Cash or Accrual: What basis for small and medium-sized charities’ accounting?

Carolyn J. Cordery, Dalice Sim

Research output: Contribution to journalArticlepeer-review


Charities regulators and standard setters mainly focus on large entities and the needs of sophisticated preparers and users; thus, they mandate accrual accounting, regulators allow smaller charities to use cash-based reporting, as, despite its disadvantages, the alternative (accrual-based reporting) can be costly and consume smaller charities; few resources. Nevertheless, all charities receive tax exemptions making them financially accountable to government; their other stakeholders also use financial reports to assess accountability and to make decisions about providing further resources. Should regulatory agencies require accrual-based reporting for all charities, or only for some?
This research examines New Zealand charities' financial reporting practices and evaluates the drivers for cash and accrual reporting. The research finds that the absolute size of charities is not the only driver to charities reporting on a cash or accrual basis, but that resource dependency (especially on goods and services and on rental) and the assistance of qualified accountants are also factors.
Original languageEnglish
Pages (from-to)79-105
JournalThird Sector Review
Issue number2
Publication statusPublished - Dec 2014


  • Charities
  • non-profit accounting
  • accounting


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