institutional flux and resource constraints, entrepreneurial firms, which have been shown to make a range of contributions to the economy (van Praag & Versloot 2007) faced increasing constraints. The Australian Federal Government quickly implemented the Green Loan program in response to the financial crisis. Unfortunately, the green loans program was flawed with obsolete processes and information (Faulkner, 2011), further constraining new firms. Prior research provides few clues regarding how resource-constrained entrepreneurial firms deal with these institutional flaws within institutional change and how they might overcome these challenges and prosper. One promising theory that evaluates behavioural responses to constraints and institutional flaws is bricolage (Levi Strauss, 1967). Bricolage aligns with notions of resourcefulness: defined here as “making do by applying combinations of the resources at hand to new problems and opportunities” (Baker and Nelson 2005: 333). Using three case studies, we consider how institutional flaws impact firm behaviours and illustrate the use of bricolage in attempts to reinforce, shape and change the GL program further extending bricolage domains of Baker and Nelson (2005).

Juggling information policy, rights to information and copyright licensing to enhance the accessibility and reusability of spatial data : the Australian experience

There is still no comprehensive information strategy governing access to and reuse of public sector information, applying on a nationwide basis, across all levels of government – local, state and federal - in Australia. This is the case both for public sector materials generally and for spatial data in particular. Nevertheless, the last five years have seen some significant developments in information policy and practice, the result of which has been a considerable lessening of the barriers that previously acted to impede the accessibility and reusability of a great deal of spatial and other material held by public sector agencies. Much of the impetus for change has come from the spatial community which has for many years been a proponent of the view “that government held information, and in particular spatial information, will play an absolutely critical role in increasing the innovative capacity of this nation.”1 However, the potential of government spatial data to contribute to innovation will remain unfulfilled without reform of policies on access and reuse as well as the pervasive practices of public sector data custodians who have relied on government copyright to justify the imposition of restrictive conditions on its use.

In the bank or on the ground : an examination of financial reserves in Australian international aid organisations

This study contributes to the understanding of the contribution of financial reserves to sustaining nonprofit organisations. Recognising the limited recent Australian research in the area of nonprofit financial vulnerability, it specifically examines financial reserves held by signatories to the Code of Conduct of the Australian Council for International Development (ACFID) for the years 2006 to 2010. As this period includes the Global Financial Crisis, it presents a unique opportunity to observe the role of savings in a period of heightened financial threats to sustainability. The need for nonprofit entities to maintain reserves, while appearing intuitively evident, is neither unanimously accepted nor supported by established theoretic constructs. Some early frameworks attempt to explain the savings behaviour of nonprofit organisations and its role in organisational sustainability. Where researchers have considered the issue, its treatment has usually been either purely descriptive or alternatively, peripheral to a broader attempt to predict financial vulnerability. Given the importance of nonprofit entities to civil society, the sustainability of these organisations during times of economic contraction, such as the recent Global Financial Crisis, is a significant issue. Widespread failure of nonprofits, or even the perception of failure, will directly affect, not only those individuals who access their public goods and services, but would also have impacts on public confidence in both government and the sectors’ ability to manage and achieve their purpose. This study attempts to ‘shine a light’ on the paradox inherent in considering nonprofit savings. On the one hand, a public prevailing view is that nonprofit organisations should not hoard and indeed, should spend all of their funds on the direct achievement of their purposes. Against this, is the commonsense need for a financial buffer if only to allow for the day to day contingencies of pay rises and cost increases. At the entity level, the extent of reserves accumulated (or not) is an important consideration for Management Boards. The general public are also interested in knowing the level of funds held by nonprofits as a measure of both their commitment to purpose and as an indicator of their effectiveness. There is a need to communicate the level and prevalence of reserve holdings, balancing the prudent hedging of uncertainty against a sense of resource hoarding in the mind of donors. Finally, funders (especially governments) are interested in knowing the appropriate level of reserves to facilitate the ongoing sustainability of the sector. This is particularly so where organisations are involved in the provision of essential public goods and services. At a scholarly level, the study seeks to provide a rationale for this behaviour within the context of appropriate theory. At a practical level, the study seeks to give an indication of the drivers for savings, the actual levels of reserves held within the sector studied, as well as an indication as to whether the presence of reserves did mitigate the effects of financial turmoil during the Global Financial Crisis. The argument is not whether there is a need to ensure sustainability of nonprofits, but rather how it is to be done and whether the holding of reserves (net assets) is an essential element is achieving this. While the study offers no simple answers, it does appear that the organisations studied present as two groups, the ‘savers’ who build reserves and keep ‘money in the bank’ and ‘spender-delivers’ who put their resources ‘on the ground’. To progress an understanding of this dichotomy, the study suggests a need to move from its current approach to one which needs to more closely explore accounts based empirical donor attitude and nonprofit Management Board strategy.

The financial services cultural orientation matrix

With saturation within domestic marketplaces and increased growth opportunities overseas, many financial service providers are investing in foreign markets. However, cultural attitudes towards money can present market entry challenges to financial service providers. The industry would therefore benefit from a strategic model that helps to align financial marketing mixes with the cultural dimensions of a foreign market. The Financial Services Cultural Orientation (FSCO) Matrix has therefore been designed, with three cultural dimensions identified which influence preference for financial products; preference for cash, aversion to debt and savings orientation. Based on a combination of these dimensions and their relative strength within a culture, eight different consumer segments for financial products are identified, and marketing strategies for each consumer segment are then proposed. Three cultural clusters from the GLOBE Project House et al. (2002) are used to highlight possible geographic markets for each of these consumer segments. In particular, this paper focuses on GLOBE’s Confucian Asia, Southern Asia and Anglo cultural clusters, as these clusters represent the most well established financial markets in the world and the fastest growing financial markets for the future. The FSCO Matrix provides the financial services industry with an innovative and practical tool for addressing cross-cultural challenges and developing successful marketing strategies for entry into foreign markets.

Intraurban rail access : Policy implications of five revealed perspectives from a Q-sorting exercise in three Australian cities

This project advances current understanding of intra-urban rail passengers and their travel experiences in order to help rail industry leaders tailor policy approaches to fit specific, relevant segments of their target population. Using a Q sorting technique and cluster analysis, our preliminary research identified five perspectives occurring in a small sample of rail passengers, who varied in their frequency and location of rail travel as well as certain socio-demographic characteristics. Revealed perspectives (named to capture the gist of their content) included: ‘Rail Travel is About the Destination, Not the Journey’; ‘Despite Challenges, Public Transport is Still the Best Option’; ‘Rail Travel is Fine’; ‘Rail Travel? So Far, So Good’; and ‘Bad Taste for Rail Travel’. This paper discusses each of the perspectives in detail, and considers them in terms of tailored policy implications. An overarching finding from this study is that improving railway travel ‘access’ requires attention to physical, psychological, financial, and social facets of accessibility. For example, designing waiting areas to be more socially functional and comfortable has the potential to increase ridership by addressing social forms of access, decreasing perceived wait times, and making time at the station feel like time well spent. Even at this preliminary stage, the Q sorting technique promises to provide a valuable, holistic albeit fine-grained analysis of passenger attitudes and experiences that will assist industry efforts to increase ridership.

The Best interests duty in the future of financial advice reforms : striking a balance between certainty and flexibility

Presentation delivered to the Australian and New Zealand Consumer Law Roundtable held at the University of Melbourne Law School on Friday, 16 November 2012. The paper covers the background to the 'Future of Financial Advice' reforms and their context. In addition to this the scope of best interests duty is discussed. The paper concludes with an assessment of the likely effectives of best interest duty as a consumer protection measure.

Submission on Financial Planning Association Consultation Paper

This report was submitted to the Financial Planning Association and is confined to the proposals in relation to compliance with the Best Interests duty (Part B) and the provision of Scaled Advice (Part C) in the FPA Consultation Paper, Modifications to the FPA Code of Professional Practice to incorporate FoFA, released in October 2012.

Transportation : implications for accessibility for older people

Objective: This research investigates older people’s use of transportation to develop strategies for age-friendly transportation within the community. Methods: Data for this study was derived from Global Positioning System (GPS) tracking of thirteen people aged 55 years and older, together with self-report information recorded in travel diaries about daily activities undertaken outside the home over a period of seven days. Semi-structured interviews were aided by individual maps to investigate engagement in out-of-home activities and verify the recorded GPS data. Results: Overall, participants were highly reliant on the car for daily commuting. Walking, biking and public transport options were unattractive due to environmental conditions, accessibility and usability. Conclusion: Participation within the community and access to services is facilitated by private and public transportation. It is therefore critical to address accessibility and usability issues faced by older people to enable them to maintain their mobility, and ensure access to services, especially when driving ceases.