Pacific Accounting Review
Charities’ new non-financial reporting requirements: 

preparers’ insights

Journal: Pacific Accounting Review

Manuscript ID PAR-12-2018-0119.R2

Manuscript Type: Research Paper

Keywords: Charities, statement of service performance, non-financial reporting

 

Pacific Accounting Review



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Charities’ new non-financial reporting requirements: preparers’ insights

Abstract

Purpose: The purpose of this paper is to obtain insights from preparers on the new 

Performance Report requirements for New Zealand registered Tier 3 and Tier 4 charities, in 

particular the non-financial information included in the ‘Entity Information’ section and the 

‘Statement of Service Performance’.

Design: Semi-structured interviews were conducted with 11 interviewees, each involved with 

governance and reporting of one or more Tier 3 or Tier 4 registered charities. These 

interviews were analysed in terms of accountability and legitimacy objectives, which 

motivated the regulators to introduce the new reporting regime.

Findings: Key findings are summarised under three themes. Manageability relates to 

perceptions and suggestions regarding implementation of the new requirements. Scepticism 

concerns some doubts raised by interviewees regarding the motivations for performance 

reports and the extent to which they will be used. Effects include concerns about potentially 

losing good charities and volunteers due to new requirements making their work ‘too hard’, 

although an increased focus on outcomes creates the potential for continuous improvement. 

Research limitations: The subjectivity that is inherent in thematic analysis is acknowledged 

and also that multiple themes may sometimes be present in the sentences and paragraphs 

analysed. We acknowledge too that early viewpoints may change over time.

Practical implications: Themes identified may assist regulators, professional bodies and 

support groups to respond to the views of preparers. Findings will also be of interest to 

parties in other jurisdictions who are considering the implementation of similar initiatives.

Originality: This paper provides early insights on new reporting requirements entailing 

significant changes for New Zealand registered charities for financial periods beginning on or 

after April 2015. The focus is on small registered charities (97% of all New Zealand 

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registered charities) and key aspects of the Performance Report: Entity information and the 

Statement of Service Performance.

Keywords: Charities, statement of service performance, non-financial reporting.

Article Classification: Research paper

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Charities’ new non-financial reporting requirements: preparers’ insights

1. Introduction

The Financial Reporting Act 2013 heralded significant changes to financial reporting 

requirements for registered charities, which became effective from 1 April 2015. Peterson-

Palmer and Malthus (2017) note that prior to this, there were no legal requirements for 

registered charities in New Zealand with regard to preparation of financial statements. The 

rationale for these changes was based on public interest, concerns about public trust as a 

result of scandals, and calls for greater transparency and accountability from registered 

charities (Cordery, Sim and van Zijl, 2017; Peterson-Palmer and Malthus, 2017).  

The New Zealand External Reporting Board (XRB) is one of the global leaders in 

promulgating new accounting standards requiring performance reporting for public benefit 

entities (PBEs)1 which place greater emphasis on non-financial reporting (Hankinson, 2017).  

McConville and Cordery (2018) note that the development of standards for non-financial 

reporting will face challenges. These include balancing the needs of a wide range of 

stakeholders interested in registered charities’ performance information, and the risk of 

excessive disclosure that compromises effective communication. The purpose of the current 

research is to contribute to the development of reporting standards by obtaining preparers’2 

insights regarding the new Performance Report requirements, in particular, the Entity 

information section and the Statement of Service Performance (SSP). These insights include 

preparers’ implementation challenges. Knowledge of such challenges and associated costs 

may assist standard setters in making cost/ benefit assessments during post-implementation 

reviews. 

1 PBEs include not-for-profit (NFP) entities such as charities. All registered charities are required to follow the 
new XRB standards.
2 Preparers of the Statement of Service Performance are primarily accountants or treasurers of the charities or 
sometimes a nominated volunteer.

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This study is limited to ‘small’ registered charities, namely those that meet the criteria 

for classification as Tier 3 and Tier 4 entities.3 We adopt this focus as it is estimated that 22% 

of New Zealand registered charities are in Tier 3 and 75% are in Tier 4 i.e., a total of 97% 

(Department of Internal Affairs, 2016).  Registered charities in Tier 3 have no public 

accountability4, have total operating expenses less than or equal to NZ$2m and are required 

to prepare accounts in compliance with a ‘simple format standard’5 using accrual accounting.  

Registered charities in Tier 4 also have no public accountability, have total operating 

payments less than NZ$125,000 and may use the ‘simple format standard’ based on cash 

accounting (cash paid and received).  Templates to assist in meeting the reporting 

requirements are provided by the XRB: Tier 3 (EG A5)6 and Tier 4 (EG A6).  

The new accounting standards [Tier 3: Public Benefit Entity Simple Format Reporting 

- Accrual (Not-for-profit) and Tier 4: Public Benefit Entity Simple Format Reporting - Cash 

(Not-for-profit)]7 require Tier 3 and Tier 4 NFP entities to prepare a performance report. This 

report includes non-financial information about the entity and its service performance, in the 

Entity Information section and a Statement of Service Performance (SSP) respectively. These 

performance reports must be submitted to the publicly available Charities Services website 

within six months of the entity’s balance date. The first performance reports were due by 31 

September 2016 (for March 2016 year-ends); later year-ends rolled on until a final due date 

3 The XRB introduced a new accounting framework, which became effective for not-for-profit PBEs for periods 
beginning on or after 1 April 2015. PBEs are classified into four tiers in terms of this framework. Tier 1 
comprises entities that have public accountability and/or have annual expenses in excess of NZ$30 million, so 
are required to comply with the full suite of PBE accounting standards. Tiers 2 – 4 do not have public 
accountability.  Charities in each tier are progressively smaller, so reporting requirements are progressively less 
onerous.   
4 Public accountability is a complex concept, which is defined in the External Reporting Board (XRB) Standard 
A1 Application of the Accounting Standards Framework (XRB A1), paragraphs 7-13. 
5 Simple format standards were developed to provide a less complex alternative for smaller, less sophisticated 
charities, than the accounting standards which Tiers 1 and 2 are required to comply with.
6 Explanatory Guide A5: optional template and associated guidance notes for applying public benefit entity 
simple format reporting – Accrual (Not-for-profit): Explanatory Guide A6: optional template and associated 
guidance notes for applying public benefit entity simple format reporting – Cash (Not-for-profit):
7 PBE SFR-A (NFP); PBE SFR-C (NFP)

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of 30 August 2017. The current research indicates that small registered charities (Tiers 3 and 

4) experience some difficulty producing and reporting the required non-financial information 

in the Entity Information section and the SSP.  The focus is, therefore, on exploring these 

difficulties.  The major findings can be summarised under three key themes: manageability, 

scepticism and effects associated with the new reporting requirements. 

This paper contributes to the literature on regulation of charities, in particular insights 

regarding recent changes to reporting requirements for the New Zealand registered charities 

sector.  Peterson-Palmer and Malthus (2017) note a paucity of research in this regard. Their 

focus is on the impact of changes to financial reporting and assurance requirements and they 

restrict their study to interviews of five charities in the Nelson region of New Zealand. They 

posit that their findings may contribute to an understanding of the impact of the recent 

changes and serve as a guide to continued implementation and monitoring of the accounting 

standards. The current study responds to their call for further research, larger sample size and 

varied geographic locations. It also extends their contribution by focusing on non-financial 

information in the Entity Information section and the SSP, as well as using a larger sample 

size to cover Auckland and Wellington, the largest centres in the North Island.  The current 

study identifies with Cordery et al., (2017) who discuss the need for efficient regulatory 

options for the charities sector in order to increase public trust and confidence. The new 

regulations for registered charities and other entities in the NFP sector aim to achieve 

consistency of reporting across the sector and thus improve accountability and transparency 

as well as readability and comparability (Peterson-Palmer and Malthus, 2017).  Morgan 

(1999) found that a new statutory regime for charity accounting in England and Wales caused 

charities to adopt new approaches to record keeping.  He reported that although required 

disclosures were seen to create additional work, there was general acceptance that the new 

regime would lead to more meaningful reporting. Our research provides additional support 

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from a different setting for these findings. Similarly, Morgan and Fletcher (2013) reported 

that mandatory public benefit reporting by charities helped the charities to focus on their aims 

and enabled them to ‘tell their story’. 

Understanding how to improve performance reporting is important, as this is integral 

to regulatory efforts to improve how charities discharge their accountability (Hyndman and 

Anderson, 1995; Gray et al., 1996). The XRB reinforces this in its statement: “The 

performance report … is designed for those users who cannot require the entity to disclose 

the information needed for accountability and decision making” (External Reporting Board, 

2013, p.10). Accountability is a key mechanism by which charities achieve legitimacy 

(Ospina et al., 2002).  By describing achieved outcomes and outputs, a charity legitimises its 

activities and enhances accountability to stakeholders.  The current study is therefore set 

within the context of accountability and legitimacy.

This research is significant because, as noted by Palmer (2013), the concept of 

disclosure is critical to the ongoing development of the charities sector and consistent 

disclosure requirements will improve stakeholder trust and confidence in the sector (Cordery 

et al., 2017).  Compliance with external reporting requirements is important for trust building 

and ongoing stakeholder support (Agyemang et al., 2017).  According to Saj (2012), 

community service organisations, such as charities, will adopt mandatory requirements when 

they consider them to contribute to the effectiveness of the organisation.

This study makes further contributions to the literature and these are best appreciated 

in the context of recent commentary on the new reporting requirements (Tukiri and Fisher, 

2017). First, the low level of compliance by registered charities in the first year of mandatory 

adoption of the new reporting requirements was alarming – a compliance rate of 59%. As we 

note in Section 5 below, compliance did improve in the second year of reporting, but 

Charities Services reports that a consistent message they hear is that Tier 3 and 4 registered 

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charities still find it a challenge to complete the reporting requirements (Charities Services, 

2019). The findings are amongst the earliest insights which may assist regulators and 

preparers in facilitating completion of reporting requirements and achieving improved levels 

of compliance. Second, the new reporting requirements are the biggest change in reporting 

ever for New Zealand registered charities. The extent of change as well as the significance of 

charities for the New Zealand economy are important factors motivating this study. Charities 

Services (2018) reports that charities are vital to New Zealand’s society with assets totalling 

$58 billion and annual income of $18 billion. Third, 97% of New Zealand’s approximately 

28,000 registered charities are small in size (Tiers 3 or 4), hence the current focus on small 

registered charities. 

The need for performance reporting has been formally promoted in the United 

Kingdom since at least the 1990’s (e.g., the 1995 Statement of Recommended Practices 

(SORP)). The 2005 SORP introduced expanded performance and governance requirements 

for annual reports of the charities’ trustees (Hyndman and McMahon, 2010). New Zealand is, 

however, one of the first countries in the world to implement SSP requirements, a separate 

statement dedicated to describing performance in terms of outcomes and outputs. Therefore, 

this study will be of interest to standard setters and early adopters of best practice in other 

countries (Gilchrist and Simnett, 2019).

The paper proceeds as follows. Section 2 provides background information on 

performance reporting, as well as a review of related literature on accountability and 

legitimacy. Section 3 describes the research method and section 4 presents the research 

findings. Section 5 includes the discussion and conclusion.

2. Performance reporting

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Performance reporting can be defined as “systematic information describing the outputs and 

outcomes of public programs and organizations - whether intended or otherwise - generated 

by systems and processes intended to produce such information” (Pollitt, 2006, p. 39).  

MacIndoe and Barman (2012, p. 717) note that “the use of outcomes as the optimal sign of 

organizational performance replaced prior efforts to measure inputs … and outputs … as 

other indicators of organizational success”.  Others (e.g., Barman, 2007; Connolly and 

Hyndman, 2004; Hyndman and McMahon, 2010) also state a need for charities to focus on 

their outcomes and outputs as a basis for providing a measurement of performance which can 

be reported to stakeholders.

The Performance Report, which registered charities are required to prepare annually, 

begins with Entity Information, a section designed to answer the questions: ‘Who are we?’ 

and ‘Why do we exist?’ (EG A5 and A6).  This section states the mission or charitable 

purpose of the entity (Charities Services, 2015).  This is followed by the SSP which 

“…reports the activities of the entity over the past year” especially in relation to achievement 

of mission (PBE SFR-A (NFP) EG A5, Sec. 4)

Service performance relates to a range of elements, particularly outcomes and outputs.  

Identifying the relationship between the two provides information on the effectiveness of the 

entity. Therefore, the first task in preparing the SSP is for the entity to describe its outcomes 

and outputs (‘What did we do?’, ‘What difference does our organisation make?’, ‘What 

change are we trying to make in society?’) (Deloitte, 2016). 

2.1 Accountability and legitimacy

The study is framed within the concepts of accountability and legitimacy.  Performance 

information is important for developing a more accountable charitable sector (Sinclair et al., 

2013). The focus of this research is performance reporting, in particular the reporting of 

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outcomes and outputs, which are measures of efficiency and effectiveness, and thus part of 

the accountability obligations of charities (Connolly and Hyndman, 2004).  Accountability is 

defined as: “the requirement for one party to account to another party for its performance 

over a given period” (PBE IPSAS 1, C17); further, “a key objective of external reporting of 

service performance is to strengthen accountability for delivery of outputs” (NZICA TPA-9, 

2007, para. 1.12). The aim is to provide accountability and legitimacy8 by reporting to 

stakeholders (including members, volunteers, beneficiaries, donors and the public) on the 

achievements of the charity in relation to its objectives.  In respect of one group of 

stakeholders, Molloy and Cordery (2009, p. 48) state: “lapsed donors rarely claim they 

couldn’t afford to carry on giving, but they often say they’ve lost faith in the effectiveness of 

their giving”, and Bekkers (2003) reports that donors would like to know more about what is 

happening to their donations.  Williams (1984) notes that a lack of accountability and loss of 

legitimacy through insufficient disclosure causes a decline in donations.  Therefore, in order 

to encourage donations of money and time, charities need to provide evidence of the 

difference they make to the lives of beneficiaries and what they have achieved in addressing 

social needs (Framjee, 2004).  In other words, they need to prove the legitimacy of their 

activities.  Output reporting contributes to legitimacy and promotes efficient performance, 

which is a basis for accountability of managers (Bale and Dale, 1998). The more recent focus 

on reporting also on outcomes will likely enhance these benefits.

Non-financial reporting assists stakeholders in assessing performance, in particular, 

how stated outcomes are being achieved (Abraham, 2007; Palmer and Randall, 2002; van der 

Heijden, 2013). However, charities often have a wide range of complex missions with 

different and diverse components usually based on social values (Hallock, 2002; Herman and 

8 Legitimacy inspires public trust and confidence. Dowling and Pfeffer (1975, p.122) suggest that it is “… a 
condition or status which exists when an entity’s value system is congruent with the value system of the larger 
social system of which the entity is a part”. 

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Renz, 1999; Forbes, 1998). This makes it difficult to assess their performance (Stewart and 

Walsh, 1994). Thus, reporting ‘outputs’ and ‘outcomes’ is a means to address the 

accountability of registered charities in efficiently providing their services and benefiting the 

community, and promoting the legitimacy of the organisation. 

2.2 Outcomes9

Outcomes are derived from the charitable purpose or mission of the charity and can be 

described as “what the entity is seeking to achieve in terms of its impact on society” (PBE 

SFR-A (NFP), EG A5, Sec. 4). More explicitly, outcomes are “the benefits or results it has 

for its customers, clients, or participants” (Plantz, Greenway and Hendricks, 1997, p.17) or as 

defined in PBE SFR-A (NFP) para. A40, “what the entity is seeking to achieve in terms of its 

impact on society”. Tier 3 registered charities are required to describe their outcomes in the 

SSP, with a focus on the short- to medium-term and being specific (PBE SFR-A (NFP) para. 

A41(a).10 Doing so makes the charity accountable to its stakeholders and enables them to 

determine whether the charity is effective or not.  Outcome measurement and reporting also 

enhances the public image and legitimacy of the charity. Disclosure of this information 

provides evidence of the legitimacy of the charity and helps position it as a successful 

organisation (Hatry, van Houten, Plantz and Greenway, 1996).

2.3 Outputs

“A key objective of external reporting of service performance is to strengthen accountability 

for delivery of outputs” (PBE IPSAS 1, para C13). Outputs are specific activities and items 

9The terms outcomes and outputs have been removed from Service Performance Reporting requirements for 
Tiers 1 and 2 (FRS 48).  It is possible that they will also be removed when the Statement of Service 
Performance for Tier 3 and Tier 4 charities is reviewed.  
10 Tier 4 charities are only required to report their outputs; reporting of outcomes is optional.

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that the entity provides in order to achieve the stated outcomes: “The goods and services that 

the entity delivered during the year” (PBE SFR-A (NFP), A40, p. 16).  The accounting 

standard requires disclosure of current year actual and budgeted figures, as well as 

comparative actual figures for the previous year. Outputs may be reported in monetary terms 

or as a simple quantitative measure in units, such as the number of programmes and/or clients 

that are serviced by the charity, number of visits to beneficiaries, or number of consultations 

(Buckmaster, 1999; Connolly and Hyndman, 2004). Pollitt (1986) asserts that the 

effectiveness of an organisation can be measured by the level of outputs utilised in producing 

outcomes, and the sustained production of benefits. Accountability for outputs requires 

description in terms of their quantity and quality as well as the timeframe and physical 

location for their delivery.

Reporting on outputs provides a basis for stakeholders to determine the extent to 

which they contribute to the achievement of outcomes.  For example, for a charity that makes 

school lunches, an example outcome could be: to reduce malnutrition in children at XYZ 

school.  The related output could be: providing lunches to children at XYZ school - 50 

lunches per term provided this year (Fletcher, 2016). This information has legitimacy value 

as stakeholders become connected to the activities of the charity.

The inclusion of non-financial performance-related information in charity annual 

reports is argued to be of greater importance and usefulness compared to traditional financial 

information, and more essential in discharging the accountability of charities (Connolly and 

Hyndman, 2004; Huang and Hooper, 2011). The new reporting requirements should therefore 

assist in enhancing public trust and confidence in registered charities. Preparers’ views in this 

regard, are explored by investigating the following research questions:

1. What are the views of Tier 3 and 4 preparers on the new non-financial 

performance reporting requirements, in particular, the Entity information section 

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and the SSP and their contribution to improved accountability and legitimacy to 

stakeholders?

2. What insights do Tier 3 and 4 preparers have to offer, regarding the preparation 

and provision of the new non-financial performance reporting information?

In summary, managers need to determine the best way to achieve their entity’s desired 

outcomes and to ensure that resources are used to generate outputs which clearly contribute to 

these.  Performance-related information is the focus of the new regulations. This should 

promote accountability. It should also serve as a legitimising tool to win donor trust and 

support (Connolly and Hyndman, 2013) and to justify a charity’s right to exist. This study 

provides evidence of the views of preparers on these matters. 

3. Research method

Description and judgement are essential in the evaluation process (Guba and Lincoln, 1989).  

This approach favours purposive sampling (the researchers select those from whom feedback 

will be obtained on the basis of their knowledge and familiarity with the topic), over random 

sampling (Lincoln and Guba, 1985). The interviewees had been selected by their respective 

charities to prepare the required reports.  As Cavana et al. (2001) explain, purposive sampling 

is particularly appropriate where there are a limited number of individuals who have the 

information, which is sought. As noted in Section 1, the first performance reports were due 

by 31 September 2016 (for March 2016 year-ends); later year-ends rolled on until a final due 

date of 30 August 2017. To obtain early insights, interviews were conducted between August 

2016 and early April 2017.  We relied on enquiries through our personal and business 

networks to identify early reporters and those involved in their reporting processes. 

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Semi-structured interviews were conducted with 11 interviewees, each involved with 

governance and reporting of one or more Tier 3 or Tier 4 registered charities. A semi-

structured question sheet was developed, drawing on prior literature, to facilitate the 

interviews and to assist in ensuring consistency of approach and questions used.11 Open-

ended questions were used in order to explore interviewee’ views on the new performance 

reporting requirements, resulting in interviews which lasted between approximately 30 

minutes to just over one hour. The interviews were conducted by the authors of this study, as 

well as by one experienced research assistant. Each interview was recorded with the 

permission of the interviewee. The researchers listened to and considered the opinions and 

feedback of respondents and this provided a rich understanding of the issues and problems 

they encountered when preparing their Entity information section and SSP. Table 1 provides 

further detail of interview duration, dates of interviews, charity sectors and interviewees, all 

of whom had considerable business experience (four were accountants). 

(Insert Table I here)

The interview recordings were transcribed by a paid professional. NVivo, a qualitative 

software package, was used to assist with some initial analysis and coding of transcribed 

interviews.  Smith and Taffler (2000) and Stent, Bradbury and Hooks (2015) inform the 

thematic analysis of interview transcripts, with particular reference to their descriptions 

relating to manageability and evaluative themes. The two researchers and their research 

assistant analysed the transcripts and agreed on the emergent key themes, which are described 

in more detail under Section 4 below.

11 A copy of the question sheet is available from the authors on request.

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4. Research findings

Our study focuses on the first two parts of a Performance Report: (1) Entity Information and 

(2) SSP. Requirements for the Entity Information section are designed to ensure that users are 

provided with the answers to two major questions: “Who are we?” and “Why do we exist?” 

The SSP requirements are designed to answer the questions: “What did we do?” and “When 

did we do it?” Our findings are therefore, organised under these headings and related 

interview questions. The findings are further organised within the above headings, in terms of 

three key themes, which emerged from the analysis. The three key themes concern levels of 

manageability, scepticism and effects associated with the new performance reporting 

requirements. Manageability relates to implementation difficulties and challenges; scepticism 

relates to doubts; effects concern consequences of implementation. Interview responses did 

not necessarily result in the presence of all three themes under each of the headings, which 

follow. 

4.1 “Who are we?” and “why do we exist?”

The ‘Entity Information’ section of the performance report requires the name of the entity, its 

type, purpose/mission, structure, sources of funds and resources, main methods used to raise 

funds and reliance on volunteers and donated goods or services.  The focus is on the 

legitimacy of the organisation.  Insights were sought from respondents as to whether this 

information had increased general understanding of the purpose/mission of their charities, as 

well as whether this purpose/mission had been clearly ascertainable from past documentation.  

Two themes emerged: manageability and scepticism.

Manageability. The interviewees generally noted that the Entity Information 

formalised and standardised what was already available on the New Zealand Charities 

Register (available on the New Zealand Charities Services website). Interviewee J added that 

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they already had a Strategic Plan in place, which identified the role of the organisation and 

stated its mission, so this was easily translated into ‘Entity Information’. 

Scepticism.  Many interviewees appear sceptical about the extent to which the new 

reporting requirements will increase people’s ability to understand who the organisation is 

and why it exists. Interviewee E believes that nobody reads the reports except the accountant 

(and researchers).  The charity she is involved with advertises its services, so has reasonably 

good brand recognition. She contends that the fact that they receive about 24,000 phone calls 

a year indicates that people know, through their advertising, who they are and what they do.  

Interviewee F supports the need for charities to ‘tell their story’ effectively, but has no 

evidence or feedback that anyone understands her entity’s story any better as a result of their 

efforts in implementing the new reporting requirements. 

In summary, completing this section of the report was generally perceived by the 

interviewees as non-onerous, an essential part of being accountable to stakeholders in order to 

receive tax free status, and the information was readily available from past documentation. 

However, standard setters and regulators would do well to take note of the high level of 

preparer scepticism in Tiers 3 and 4 around the usefulness of the Entity Information section 

of Performance Reports and the extent to which stakeholders use it for decision-making.  

4.2 ‘What did we do’ and ‘when did we do it’? 

The SSP section of the Performance Report requires information about the desired outcomes, 

the outputs provided to promote these outcomes, as well as how and when the outputs 

contribute to those outcomes.  The focus is on accountability and promoting the legitimacy of 

the charity.

How were outcomes determined?

Two themes were identified: manageability and effects.

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Manageability.  The majority of the interviewees said that they struggled to identify 

the planned outcomes for their charity even though they had a mission statement to use as a 

basis. Interviewee A noted that one entity, for whom she is the treasurer, had only gained 

charitable status several years after it was first incorporated. Charitable status was, therefore, 

not expressed in the mission statement or the statement of purpose: “They have five things 

under the aims, so I had to go from those to the purpose or mission because that is the nearest 

thing I’ve got, then from that to outcomes” (Interviewee A). This was not a problem with her 

other charity (a trust) because it was initially set up as a charity and the aims/mission 

therefore translated easily into outcomes.

Interviewees B, C and E found it more difficult: “It was a pain and took time to think 

it through and make sure the two complied” (Interviewee C). Interviewee B (accountant for 

several charities) found that this section gave him the most strife.  He asked the trustees to 

come up with their own words.  One club delivered a couple of short paragraphs of outcomes.  

Another had several meetings and wrote a full page of outcomes.  Most other organisations 

provided a mission statement but ignored outcomes. Such shortcomings compromise 

accountability to stakeholders who would be unable to determine specifics on what the 

charity is seeking to achieve through the delivery of goods and/or services. 

Effects.  Other interviewees offered differing insights as to how they went about 

defining outcomes. Interviewee K emphasised the need to think carefully about defining 

outcomes, and what and how to monitor them.  He intended to send out a questionnaire to the 

charities in order to get everyone thinking about outcomes and outputs which would then 

flow on from year to year. Interviewee F already had targets flowing on from the mission 

statement and used those to state outcomes, but she noted that the outcomes change each year 

as new projects are developed. As a result, they are always looking at new ways in which 

they can be accountable and describe exactly what they are doing.  She noted that the new 

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reporting requirements have made them think more carefully about their defined outcomes. 

Interviewee G  said that their stated outcomes were developed independently of the mission 

statement.  In his opinion, they are a group of people wanting to do good things and they 

know what they want to do without the need to reflect on the mission statement and 

outcomes.  However, Interviewee I  encouraged organisations he worked with to start with 

the mission then contemplate the activities which would contribute to achieving it; an 

important strategic exercise. He observed that very few people actually think strategically, 

with the result that there was very little analysis of whether outputs were properly connected 

or contributing to stated outcomes.  Interviewee J noted that they had input from a major 

sponsor into the outcomes of their organisation.

In summary, although describing outcomes is optional for Tier 4 entities, it appears 

that all entities are working towards doing so.  Most have not found this easy to do, and have 

sought assistance from accountants or similar professional advisors – an indication of their 

acknowledgement of the importance of this information for their legitimacy. 

Application of the new reporting requirements has implications for the functioning of 

the organisation (Potter, 2005). One implication is increased accountability demands for 

registered charities. The SSP requires that a charity focus on its aims and outcomes and 

therefore on its beneficiaries.  This promotes accountability of the charity through the telling 

of a richer, fuller story. This, in turn, is inherently important in establishing the legitimacy of 

the organisation.

Are any of these outcomes new or different, compared to what the entity used to aim at 

achieving before these new requirements were implemented?

Effects.  The only theme that emerged in response to this question is ‘effects’. The 

new requirements led registered charities to consider the desired outcomes from their 

activities and to check whether they were appropriate and in line with their mission 

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statement. There was little evidence that the new requirements resulted in a change in 

outcomes, although Interviewee F noted that they did result in increased focus on outcomes, 

which she felt contributed to continuous improvement. Interviewee K remarked that: “We 

probably are going to see new or different outcomes emerging as result of having to think a 

bit harder about what they are and what we are doing”.

On the other hand, interviewee G responded as follows: “We are incorporated and we 

have a constitution and the constitution sets out objectives and that's what our objectives are - 

they haven't changed.” He went on to explain that, prior to incorporation, his community 

organisation had “… produced a lot of visionary stuff about where they wanted to go and 

how they wanted to do it, so they already had a pretty clear idea about what their objectives 

were”. Interviewees G and H agreed that outcomes for the charity they represented were 

“organic”, “came from the spirit of the people”, and depended upon “what people have the 

energy for at certain times”, rather than a reflection of the mission statement.

How were outputs determined and measured/quantified? 

This requirement is concerned with describing and quantifying what the entity did to achieve 

its desired outcomes and when (e.g., the number of services/goods delivered or people 

helped). Themes of manageability and scepticism were identified.

Manageability. Entities took various approaches to source the information about 

outputs and, for some, the challenge of changing from a financial to a non-financial 

orientation was evident.  Interviewee C said he looked back on what the club had done and 

where the money went.  Interviewee B found that most clubs just added words around the 

financial information available in the payments information, in essence providing a list of 

what the money was spent on.  He thought this was unnecessary and superfluous. The 

Charities Services website uses guide dog objectives as an example, which he considered 

were more definable in terms of outputs and outcomes than is true of the clubs he deals with. 

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The Tier 3 clubs he is responsible for very rarely have an activity that can be expressed in 

numerical terms. Interviewee H found defining outputs difficult as records had not been kept 

of the number of participants in group events.  She also remarked that the change in mindset 

from reporting “we made NZ$300 on a sausage sizzle” to “we fed 15 people at a sausage 

sizzle”, had been a challenge. They are now more aware of the need to record information. 

Interviewee K said they had now put systems in place to collect information about outputs.  

He thought that this information would promote better control for clubs.  Some of the 

charities he has prepared reports for, held meetings to “pull the information together”, often 

using the annual report as a source.

Interviewee F noted that they already had systems in place to record numbers at 

meetings, etc., so they could specify how they recorded their outputs – meeting attendees sign 

a register.  Their stated outputs include examples, e.g., how funding received has helped a 

family.  Interviewee F focuses on telling a story of what they do, not just facts and figures. 

Interviewee J said it was very easy to list the outputs: number of events and attendance with a 

description of each event including financial outcomes and number of student scholarships 

given.  

Scepticism. Concerns raised included Interviewee G who reiterated that if no one is 

looking at the information provided or really cares about it, then their reporting serves no 

purpose.  Interviewee I thought outputs were a superficial way of looking at how much good 

an organisation is doing.  In his view, it would be better to design a set of indicators which 

were representative of the outcome, rather than trying to measure the outcomes through 

outputs, which is really difficult to do.  

In summary, there was a mix of positive and negative feedback related to the 

reporting of outputs.  A key component of accountability is answering the question: ‘What 

did we do?’  This is essential information to provide stakeholders with a basis for assessing 

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the performance of an entity, consistent with the entity’s overall purpose. The information 

provided in answering the question, ‘When did we do it?’, assists in providing richer detail 

and gives greater insight as to the frequency and regularity of activities, e.g., monthly coffee 

meetings, annual galas, quarterly newsletters.

Have you made any formal or informal plans to introduce new/changed processes or 

measures, as a result of the new requirements, regarding information on outputs? 

Manageability. It is expected that the ability of an entity to source and report on the 

required information will evolve and improve over time.  All interviewees considered that 

they now had everything in place and adequate recording processes to be able to proceed with 

the reporting requirements in the future.  Several interviewees mentioned the advantages of 

an online reporting package and the ability to convert the information it provides into 

outcomes and outputs.  

No further themes emerged with regard to this interview question.

4.3 What other reporting considerations arose from the new requirements?

Themes of manageability, scepticism and effects are evident in responses to aspects of this 

question.

Improvements or benefits?

Responses to this question related to the effects of implementation of the new 

reporting requirements.  Interviewees were asked to consider any benefits that the new 

reporting regime has introduced.  Interviewees G, H, I and K felt that the new requirements 

were unnecessary, as their funders generally obtained the information they required through 

the application forms that had to be completed for their funding contracts to be awarded. 

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They discharged their accountability to these funders through the contractually required 

reporting. However, these interviewees do not appear to appreciate that the SSP was designed 

to address most generic contractual requirements. The SSP is, therefore “important in 

fulfilling the accountability obligations to provide goods or services to others when the entity 

receives grants from funders, or contracts with the government or other bodies” (PBE SFR-A 

(NFP), EG A5, Sec. 4).

Interviewee H also thought that, given the small amount of income her charity 

received, the amount of reporting required was excessive.  In general, their thoughts are 

expressed by Interviewee G: “… you are feeding stuff into the ether with absolutely zero 

feedback on anything you are putting in and even now, we got (sic) no feedback whatsoever 

on all this performance stuff we put in”. The new reporting requirements were, therefore, 

seen as “… an extra layer of public exposure and, as I say, I am not seeing the benefit” 

(Interviewee H).  However, she did think it was worthwhile to sit down and think about why 

the charity exists i.e., the Entity Information section.

 Interviewee J felt that requirements to report minimum categories of revenue and 

expenses, provide much more coherent information.  Interviewee K, on the other hand, felt 

that the information provided in ‘old’ entity annual reports was sufficient for accountability 

purposes and that the new requirements did not add anything that was significantly more 

helpful.  

Additional costs?

Manageability and effects were the key themes emerging from this question.

Manageability.  Most interviewees acknowledged that having done the reports once, 

the second time around would be much easier.  These thoughts are summed up by 

Interviewee J who stated that no significant costs had been incurred in meeting the reporting 

requirements and that it was just a matter of “getting up to speed”.

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Effects. Although most interviewees said there were no additional costs, a substantial 

learning curve in meeting the new reporting requirements is evident. One expressed concern: 

“that whereas most people could have been treasurer before and operate things in their own 

way there would be a lot of people not capable of keeping records to a standard that they can 

do the reporting at the end of the year.  It was onerous to do the first one - tough.  I’m a 

volunteer so there was no financial cost but a huge increase in my contributed hours” 

(Interviewee C). Interviewee H thought the requirements were “an awful lot of reporting for 

such a low level of income”.

Usage and usefulness of the templates provided by the XRB?

Responses to this question focused on manageability of reporting.

The XRB provides templates to assist in the reporting process and to help registered 

charities understand what is being asked of them. Use of these is optional but they have the 

potential to improve communication and comparability by ensuring that Entity Information 

and the SSP is systematically organised, presented in a standardised manner, includes all 

required information and excludes misleading or irrelevant information.  

Interviewees F, H and K found the template helpful and were pleased to have a format 

with which to work. Others were supportive of having a template to complete, but were 

critical of the templates provided by the XRB, suggesting that, as a result, many have resorted 

to using other templates developed by accountants and by Xero.12 Illustrative quotes include:

- “The templates are diabolical ....   The auditors have said that they are advising 

people not to use the template” (Interviewee A).

12 ‘Xero’ is a reference to accounting software that is commonly used by small to medium sized enterprises in 
New Zealand.

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- “The templates were horrible; sort of a summary page then all these notes that 

expanded the data.  Turning simple cash accounting into something that required 

45 pages of instructions was bizarre and bureaucracy at its worst” (Interviewee B). 

Interviewee B, therefore, adapted the XRB template and sent this on to a number of clubs to 

help them cope. Interviewees J, C and E expressed similar sentiments – an indication, 

perhaps that the spreadsheeting skills of many in this sector are relatively rudimentary.

In summary, there was a mix of responses to the voluntary templates.  It appears that 

the Xero templates were more user friendly but access to those was limited.  Those with more 

experience in reporting were able to adapt the XRB template or to develop their own.

Other comments/views on the new requirements? 

Interviewees responded to this final open-ended question with a variety of general comments 

that identified with the themes of manageability and scepticism. 

 Manageability. Interviewee A emphasised the need for clearly stated rules and well-

specified aims before beginning the reporting process.  Similarly, the need to record members 

separately from non-members with regard to attendance at events and making of donations.  

Scepticism.  Interviewee C remarked that he did not think that anyone “looks at this 

stuff on the web”.  In his view, people have the attitude that they can just make up numbers 

and put something in the report on the basis that nobody looks at it.  In a similar vein, 

Interviewee D noted that Charities Services are reportedly checking 8-9% of returns.  

However, because many are filing late, Charities Services are checking a disproportionate 

number of those filed in the first six months.  In his opinion, there does not appear to be any 

accountability for those not bothering to file returns.

Interviewee G  was concerned that they received no feedback whatsoever: “We are 

feeding stuff into the system and now we have to feed more stuff in and there is nothing 

coming back”.  He wondered if the reports were looked at: “If anyone can tell me what the 

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benefit is, then fine, but I can’t see it”. He also wanted someone to check the report, give it a 

score (e.g., 1-10) and advice on how to improve. 

Interviewee H thought the reporting improved accountability and helped prevent 

people “going off on tangents” with public money.  She noted, however, that she had filed 

the wrong year accounts with Charities Services and no one had picked that up.  

While interviewee K supported the increased transparency, he thought that some 

registered charities would struggle to find people who were willing to record the information 

necessary for the reports and as a result would close down: “It’s too hard now and they can’t 

be bothered”.  Interviewee H expressed similar sentiments and interviewee G went a step 

further: “Maybe that's what they are trying to do. They are trying to clean the cupboard out”.

The concluding open-ended question allowed interviewees to discuss any remaining 

views and concerns regarding the new regulations.  In general, this reveals that they had 

attempted to define and respond to the accountability issues in respect of their particular 

charities, but had misgivings about the extent to which some others in the sector make 

conscientious efforts to do the same. 

It is acknowledged that some of the concerns and misgivings of the interviewees 

reflect limited knowledge of the information available on the Charities Services website and 

efforts by Charities Services to monitor compliance. This is exacerbated by their lack of 

understanding of the new regulatory requirements for registered charities within the context 

of the sweeping changes for all reporting entities introduced by the Financial Reporting Act 

2013 and the Financial Reporting (Amendments to other Enactments) Act. These changes 

included carefully considered reporting and assurance requirements for all reporting entities 

and recognition of the need to minimise compliance costs for smaller entities.

4.4 Summary

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Connolly and Hyndman (2013) note the need for greater accountability and transparency 

from organisations formed for the public benefit.  In this research, the growing importance of 

accountability in the registered charities sector is acknowledged. The aim of the new 

regulations is to report on the value added by each charity in terms of outcomes and outputs, 

specifically to focus on “who we are, why do we exist, and what did we do?”  Some of the 

interviewees considered that the accountability process imposed on the registered charities 

sector was too onerous and suspected many were seeking ways to work around the imposed 

requirements.  Others accepted the need for more formal and structured accountability 

requirements and supported transparency as an essential feature of good charity governance.  

Interviewees noted the disruption caused by the external mandatory reporting requirements.  

However, these findings support Saj (2012), who considers that organisations will more 

readily adopt mandatory external reporting requirements when they are seen to contribute to 

organisational effectiveness and transparency, and Morgan and Fletcher (2013, p. 26) who 

found public benefit reporting to be “a positive catalyst for fresh engagement with the 

charitable objects…”, along with a general acceptance of the broad accountability that results 

from having charitable status.  

 

5. Discussion and conclusion

This study provides early insights from preparers regarding the most significant change ever 

in reporting requirements for New Zealand registered charities (Tukiri and Fisher, 2017). 

This change applies to registered charities for financial periods beginning on or after 1 April 

2015, so the last of the first round of these new reports became due for submission by 31 

August 2017. This study focuses on smaller (Tier 3 and 4) registered charities, as they 

account for approximately 97% of all registered charities in NZ. In particular, the focus is on 

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Entity Information and the SSP, two components of the newly mandated Performance Report, 

as they are novel in requiring non-financial information such as outcomes and outputs.

In-depth interviews were conducted with 11 interviewees, each involved with 

reporting for one or more Tier 3 or Tier 4 registered charities. In particular, the views of Tier 

3 and 4 preparers are explored regarding the new reporting requirements and the preparation 

and provision of the new performance reporting information.

The aim of an SSP is for an entity to present service performance information that is 

useful for accountability and decision-making (Feedback Statement on ED NZASB 2016 

Service Performance Reporting, p. 1).  In addition, legitimacy management relies on 

communication between the reporting entity and its stakeholders (Samkin and Schneider, 

2010).  The intention is to provide information that is appropriate and meaningful for 

stakeholders of the many small New Zealand registered charities by prescribing a set format 

for reporting this information. The new reporting regime is seen, by regulators, as an 

opportunity for each registered charity to ‘tell its story’, by highlighting to the general public 

who the organisation is, why it exists and what it did. A number of researchers (e.g., 

Hofmann and McSwain, 2013; Sinclair et al., 2014; Cordery et al., 2017) posit that regulation 

requiring particular disclosures is needed in order to increase transparency of registered 

charities receiving government and public support and to prevent earnings manipulation and 

even fraud in the charitable sector.

Interviewees described various experiences and perceptions and their views varied 

considerably. One interviewee felt that the developer of the new reporting requirements had 

done a fantastic job. At the other extreme, interviewee G was of the opinion that, “It’s classic 

bureaucracy gone mad” and “there’s a good case to knock this on the head for Tier 4s”.

The key themes identified concern manageability, scepticism and effects associated 

with the new reporting requirements.  The manageability theme highlights that many saw the 

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SSP requirements as onerous, intimidating, unnecessary and sometimes confusing and time 

consuming. However, there was support for standardisation, which improved readability and 

comparability and some suggestions for overcoming difficulties and challenges.  In general, 

interviewees agreed that a charity needs to be accountable to its donors, its community and its 

country. In this regard, Morgan (1999) finds that the need to adopt new approaches to record 

keeping created challenges, but led to improvements in charity governance and 

accountability. Without this accountability, the public cannot determine whether the charity is 

legitimate and effectively fulfilling its objectives.

The scepticism theme suggests that many have doubts about the extent to which 

performance reports are used or even read by stakeholders. Some also express doubts about 

the motives of regulators and their commitment to enforcing the new requirements. Standard 

setters and regulators should take heed of this scepticism and a number of suggestions in this 

regard are made in closing.

The effects theme warns of the potential for losing good charities and charity workers, 

who are discouraged by new requirements that make their work ‘too hard’. However, 

interviewees also express views suggesting they are thinking harder about questions like 

“who are we?” and “what are we doing?” and that the increased focus on outcomes may 

contribute to continuous improvement.

Resistance to change is to be expected, but there is already evidence that this will 

moderate and settle as reporting falls into a replicable pattern which will roll over more easily 

from one year to the next, and as systems are developed and refined to record the information 

required. Charities Services (2018a) reports that compliance with requirements to adopt the 

new reporting requirements improved in the second year of reporting checks, from 65% to 

82%, with exceptional improvement in Tier 4 which moved from 56% to 72% compliance as 

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of March 2018. As concluded by Morgan (1999, p. 114), it is expected that with a little more 

time, education and training, “the new accounting regime will be seen as normative”.

Further research and effort is required to raise awareness of benefits and how to 

maximise these, as well as to address the challenges discussed under the ‘manageability’ and 

‘scepticism’ themes. Examples of such challenges include: technical difficulties with the 

optional templates made available by the XRB as well as some accounting requirements; 

defining and measuring outcomes and outputs (or representative indicators of these); and 

scepticism about whether stakeholders (e.g., regulators, funders, donors, beneficiaries, 

employees) actually check, use or are interested in the new performance reports.

Supportive efforts to date by the XRB, Charities Services and professional accounting 

bodies are acknowledged. It is also noted that only one interviewee had attended courses 

offered by these bodies – a reminder that registered charities also have a responsibility to 

make an effort.  Recent initiatives by Chartered Accountants Australia and New Zealand 

(CAANZ) will assist further towards addressing some of the issues identified in the current 

study. Community accounting projects have emerged which offer free support, advice and 

assistance to charities. Encouraging initiatives like these should help to highlight the benefits 

and overcome the challenges identified in this study.

Expansion of recent initiatives like the introduction of charity reporting awards 

(CAANZ, 2017) is recommended in order to develop a database of examples of good 

practice. These could be used to further educate preparers, funders and the general public as 

to how useful performance reports can potentially be in effectively communicating the 

charity’s ‘story’. In particular, such examples could be drawn on to:

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 Improve the level of public trust and confidence in registered charities (reported as 

moderate at 5.9 out of 10 in 2016 – the most recent survey, according to Charities 

Services, 2018b);13 

 illustrate how performance reports can be used to motivate donations from the 

public; 

 reduce bureaucracy required from funders in terms of their application and 

reporting requirements;

 better inform trustees and management as to the efficiency, effectiveness and 

economy with which they are achieving their desired outcomes.

The subjectivity that is inherent in thematic analysis is acknowledged and also that 

multiple themes may sometimes be present in the sentences and paragraphs analysed. We 

acknowledge too that early viewpoints may change over time. While the findings are specific 

to new reporting initiatives in the registered charities sector in New Zealand, they should also 

be of interest to regulators, professional bodies and charities in other jurisdictions who are 

considering and evaluating the implementation of similar initiatives.  

13 The same reference reveals that these surveys have been conducted every two years since 2008. Equivalent 
scores in prior years were: 6.0 (2014); 4.4 (2012); 5.5 (2010); and 5.8 (2008).

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Pacific Accounting Review
Charities’ new non-financial reporting requirements: preparers’ insights

Jill Hooks, Warwick Stent
School of Accountancy, Massey University, New Zealand

Contact author 
Dr Warwick Stent
School of Accountancy, Massey University Auckland, Private Bag 102904, North Shore, 
Auckland 0745, New Zealand
Email: w.j.stent@massey.ac.nz 
Phone: +64 9 213 6296 

Acknowledgements
We gratefully acknowledge financial support from the Massey University Research Fund. We are also grateful 
to attendees of the Auckland Regional Accounting Conference, 2017 and to two anonymous reviewers for their 
suggestions and comments which helped to improve the paper.

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Pacific Accounting Review

Table I. Interviewees
Description of interviewee / Sector (s) Interview duration

(minutes)
Date

A Accounting academic and treasurer of two charities (Tier 3 and 4)
Education / Training Research

67 04/08/2016

B Business owner, Chartered Accountant*; Accountant for a number of charities (Tier 3 and 4)
Education / Training / Research

48 10/03/2017

C Business owner, treasurer of one charity (Tier 4)
Community Development

32 9/03/2017

D Chartered Accountant* working in NFP sector (Tier 3 and 4)
International Activities & Sport / Recreation

58 06/03/2017

E Business manager (Tier 3 and 4 charities)
Community Development

66 28/02/2017

F Executive Officer, community organisation (Tier 3)
Community Development

48 28/02/2017

G Chair of community organisation (Tier 4)
Environment / Conservation/ Community Development

64 10/02/2017

H Treasurer of community organisation (Tier 4)
Environment / Conservation/ Community Development

64 10/02/2017

I Employee of local council; works with community groups (Tier 4)
Environment / Conservation/ Community Development

67 27/02/2017

J Treasurer of a charity (Tier 3)
Arts / Cultural / Heritage

35 15/05/2017

K Accountant, performs pro bono work for a number of charities (Tier 4)
Sport / Recreation / Arts/ Cultural / Heritage

35 06/03/2017

* = Chartered Accountant is a designation restricted by law to those persons qualified to use it in terms of the professional education and 
practical experience requirements of the Institute of Chartered Accountants of Australia and New Zealand. 

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Authors’ response to Reviewer 1

Thank you once again for your review and comments. We have addressed 
your comments and suggestions, as detailed below. We have added our 
responses in the far right hand column, which we inserted into a copy of 
your original comments.

Feedback on Pacific Accounting Review paper –  Charities’ new non-financial 
reporting requirements: preparers’ insights

Manuscript ID: PAR-12-2018—119R1

Reviewer comments Authors’ responses
Version 
1 Pg no. 

Line 
no. 

The paper needs to be further 
edited, and the following 
amendments, which were 
raised in the previous review, 
still need to be made:

As noted in our R1 responses, we 
did amend the research questions 
to reflect the focus on SSPs and 
also corrected where necessary to 
ensure that ‘Entity Information’ is 
no longer included under the SSP 
umbrella. We were surprised that 
we missed the items you raised 
and apologise.  It appears some 
amendments were inadvertently 
lost in combining work by the two 
authors during our revision 
processes.  

13 3
Should refer to Entity 
Information not Performance 
Reports, which include other 
information. 

We have added an opening 
sentence to the Research Finding 
section to clarify. We also 
amended as suggested and 
searched the current R2 version to 
try to ensure we refer to ‘Entity 
Information’; SSP’s and 
Performance Reports as 
appropriate in view of the 
distinctions between these terms.

13 49
Remove who is involved with a 
number of charities. 

Done – thank you and apologies 
for missing this.

14 45
This section is not really optional, 
as per the Charities Services 
Guide for Tier 4 Charities 

We have amended this sentence to 
clarify what we meant – we note 
that the Guide referred to does 
note that description of outcomes 
is optional for Tier 4 charities.

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2

Reviewer comments Authors’ responses
Version 
1 Pg no. 

Line 
no. 

20 10
 ..that the SSP and the Entity 
Information.. 

Done – thank you and apologies 
for missing this.

23 38
 ..significant change ever in 
performance reporting.. 

Thank you – we have amended this 
to “reporting requirements”.

23 49
 .. on the SSP and the Entity 
Information, two components 
of.. 

Done – thank you and apologies 
for missing this.

24 47
 Remove the apostrophe, should 
be 4s. 

Done – thank you and apologies 
for missing this.

26 42
 Do you mean exemplars or 
examples? There are lots of 
exemplars of performance 
reports on the Charities Services 
website. 

We have replaced ‘exemplars’ with 
‘examples’ – thank you and 
apologies for missing this.

The following amendments need to 
be made to the second version of 
the paper:

4 28
 Should read ..about the entity in 
the Entity Information section, 
and its service performance in 
the Statement of Service 
Performance section 

Done – thank you

4 55
 Footnote 5 should read .. based
 on full Public Benefit Entity
 International Public Sector
 Accounting Standards (not IFRS) 

We have re-worded this - thank 
you

15 13
 Should read ..usefulness of the 
Entity Information section of ..

Done – thank you

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Authors’ response to Reviewer 2
Thank you once again for your review and comments. We have addressed your 
comments and suggestions, as detailed below. Our responses have been added in 
the far right hand column, alongside your original comments.

Manuscript Number: PAR-12-2018-0119.R1

Title: Charities’ new non-financial reporting requirements: preparers’ insights

Reviewer comments Authors’ responses
The research aim (p.1) and the two key research 
questions (p.11) are not well aligned. It is unclear 
whether the research aims to investigate the preparers’ 
understanding of the new non-financial performance 
reporting requirements or their experiences and 
perceptions of implementing these requirements and 
challenges faced. 

The first research question is a bit clumsy. It seems to 
investigate 1) to what extent the preparers understand 
the new requirements; 2) whether (and if so how) these 
requirements help to improve charity accountability and 
legitimacy (but to whom?). The focus of the paper and 
research questions need to be clarified throughout the 
paper.

Our purpose, as explained on p.1 is to 
obtain preparers’ insights on the new 
non-financial Performance Reporting 
requirements, including challenges 
they faced, in order to assist standard 
setters in their efforts towards 
continuous improvement. The title of 
the paper refers to ‘preparers’ insights’.
Preparers’ views on the new 
requirements and their contribution to 
accountability and legitimacy 
(Research Question 1) appears to us to 
align well with the above purpose and 
is well motivated in terms of prior 
literature, so we are uncertain as to 
where the reviewer sees any 
misalignment here. 
Preparers’ insights regarding 
preparation/provision of the new 
requirements (Research Question 2) 
also appears to us to align well with the 
above purpose. As explained further on 
pg.3, insights regarding 
implementation challenges provide 
potentially important information to 
standard setters that may assist in 
assessing cost/benefit implications of 
some of the requirements.  Throughout 
the paper we use the terms insights or 
views.  When we use the term 
understanding we are referring to our 
understanding (rather than the 
interviewees).

We would argue that the first research 
question is broad rather than clumsy. 
Participant responses to this question 
could provide insights regarding the 
two questions suggested by the 
reviewer, as well as potentially to other 
questions. Our focus is on 
interviewees’ experiences and 
perceptions - their understanding is 

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Reviewer comments Authors’ responses
incidental to this. This breadth is in 
line with the exploratory, qualitative 
nature of the study. 
We have added ‘ … to stakeholders.” 
to the end of  the question to address 
the reviewer’s concern “ …(but to 
whom?). Please see section 2.1, 
particularly pg.9 for a detailed 
discussion of who these stakeholders 
may be and substantial support from 
prior literature which motivates the 
relevance of this research question. 

The paper argues its originality and contribution as it 
provides “early insights on new reporting requirements” 
(pp.1, 12 and elsewhere), but it also cited Morgan 
(1999) in p.27 who suggests that “the new accounting 
regime will be seen as normative” after more time and 
education. So why understanding the preparers’ views at 
a very early stage of implementing the requirements is 
significant? Wouldn’t it be more interesting to 
investigate whether the new accounting regime becomes 
a norm after a few years of implementing the new 
requirements? The author(s) could argue it is future 
research, but what can we learn from examining the 
preparers’ early insights needs further articulations.

We provide strong motivation for the 
value of the early insights from this 
study mostly in the latter half of the 
Introduction. Particularly pertinent 
examples are explained in the final 
paragraph on pg. 6, flowing to pg. 
including:
 low levels of compliance by 

charities initially;
 reliable anecdotal evidence that 

Tier 3 and 4 charities still find the 
new reporting requirements 
challenging (see also XRB NFP 
Update, 21 Aug, 2019);

 the extent of change introduced by 
the new requirements and the 
significance of charities for the NZ 
economy;

 as Zowie Pateman (CAANZ Acting 
Reporting Leader) remarks in pg.3 
of “New Charity Reporting – One 
Year On, 2017: “One year on is a good 
time to pause and reflect on the benefits to 
us as a community of the new reporting 
requirements.” 

   
The interview data was collected between August 2016 
and April 2017. It was prior to the end of the first year 
of implementing the new reporting standards (p.12). 
While some interesting viewpoints were presented by 
the interviewees, it is reasonable to believe that their 
viewpoints could subject to change after complying 
with the new standards for a few rounds or even 
completing the first year of implementation. So it is 
perhaps useful to identify what kind of viewpoints could 
change and sustain. This will strengthen the contribution 
of the paper.

We agree that early viewpoints may 
change over time. We have added this 
as a limitation, rather than trying to 
identify which views may change as 
we were concerned about the level of 
subjectivity this would involve. We 
note also that there is frequent 
emphasis in the paper on the fact that 
these are early insights.

Some varied and conflicting viewpoints of preparers 
were presented (e.g. in pp. 19, 26 and elsewhere), which 
is interesting. However, if interviewees offered such 

We are unsure of the reviewer’s 
concern here. As the reviewer notes the 
variety of views are interesting. We 

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Reviewer comments Authors’ responses
varied viewpoints, to which points the author(s) 
concluded the interview data reached saturation. This 
issue merits more explanations, especially considering a 
small number of interviews included in this paper.

have drawn these together in a 
summary at the end of each section of 
the research findings and in the 
discussion and conclusion.

Some findings presented were inconsistent. For 
example, p.26 “many saw the new requirements as 
onerous…” but p.15 shows “completing this section of 
the report was generally perceived by the interviewees 
as non-onerous…” and p. 21 “these thoughts are 
summed up by Interviewee J who did not think meeting 
the Charities Services requirements was onerous”. Also, 
p. 21, Interviewee H said “I am not seeing the benefit” 
of the new requirements, but later the same interviewee 
expressed “it was worthwhile to sit down and think 
about why the group (charity) exists”. It is suggested 
that the author(s) perform a thorough check on the 
consistent presentations of findings and 
discussion/conclusion.

We have made amendments to sections 
4.3 and 5 to clarify/resolve what 
appeared to be contradictory 
statements. These had to do with 
distinguishing clearly between the 
Entity Information section and the SSP 
in discussing interviewees’ views. 

There is still a need for the author(s) to articulate clear 
contributions to literature. What there anything 
surprising about the findings? The author(s) could make 
more of how they have drawn upon accountability and 
legitimacy and how they contribute to the extant 
literature.

In the Introduction section we include 
a paragraph that states “This research 
is significant because…”.  We also 
include a paragraph that begins “This 
study makes further contributions….”  
and another that beings “The need 
for…”.  Please also see our response to 
the second row in the table above 
which addresses similar concerns. We 
were somewhat surprised at the level 
of scepticism encountered as is evident 
in that this emerged as a separate 
theme. We have also provided frequent 
linkages to accountability and 
legitimacy. We note that we had to cut 
significant amounts of our original 
material to comply with word limit 
constraints.  However, throughout the 
paper (excluding references) we use 
the term ‘accountability’ 47 times and 
‘legitimacy’ 20 times.

Editorial:
1. p.3 line 31 needs reference.
2. p. 3, provide the challenges identified by McConville 
and Cordery (2018) in developing
non-financial reporting standards.
3. p. 4 lines 22-31, meanings are not clear in this long 
sentence. A performance report includes
non-financial information, but the SSP is not the only 
place that presents this information.
4. p. 4 line 42, miss the word ‘Information’ after 
‘Entity’.

1. Done
2. Done

3. We have broken the sentence into 
two and clarified what is provided in 
the SSP and Entity Info sections 

4. Amended - added ‘Information’ 

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Reviewer comments Authors’ responses
5. p. 7, first paragraph, provide some recent statistics to 
support why charities are significant
to the New Zealand economy.
6. p.8 last paragraph, “Accountability may be defined 
as…” why uncertainty is expressed here?
7. p. 9. “output reporting contributes to legitimacy…” 
what about outcome reporting?
8. p. 10 “Tier 3 charities are required to measure, 
evaluate and report on their outcomes”.
Provide references to support the measurement and 
evaluation requirements.
9. p. 11, lines 52-54, it is suggested to rewrite the first 
sentence after the research questions.
10. p.12, “We relied on personal knowledge and 
enquiries to identify early reporters and
associated parties.” explain what this means.
11. p. 12 “a survey instrument was developed…”. was 
the survey another research method
employed? If so, provide more details.

12. It is useful to provide more information on the 
selected Tiers 3 and 4 charities, including
their service areas, annual expenditures/operating 
payments, and the number of staff and
volunteers.

13. Please include the date and length of each interview 
in Table 1, not in the findings.
14. p. 15. “ completing this section…was generally 
perceived by the interviewees as…an
essential part of being accountable” to whom?
15. p. 16. “Such shortcomings compromise 
accountability to users.” who are the users? and how
their accountability expectations would be 
compromised.
16. p. 17 and elsewhere, the terms of ‘charities’, ‘NFPs’ 
and ‘third sector organisations’ are used
in this paper. The focus is on registered charities, so 
consistent wording needs to be checked
and used.
17. p. 17. the last paragraph, the interviewees talked 
about ‘objectives’, not outcomes. how do
these objectives information relate to or inform 
reporting on outcomes?

5. Done

6. We have changed this to ‘is defined’

7. Amended to refer also to outcome 
reporting.
8. We have amended this sentence to 
more accurately reflect what is 
required and cited (PBE SFR-A (NFP) 
para. A41(a).
9. Thank you – we have improved this 
sentence by rephrasing it.
10. We have amended this to better 
explain what we mean.

11. Amended to refer to question sheet 
we used to guide our interviews. 

12. We have included the 
sectors/service areas in Table 1. Our 
focus was on interviewees, many of 
whom represented multiple charities. 
As such, we did not ask them to 
individually identify all the charities 
they worked with, so are not able to 
supply the other information suggested. 
We are also concerned to ensure our 
interviewees are anonymous.

13. Done

14. Amended to include “to 
stakeholders”.

15. Amended to replace ‘users’ with 
‘stakeholders’ (see response to second 
comment on pg.1 re who stakeholders 
are and their expectations.
16. We have searched these terms and 
where appropriate replaced them with 
‘charities’ or ‘registered charities’.

17. Comments regarding ‘objectives’ 
were responses to the question: “Are 
any of these outcomes new or different, 
compared to what the entity used to 
aim at achieving before these new 
requirements were implemented?”. 
This question is also the heading under 
which these comments are discussed. 

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Reviewer comments Authors’ responses

18. p.18. some interviewees talked about their 
experiences of preparing output reporting for
(sport) clubs and thought it would be different compared 
to the charities that provided other
services. Therefore, as previously mentioned, it is useful 
to provide the service categories
of Tiers 3 and 4 charities investigated.
19. p. 20. check the quote provided by Interviewee G in 
the last paragraph.

20. p. 22. explain Xero is an accounting software for the 
international readers.
21. p. 24. “The aim of the new regulations is to 
measure…” to measure or to report on outputs
and outcomes?
22. p. 25. “This change applies to charities…” it needs 
to be clear that it is for ‘registered
charities’, not charities in general.
23. p.25 and elsewhere, a few terms of ‘governance’, 
‘management’, ‘measurement’, and
‘reporting’ are used in the paper, the author(s) need to 
check and use the words consistently.

The opening sentence of this section 
provides further context in reminding 
readers of the link between the entity’s 
mission and outcomes. On careful 
consideration, we feel that these 
precursors to the comments on 
‘objectives’ provide sufficient context.

18. See response to (12) above – we 
have now included this information in 
Table 1.

19. We have inserted “(sic)” to 
acknowledge a grammatical error by 
the interviewee in this