Accountability and Governance Reporting by Non-Profit Organizations

¹ Faculty of Accountancy, Universiti Teknologi MARA, Puncak Alam Selangor, Malaysia
² Accounting Research Institute, Universiti Teknologi MARA, Malaysia
³ Faculty of Accountancy, Universiti Teknologi MARA, Melaka, Malaysia.

^* Corresponding author’s email: nurfarahin1310@gmail.com

Abstract

Many non-profit organizations (NPOs) are facing funding cuts and reduction in voluntary donations during the current economic environment. In ensuring the sustainability of these organizations, the Malaysian government is currently promoting collaborative efforts between the government, social organisations and the private sector in providing social services. The potential advantages of such collaborations include, the risks of providing social services are shared between the government, social organizations and the private sector, build positive perceptions of government as enabler for social organizations, capitalise on social organizations’ collective skills, enthusiasm and innovation in providing social services. However, the current reporting requirement for NPOs in Malaysia may give rise to information asymmetry that can hinder such efforts. Hence, this study aims to examine the current reporting practices of NPOs in Malaysia. Based on content analysis of annual reports of 205 NPOs registered with Registry of Societies for the financial year 2011, this study finds that the overall information reported by the NPOs is relatively weak. NPOs also disclosed relatively high non-financial information as compared to the financial information. Hence, there is a need for more comprehensive reporting guidelines for the NPOs that can facilitate the decision-making needs of the relevant stakeholders.