What Costs Accountability? Financial Accountability, Mission and Fundraising in Nonprofits

Although greater calls for accountability have been articulated by academics, policy makers and donors in the recent years, a stream of thought has been questioning where the giving of an account should stop. In conveying the limits to the giving of an account (Messner, 2009) and associated transparency (Roberts, 2009), critical accounting scholars have also pointed to as yet unresolved contradictions intrinsic to accountability (McKernan, 2012), especially when it comes to be operationalised (Joannides, 2012). The impact of accountability's discharging on nonprofits' strategy or operations has to date been underexplored (Dhanni & Connelly, 2012; Tucker & Parker, 2013). Accordingly, this chapter seeks to contribute to this body of literature on the consequences of accountability on fundraising strategies in nonprofits, questioning whether accountability practice may hamper the effectiveness of the nonprofit sector by restraining the fundraising profession. Our chapter seeks to fill a dual theoretical gap. Firstly, only a number of publications have investigated the interplay between accountability and the making of organisational strategy (Parker, 2002, 2003b, 2011, 2012, 2013; Tucker & Parker, 2013). Therefore, we seek to fill a theoretical gap as to the impact of accountability on the conduct of straegic operations. By questioning whether accountability hampers fundraising strategy in non-profits we are also contributing to the literature balancing accountability and the mission. In this literature, it appears that money and the mission are often conflictual, financial managers being often seen by mission advocates as guardians shielding organisational resources (Chiapello, 1993, 1998; Lightbody, 2000, 2003). Another approach shows that making nonprofits accountable to capital and multiple stakeholders (donors, public authorities) leaders to changes in organisational culture (O'Dwyer & Unerman, 2007; Unerman & Bennett, 2004; Underman & O'Dwyer, 2006a, 2006b, 2008). By examining a small number of cases we show how accountability practices result in fundraising adapting and adjusting under such external pressures and constraints. We also show accountability systems may have a direct impact on the conduct of strategic operations, which might hamper mission conduct.

Go your own way : reporting of fundraising in Australian charity financial statements

Australian charities are facing increased public scrutiny of their financial reports, which must now be submitted to the national regulator, the Australian Charities and Not-for-profits Commission. Some may wish to use reports to create so-called 'fundraising efficiency league tables'. This article seeks to provide a description of current best practice in fundraising financial reporting by examining annual reports that have been recognised with industry awards. We find a wide variation in how terms have been used, with no patterns discernible. Moreoever, reporting is influenced by regulatory requirements in the relevant jurisdiction, which differ substantially. It is unlikely that league tables will be meaningful if constructed from charities' current annual financial statements.

Ethical screening and financial performance : the case of Islamic equity funds

Whether ethical screening affects portfolio performance is an important question that is yet to be settled in the literature. This paper aims to shed further light on this question by examining the performance of a large global sample of Islamic equity funds (IEFs) from 1984 to 2010. We find that IEFs underperform conventional funds by an average of 40 basis points per month, consistent with the underperformance hypothesis. In line with popular media claims that Islamic funds are a safer investment, IEFs outperformed conventional funds during the recent banking crisis. However, we find no such outperformance for other crises or high volatility periods. Based on fund holdings-based data, we provide evidence of a negative curvilinear relation between fund performance and ethical screening intensity, consistent with a return trade-off to being more ethical.

How should regulators deal with entrenched company executives?

The regulatory framework for corporate governance, both in Australia and internationally, shifts between rules based regimes and principles based approach. The rules based regimes are typified by legislation that imposes mandated compliance based rules, such as the Sarbanes Oxley Act. Other regimes, such as Australia’s CLERP 9 and the ASX Corporate Governance Council’s principles, have opted for a disclosure approach. This paper examines these approaches in the context of the non-binding vote rule, which arguably combines aspects of both. The study’s methodology empirically considers evidence relating to actual voting patterns as well as case study examples of the non-binding vote’s effectiveness. Significantly, our analyses show that from its inception, the non-binding vote was effective in motivating management to change the remuneration package to one they perceived as more acceptable to shareholders and that the non-binding vote is an effective regime to manage CEO remuneration (and by extension) executive remuneration.

Balancing the books : an assessment of financial stress associated with social work and human service student placements

This report presents the findings from a study of the financial impact of work-integrated learning commonly referred to as 'placement' among social work and human services students. Based on a survey of 214 respondants, 14 in-depth interviews and two focus groups, the findings indicate that two thirds of the surveyed group felt tired and anxious about their experience of balancing paid work and placement, with 2 in 5 reporting their learning experience was compromised as a result. The significant implications and potential solutions are also discussed.

Enhancing the auditor's report : to what extent is there support for the IAASB's proposed changes?

This article outlines proposed reforms to auditor reporting currently being considered by the International Auditing and Assurance Standards Board (IAASB), and other key national and transnational standard-setters and regulatory bodies. It adds to recent academic contributions on reforming the auditor’s report by analyzing the 165 stakeholder responses to the IAASB’s 2012 Invitation to Comment: Improving the Auditor’s Report to determine levels of support for the IAASB’s proposed reforms, and the differences, if any, between the views of various respondents based on stakeholder groups (e.g. audit and assurance firms, users, preparers, regulators, etc.) and regional classifications. Guided by insights from communication theory, our results show the levels of stakeholder support for the IAASB’s proposed reforms addressing auditors’ expectations, information and communication gaps are mixed. The strongest overall support was for enhanced auditor reporting on other information attached to, or intended to be read with, the financial statements, and the least supported initiative was including additional information in the auditor’s report about the auditor’s judgements and processes. Whilst overall there is generally consensus across both stakeholder groups and regions concerning the various questions investigated, we highlight where statistically significant differences between groups do exist. Notably, North American respondents were less likely to support a number of the IAASB’s proposed reforms than their counterparts from other regions.

Is biggest best? A comparative analysis of the financial viability of the Brisbane City Council

Structural reform through forced mergers has been a dominant feature of Australian local government for decades. Advocates of compulsory consolidation contend that larger municipalities perform better across a wide range of attributes, including financial sustainability. While empirical scholars of local government have invested considerable effort into investigating these claims, no-one has yet examined the performance of Brisbane City Council against other local authorities, despite the fact that it is by far the largest council in Australia. This paper seeks to remedy this neglect by comparing Brisbane with Sydney City Council, an average of six south east Queensland councils and an average of ten metropolitan New South Wales councils against four measures of financial performance over the period 2008 to 2011.

Household financial systems

In this paper we discuss some preliminary results of an ethnographic study focused on the ways money and financial issues are collaboratively handled within families. Families develop ‘systems’ or methods through which they organize and manage their everyday financial activities. These systems not only organize everyday family finances, but represent and shape family relationships. Through analysis of our ethnographic field study data, we develop four types of financial systems that we observed in the field: banking arrangements, physical hubs, goal-oriented systems and spatio-temporal organization. In this paper, we discuss examples of these systems and their implications for designing tools to support household financial practices.

The provision of visitable housing in Australia: Down to the detail

In response to the ratification of the United Nations Convention of the Rights of People with Disabilities (CRPD), Australian housing industry leaders, supported by the Australian Government, committed to transform their practices voluntarily through the adoption of a national guideline, called Livable Housing Design. They set a target in 2010 that all new housing would be visitable by 2020. Research in this area suggests that the anticipated voluntary transformation is unrealistic and that mandatory regulation will be necessary for any lasting transformation to occur. It also suggests that the assumptions underpinning the Livable Housing Design agreement are unfounded. This paper reports on a study that problematised these assumptions. The study used eleven newly-constructed dwellings in three housing contexts in Brisbane, Australia. It sought to understand the logics-of-practice in providing, and not providing, visitable housing. By examining the specific details that make a dwelling visitable, and interpreting the accounts of builders, designers and developers, the study identified three logics-of-practice which challenged the assumptions underpinning the Livable Housing Design agreement: focus on the point of sale; an aversion to change and deference to external regulators on matters of social inclusion. These were evident in all housing contexts indicating a dominant industry culture regardless of housing context or policy intention. The paper suggests that financial incentives for both the builder and the buyer, demonstration by industry leaders and, ultimately, national regulation is a possible pathway for the Livable Housing Design agreement to reach the 2020 goal. The paper concludes that the Australian Government has three options: to ignore its obligations under the CRPD; to revisit the Livable Housing Design agreement in the hope that it works; or to regulate the housing industry through the National Construction Code to ensure the 2020 target is reached.

Stakeholder pressures on corporate climate change-related accountability and disclosures: Australian evidence

This study investigates stakeholder pressures on corporate climate change-related accountability and disclosure practices in Australia. While existing scholarship investigates stakeholder pressures on companies to discharge their broader accountability through general social and environmental disclosures, there is a lack of research investigating whether and how stakeholder pressures emerge to influence accountability and disclosure practices related to climate change. We surveyed various stakeholder groups to understand their concerns about climate change-related corporate accountability and disclosure practices. We present three primary findings: first, while NGOs and the media have some influence, institutional investors and government bodies (regulators) are perceived to be the most powerful stakeholders in generating climate change-related concern and coercive pressure on corporations to be accountable. Second, corporate climate change-related disclosures, as documented through the Carbon Disclosure Project (CDP), are positively associated with such perceived coercive pressures. Lastly, we find a positive correlation between the level of media attention to climate change and Australian corporate responses to the CDP. Our results indicate that corporations will not disclose climate change information until pressured by non-financial stakeholders. This suggests a larger role for non-financial actors than previously theorized, with several policy implications.

Financial institutions using social media – do consumers perceive value?

Purpose The purpose of this paper is to examine consumer perceptions of value of financial institutions using social media to interact with consumers; if overall perceived value predicts a consumer’s intention to adopt, and if intention predicts self-reported adoption of social media to interact with a financial institution; and if perceptions of value in using social media to interact with a financial institution changes over time. Design/methodology/approach Self-administered surveys were run at two time points; 2010 and 2014. Data were analyzed using multiple and mediated regressions, and t-tests. Comparisons are made between the two time points. Findings Perceived usefulness, economic value, and social value predicted overall perceived value, which in turn predicted a consumer’s intention to adopt social media to interact with a financial institution. At Time 2, adoption intention predicted self-reported usage behavior. Finally, there were significant differences between perceptions across Time 1 and 2. Research limitations/implications The implications of the research highlight the importance of overall perceived value in the role of adoption intention, and that at Time 2, adoption intention predicted self-reported adoption to read and share content. A reduction in perceptions of value and intentions from Time 1 to Time 2 could be explained by perceptions of technology insecurity. In future studies, the authors recommend examining inhibitors to adoption including hedonic value. Practical implications The findings suggest that consumers will use social media if the sector creates and clearly articulates consumer value from using social media. The sector also needs to address technology security perceptions to increase usage of social media. Originality/value This paper is one of the first to investigate the consumer’s perspective in social media adoption by financial institutions, by exploring the role of value in consumer adoption and usage of social media.

The influence of financial risk tolerance and risk perception on individual investment decision-making in a financial advice context

The aim of this thesis is to examine how risk tolerance and risk perception, two important but often misunderstood constructs, jointly influence client investment decisions in a financial advice context. By distinguishing the roles of these two risk constructs in client decision-making, in this thesis a new direction in studying financial/investment risks is provided while practice and regulation in the financial services industry is potentially informed. Based on the literature relating to risks and individual decision-making, a theoretical framework is developed and relevant hypotheses are tested in two studies with financial adviser clients in Australia. Results reveal that financial risk tolerance influences asset allocation both directly and indirectly through risk perception. The intervening role of risk perception suggests that risk tolerance affects how clients perceive the riskiness of an investment product which influences client decision-making.

Unpacking director financial literacy

The social and economic effects of high profile governance scandals such as the National Safety Council, HIH and Centro have triggered much debate, reform and research into predicting and preventing future failures. While this has meant director financial literacy is now recognised as a core capability required of each individual director, there has been little guidance on what this capability involves other than the very general statement of being able to 'read and understand financial statements'. This thesis presents the results of a Delphi study aimed at identifying the core concepts a director needs to master to be financially literate. Thirty-five experts drawn from accounting, education and practice agreed that to be financially literate a director must have a conceptual understanding of 24 basic accounting concepts and be able to independently apply this understanding to a strategic evaluation of the finances of the organisation they serve.

The Value of Financial Planning Advice: Process and Outcome Effects on Consumer Well-being [Time 1 and 2 Survey Summary Results]

While anecdotal evidence indicates financial advice affects consumers’ financial well-being, this research project is motivated by the absence of empirically-grounded research relating to the extent to which, and, importantly, how, financial planning advice contributes to broader client well-being. Accordingly, the aim of this project is to establish how the quality of financial planning advice can be optimised to add value, not only to clients’ financial situation, but also to broader aspects of their well-being. This broader construct of well-being captures a range of process and outcome factors that map to concepts of security, control, choice, mastery, and life satisfaction (Irving, 2012; Gallery, Gallery, Irving & Newton, 2011; Irving, Gallery, and Gallery, 2009). Financial planning is commonly purported to confer not only tangible benefits, but also intangible benefits, such as increased security and peace of mind that are considered as important, if not more important, than material outcomes. Such claims are intuitively appealing; however, little empirical evidence exists for the notion that engaging with a financial planner or adviser promotes peace of mind, feelings of security, and expands choices and possibilities. Nor is there evidence signalling what mechanisms might underpin such client benefits. In addressing this issue, we examine the financial planning advice (including financial product advice) provided to retail clients, and consider the short- and longer-term impacts on clients’ financial satisfaction and broader well-being. To this end, we examine both process (e.g., how financial planning advice is given) and outcome (e.g., financial situation) effects.

Students' low financial literacy makes understanding fees, loans, debt difficult

Financial literacy in Australia is low, particularly so in those under 25 years of age. What might be surprising is that it is low even among university students.