Barriers to the Usefulness of Nonprofit Financial Statements: Perspectives from Key Internal Stakeholders

David Gilchrist, Andrew West, Yuyu Zhang

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

The extent to which financial reports are useful is of central importance in relation to the accounting standards that underpin them. This is as true of nonprofit financial reporting as it is of financial reporting in the commercial and public sectors. In this paper we report on our findings related to a research project focused on examining the usefulness of Australian accounting standards from the point of view of nonprofit directors, preparers of nonprofit financial statements and their auditors. Undertaking a series of round tables specific to each cohort, we examine the question of who is responsible, for what and to whom in the context of financial reporting. Our research reinforced a number of issues negatively impacting the usefulness of General Purpose Financial Reports in the nonprofit sector. We draw particular attention to concerns around the financial literacy of nonprofit directors, potential misunderstandings in relation to financial profitability, and complexity across a range of issues, including revenue recognition. Overall, the project found that there are manifest specific issues and aspects which are particular to the sector and that simply adopting the same approach with regard to accounting standards as taken in the for-profit sector is insufficient to ensure the utility of nonprofit GPFRs.
Original languageEnglish
Pages (from-to)188-202
Number of pages15
JournalAustralian Accounting Review
Volume33
Issue number2
DOIs
Publication statusPublished - Jun 2023

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