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Topic 2 Notes

Accounting Notes > Accounting in Non-Governmental Organisations Notes

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AC310: Module 2 - Topic 2 - Management accounting and control systems in NGOs

Topic 2 - Management accounting and control systems in NGOs

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Perception of NGOs as 'inefficient' or 'unaccountable' o Leads to pressure to adopt business practices Characteristics of NGOs suggests that wholesale adoption of for-profit organization practices will be difficult o Maybe even damaging Empirical research suggests that a more NGO-specific approach to MACS o Research is often normative i.e. what they should do, not what they do

Adopting practices from business

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Often encouraged to: o Measure more o Be more efficient o More effective Kaplan (2001): o Accountability and performance measurement becoming more important due to increasing competition o Governments and other sources of income focus only on financial measures
? But it is hard to measure non-financial indicators o Suggests BSC
? May make the NGO look more attractive to donors
? But the argument for it is not convincing Porter & Kramer (1999): o "Not enough foundations think strategically" o "Little effort is devoted to measuring results" o Makes links between not being strategic and not measuring performance o But doesn't say exactly what they should be doing!
LeRoux & Wright (2010): o GPRA (Government Performance and Results Act, 1993) forced nonprofits to focus more on performance measurement o Less academic, and was influenced by the government o Important because increasingly being funded and controlled by government o Similar in many developed countries Bradley et al. (2003): o "Substantial opportunities for improvement" o "Streamlining and restructuring" could lead to $60bn a year
? But Hall is skeptical of such numbers o NGOs aren't efficient enough o Metrics now being used to report the efficiency of funds o Business-like language and practices

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