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Should NPOs Follow International Standards for Financial Reporting? A Multinational Study of Views


Financial reporting is an important aspect of not-for-profit organisations’ (NPOs’) accountability. Globally, numerous and varying regimes exist by which jurisdictions regulate NPO financial reporting. This article explores whether NPOs should be required or expected to follow sector-specific international financial reporting standards. We investigate stakeholder perceptions on the nature and scope of any such developed standards, interpreting our findings through the lens of moral legitimacy. Using an international online survey of stakeholders involved in NPO financial reporting, we analyse 605 responses from 179 countries. Based on our findings, we argue that diverse stakeholder groups, especially those who are involved with NPO financial reporting in developing countries, are likely to grant moral legitimacy to developed NPO international accounting standards if the consequences are to enhance NPO accounting and accountability information, subject to agreement as to whether all or only NPOs of a certain size should comply and whether any such standards should be mandatory.

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  1. The subtleties of legitimation are presented here as distinct explanations as to why stakeholders might grant legitimacy to a particular financial reporting practice. In reality, pragmatic, moral and cognitive legitimation processes are not clearly separable, but often interact and reinforce each type of legitimation. (Georgiou and Jack 2011; O’Dwyer et al. 2011).

  2. It is of interest to note that IFRS Trustees have announced that, although they will support efforts to develop NPO standards, they will not be responsible for developing them (IFRS Foundation 2016).

  3. The scope and dimensions of NPO accountability have been the subject of extensive research to date with scholarly contributions proposing both broad and narrower frameworks of NPO accountability. It is beyond the scope of this paper to develop a detailed discussion of this broader issue, but readers are further referred to the seminal contributions of Gray et al. (2006), Ebrahim (2005) and (2009) in this regard.

  4. IASB does not have legislative power; however, over 140 jurisdictions have mandated, through jurisdictional regulatory frameworks, IFRS for publicly accountable companies.

  5. Many national standard setters also undertake similar due process work to ensure “buy-in” from their constituency and the quality of their standards (for an example from the Third Sector, see Sinclair and Bolt 2013).

  6. The full survey can be found at Crawford et al. (2014b), Appendix B..

  7. Empirical data available from Crawford et al. (2014b).

  8. Of necessity, it would take many years to enshrine such a requirement in the legislation of countries around the world, even if it were considered desirable, but it could be that reputational pressures or the desire for accreditation against particular standards in order to attract funding might be enough to persuade NPOs to comply.


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The study reported in this paper was commissioned by CCAB whose membership comprises five major chartered accountancy bodies—ICAEW, ACCA, CIPFA, ICAS and Chartered Accountants Ireland. However, all conclusions in this paper are the authors’ own. The study was undertaken while Carolyn Cordery was at the University of Victoria, Wellington and Louise Crawford was at the University of Dundee, the latter provided the technical facilities for the online survey. Other members of the research team who contributed include Faisal Sheikh and Liafisu Yekini (Sheffield Hallam University); Ruth Kelly and Suyanto Suyanto (University of Dundee). The authors also wish to thank participants at several conferences for helpful feedback especially the ISTR Conference in Muenster, Germany in July 2014 and thanks to ICAS for facilitating a summit of the four authors in Edinburgh, Scotland in October 2016.

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Correspondence to Oonagh B. Breen.

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The authors have no conflicts of interest beyond those disclosed in the acknowledgements.

Human Participants and Informed Consent

The study used an online survey with human participants as described in the paper. The covering email explained the purpose of the study and stressed that participation was voluntary; it also made clear that narrative responses might be used on a non-attributable basis in publications arising from the study. No questions were included which were likely to cause emotional distress. The study was subject to ethical review in accordance with the relevant procedures at the lead institution (Sheffield Hallam University, UK).

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Breen, O.B., Cordery, C.J., Crawford, L. et al. Should NPOs Follow International Standards for Financial Reporting? A Multinational Study of Views. Voluntas 29, 1330–1346 (2018).

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  • Not-for-profit accounting
  • International standards
  • International surveys
  • Moral legitimacy