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Research in nonprofit accounting is steadily increasing as more data is available. In an effort to broaden the awareness of the data sources and ensure the quality of nonprofit research, we discuss archival data sources available to nonprofit researchers, data issues, and potential resolutions to those problems. Overall, our paper should raise awareness of data sources in the nonprofit area, increase production, and enhance the quality of nonprofit research.

Prior research has shown that many donors utilize charity ratings for decisions and they give more to higher rated charities. Because ratings are partly or completely based on financial information, the financial reporting quality of highly rated charities is more critical to donors than that of the poorly rated ones. In this study, we examine whether the financial reporting quality of charities systematically varies with charitable ratings. Examining a sample of human service charities, we find that highly rated organizations are more likely to underreport fundraising expenses and overstate program ratios. Highly rated organizations appear to be exercising accounting discretion to achieve this desirable outcome. Collectively, our findings suggest that stakeholders should be cautious when they use the rating information.

The purpose of this paper is to test the association between various stakeholder groups and whether nonprofit organizations (NPOs) have obtained accountability accreditation. In particular, the study intends to answer the following research questions: Does the governance of an NPO have any impact on the likelihood that the organization obtains certification? Does an NPO’s investment in executives affect certification efforts? Does employing a professional fundraiser play a significant role in whether an organization seeks accreditation? and Are certification efforts influenced by the relative sophistication of donors of the NPO?

Data were analyzed by examining information provided in the Internal Revenue Service revised Form 990, Part VI specifically from organizations holding the Standards for Excellence® (SFX) certification. This study uses a size- and sector-matched sample of 228 NPOs (half of which with the SFX certification and half without) to examine the association between accountability and governance in NPOs in both univariate and multivariate contexts.

The findings of this study indicate that organizations with strong internal governance (indicated by their answers to the governance-related questions in Form 990) are more likely to have obtained certification when compared to a group of nonprofits that did not receive the certification. In addition, nonprofits that invest more in their executives are more likely to receive SFX certification. Interestingly, external stakeholders (donors making restricted gifts, and professional fundraisers) are not associated with the likelihood of holding the SFX certification.

Even though the study has attempted to control for factors that may have contributed to the findings (e.g. a size- and sector-matched peer for each NPO that secures the SFX seal in the final sample), it is not feasible to perfectly tease out all alternative explanations for the findings. Endogeneity issues may still be present given that the sample and comparison groups possess significantly different governance characteristics (i.e. governance scores, board independence, investments on executives).

The positive association between organization governance and investment in executives and the NPO’s certification credentials implies that certification may be used by these certified organizations as a signaling mechanism for strong governance. This would be consistent with the positive stakeholders’ reactions to NPOs’ accountability certifications that have been documented by Feng et al. (2016). The findings should help NPO board and staff members, researchers, and regulators to further understand the association between stakeholder groups and whether NPOs have obtained accreditation.

A thorough search of the relevant literature suggests that this study is the first one to link the association between stakeholder influence (proxied by the NPO’s governance strength, investments in executives, employing a professional fundraiser and donor sophistication) and an NPO’s decision to seek accountability accreditation. The findings should provide insights to stakeholders and researchers interested in examining the value of third-party accountability certifications and signaling mechanisms in NPOs and inform regulators regarding significant stakeholder influence on NPOs’ accreditation decision-making process. The results of this study also add to the body of literature on certification programs for NPOs.

We examine the factors that associate with local government decisions to comply with Generally Accepted Accounting Principles (GAAP). GAAP non-compliance is surprisingly common among larger local governments, and that trend has important implications for public policy, financial management transparency, and government accountability. To examine the factors that drive GAAP compliance, we develop a conceptual framework based on the politico-economic perspective on accounting policy choice, and then test that model with data from a national survey of local government finance professionals. Our key contribution is that we incorporate accounting professionalism. The findings suggest that for many local governments the decision to adopt GAAP is a response to the pressures of professionalism rather than a rational response to political and economic motives.

In an effort to develop an audit quality (AQ) framework specific to the US audit market, the Public Company Accounting Oversight Board (PCAOB) recently issued a concept release proposing 28 audit quality indicators (AQIs) along three dimensions: audit professionals, audit process and audit results. Using AQIs initially proposed by the PCAOB, as well as AQIs suggested by prior literature, the authors solicit perceptions from junior-level (senior and staff) auditors to investigate the current state of practice along many of the AQIs relating to audit professionals and audit process.

In the study, 78 junior-level auditors responded to the survey.

An analysis of the responses suggests auditors engage in activities and audit firms promote conditions that at times improve, and at other times, reduce audit quality. The authors find that individual auditors’ perceptions differ across experience level, gender and audit firm size for certain AQIs.

The study is useful to the PCAOB because it provides insights to help assess the value of potential AQIs in differentiating AQ. The study is also useful to other regulators because it describes audit staff and seniors’ perceptions of apparent firm and auditor compliance with accounting and auditing standards. Practitioners should find this information useful in helping to identify possible root causes of audit deficiencies, a challenge put forth to firms by the PCAOB.

This study provides academia with evidence on AQ from practicing auditors, which informs existing and future research along. The study complements existing work by showing how individual auditor characteristics (experience and gender) at the junior levels may impact AQ in practice

Given the well-reported concerns over cost containment in public higher education, we believe performance should be measured based on cost efficiency and spending choices. This study develops three regression models linking presidential pay and public university performance with data for public universities that have no president change for fiscal year 2007 to fiscal year 2010. Analysis finds a statistically significant inverse relationship between presidential pay and resources devoted to instruction, the primary mission of most universities. A relationship for presidential compensation and enrollment is found for the individual fiscal years examined but not over time. Presidential compensation over time is positively related to spending on areas other than instruction.

This paper provides a review and synthesis of past research regarding financial disclosure management by nongovernmental nonprofit organizations and suggests directions for future study. The primary purpose of this review is to summarize the evidence on financial disclosure management to help regulators and other stakeholders understand why, how, and to what extent nonprofits engage in this behavior. The paper begins by defining disclosure management in nonprofit organizations and exploring the motivations for why it might occur. Next is a survey of the nongovernmental nonprofit financial reporting environment: objectives, common practices, and the informational needs of users of nonprofit financial reports. Research exploring the motives, methods, and consequences of disclosure management is summarized. The evidence suggests that nongovernmental nonprofit managers have a variety of incentives to manage reported numbers and that they do in fact alter spending decisions, choose accounting methods, and design cost allocations to achieve certain performance benchmarks. Furthermore, this review sheds light on the consequences of disclosure management and what can or should be done to limit it.

The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation discretion significantly impacts program ratio reporting, the primary NP performance measure. Stakeholders are misled to allocate limited resources inefficiently. While some NPs file group Internal Revenue Service (IRS) Form 990 returns with their affiliates, effectively providing consolidated statements, others choose to file independently of their affiliates.

The authors use OLS regression analysis and panel data for 5,697 NP-year observations for the period 2009-2011 retrieved from the National Center for Charitable Statistics Form 990 database.

The authors find evidence that consolidation discretion substantially impacts donor decisions. NP managers have incentive to utilize consolidation discretion to influence charitable giving.

The authors urge the IRS and the Financial Accounting Standards Board to reconsider the consolidation guidance for NP organizations, to develop performance measures beyond the widely used program ratio, and to require program ratio segment reporting to allow for better comparability among NPs irrespective of consolidation status. Further, the authors caution stakeholders to consider supporting organization transactions in their resource allocation decisions.

The authors are the first to use NP supporting organization information to investigate consolidation discretion and its impact on donor responses.

The aim of this paper is to bridge the gap between the organizational effectiveness (OE) models developed in the field of organizational theory and the performance measurement models presented within the management accounting literature. The specific evolution of these two complementary streams of research stemming from two different fields of research are reconciled and integrated by analyzing their convergences and divergences. As a response to theoretical and practical pressures, the evolution of OE models reflects a construct perspective, while the evolution of performance measurement models mirrors a process perspective. Performance measurement models have moved from a cybernetic view whereby performance measurement was based mainly on financial measures and considered as a component of the planning and control cycle to a holistic view based on multiple nonfinancial measures where performance measurement acts as an independent process included in a broader set of activities. This paper contributes to the performance measurement literature by establishing the origins of the performance measurement models and by shedding light on unexplored fertile areas of future research.