Accounting in Non-governmental Organisations

Abstract

This research investigates the phenomenon of accounting in non-governmental organisations (NGOs). It seeks to understand accounting processes and reporting practices in NGOs and conditions that sustain those processes and practices. NGOs have become important institutions in world affairs but accounting research has not developed interest in their operations. Premised on an interpretive theoretical orientation this research executes a grounded theory strategy as the principal line of inquiry (Strauss and Corbin, 1990; 1998). However, since stakeholder relationships are important dimensions in NGOs, a stakeholder analysis framework (Mitchell et al., 1997) was also employed. Fieldwork was undertaken from June 1999 to October 2000 in three Tanzanian NGOs.

The research established the importance of accounting in the process of seeking, attaining and maintaining organisational legitimacy. Accounting communicated activities and scale of resource need and was the formal channel for justifying resource utilisation, but it was also an important legitimating catalyst because it symbolised organisational competence. When perceived to be adequate accounting enhanced organisational legitimacy. Increased availability of easily accessible donor funds; a weak and outdated regulatory regime; effects of stakeholder stature, organisational growth, conflicts; organisational credibility; the strength of cultural orientation; and the state of trust relationships emerged as other important conditions that facilitated or constrained the processes of navigating legitimacy.

The research contributes to interpretive accounting research by providing incremental evidence of previously observed phenomena but from organisational forms that have not been studied previously. It observes accounting to be intertwined with intra-organisational dynamics as well as inter-organisational dynamics that arise from interactions with, and meeting demands, or stakeholders. The research underscores the centrality of trust to organisational accountability and suggests that the relationship between accounting and trust is a multi dimensional one. Whereas accuracy, integrity, frequency, and coverage of accounting information affect levels of trust, the depth of trust relationships similarly influences the burden of accounting.

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