A study about accountability and informal accounts concerningSky Charity Organization
Task: You are required to use the theoretical knowledge of accountability to study a case of religious charity organization. Identify the stakeholder and for each indicate the resource(s) or power(s) that this stakeholder holds to sanction Sky. Identify the account(s) given by Sky to each stakeholder; and indicate whether it is formal or informal.
The case study of Sky Charity Organization had given an idea about the nature of the works that are done by the given Organization. Sky Charity Organization is a non-profit organization that was found to be managed by different stakeholders ranging from church
governors to environmentalists.
Sky Charity Organization is also responsible for the sales of different healthy food items which yields a considerable profit annually. Henceforth, Sky Charity Organization is also held accountable for producing financial reports by adhering to several accounting standards and principles and by adhering to the different legal guidelines and policies which are evaluated by the Church governors at first. The financial reports are then evaluated by the different stakeholders of the Organization.
a. The stakeholders in the given case
The different stakeholders of the Organization which was observed from the case study include:
- the Church governors,
- the church members, and
• the different government bodies.
Furthermore, Sky Charity Organization is held accountable for fulfilling the several roles and responsibilities being a departmental entity (Ortega-Rodríguez, Licerán-Gutiérrez, and Moreno-Albarracín, 2020). In terms of commitment to accountability to the different stakeholders, Sky Charity Organization produces an official report on how the funds are being utilized for charity purposes annually. Furthermore, when the Local Government receives any complaints related to the violation of the standards of hygiene, the Organization is held responsible and a detailed report has to be provided by the Organization to the government regarding the given matter. Moreover, the Organization also implements immediate remedial measures to resolve the issue (Ortega-Rodríguez, Licerán-Gutiérrez, and Moreno-Albarracín, 2020). Sky Charity Organization is held responsible for fulfilling the accountability and the different obligations to its various stakeholders through a combination of both formal and informal communication.
b. Resources and power possessed by the stakeholders to sanction sky
In the case study of Sky Charity Organization, case, the different stakeholders who hold resources or power to sanction the Organization have been discussed briefly below-
1. Church governors: Firstly, the Church Governors of Sky Charity Organization possess the power to replace the management of the Organization if the performance was not found to be satisfactory and the different needs and requirements of the stakeholders are not fulfilled.
Furthermore, in the given case study of Sky Charity Organization, the Church Governors are the accountor who delegates the power to the members of the Church after analyzing the performance of the Organization critically (Lai, Melloni, and Stacchezzini, 2018).
2. Church members: Secondly, the Church members may use the purchasing power to support or boycott the products of Sky Charity Organization. The products of Sky Charity Organization are supported or boycotted by the Church members based on the satisfaction of the members with the Organization. Furthermore, the Church members may also impose sanctions on Sky Charity Organization when disruptions occur in the process of informal communication.
3. Government bodies: Thirdly, the government bodies possess the legal power to fine Sky Charity Organization or even terminate the operations if a lack of compliance is observed with the different Government regulations and policies. Furthermore, Government bodies may also impose penalties on the Organization when the Organizational operations are found to be in contravention of ethical principles. The government bodies may also stop providing monetary aid to the Organization for performing the different operations when a lack of compliance with the regulations and policies and engagement in unethical practices is detected.
4. Customers: Fourthly, the Customers may use the purchasing power and can choose to support or boycott Sky's products, depending on the satisfaction with the Organization. Furthermore, the Customers may also use social media or other channels to share opinions about Sky Charity Organization which shape the perception of the public regarding the given Organization.
5. Local communities: Fifthly, the local communities play a major role in influencing the prosperity and growth of the Organization. When the local communities have negative impressions of the Organization, the relationship of the Organization with the local communities is harmed which degrades the prosperity of the Organization in the long run.
6. Environmentalists: Lastly, environmentalists also play a major role in shaping public opinion regarding the Organization. When the Organization was found to be violating the principles and regulations related to hygiene the public reputation is harmed adversely. The environmentalists may use online platforms and television to make the public aware of the different unethical practices that are being adopted by the Organization. Furthermore, the environmentalists may also use advocacy and lobbying power to advocate for or against Sky's operations based on the detailed reports provided by the Organization.
c. The type of accounts given by Sky charity organization to each of the stakeholders
The non-profit Organizations mostly use the accrual method of accounting for preparing the financial statements which contains the details of the revenues earned (Cookandcompanycpa.com, 2022). Furthermore, the non-profit organizations use the generally accepted accounting principles (GAAP) for preparing the financial statements adhering to the accounting principles and standards.
The accounts given by Sky to each of the stakeholders have been discussed briefly below-
1. Church governors: First, Sky Charity Organization provides the annual financial reports of the food business to the Church governors, which must comply with the different accounting standards and legal regulations. The financial reports that are provided by Sky Charity Organization to the church governors are considered to be formal (Cordery, Belal, and Thomson, 2019).
2. Church members: Secondly, Sky Charity Organization communicates with the church members through the print media, "Trace," which contains rich religious discourse but little information about commercial issues. Furthermore, communication of the Organization with the Church members is considered to be informal (Cordery, Belal, and Thomson, 2019).
3. Government bodies: Thirdly, Sky Charity Organization must provide an official report on how the funds are being utilized by the Organization for charity every year (Cordery, Belal, and Thomson, 2019). The official reports of Sky Charity Organization that are provided to the Government bodies are formal.
Furthermore, Sky Charity Organization is also required to address and also provide explanations for any complaints received by the government regarding the violation of the principles of hygiene by the Organization while conducting different operations in the food business. The explanations that are provided by Sky Charity Organization to the Government bodies regarding compliance with the principles of hygiene are informal.
4. Customers: Fourthly, Sky Charity Organization provides product manuals to customers, which are formal (Cordery, Belal, and Thomson, 2019). Furthermore, Sky Charity Organisation may also communicate informally with the customers through emails and phone calls.
5. Local communities: The nature of the accounts provided by Sky Charity Organization to the local communities is informal which also aims at strengthening the relationship of the Organization with the local community to improve the reputation of the Organization.
6. The Environmentalists: Lastly the accounts given by Sky Charity Organization to the environmentalists are informal.
The accounts that are provided by Sky Charity Organization to the different stakeholders are an amalgamation of both formal and informal. Moreover, the stakeholders like the church members and local communities may not be fully informed about the commercial aspects of the operations of the Organization. The aforementioned stakeholders may benefit through transparent and comprehensive communication.
Cookandcompanycpa.com (2022) Available at: https://cookandcompanycpa.com/cash-vs-accrual-accounting-nonprofit/ (Accessed: December 29, 2022).
Cordery, C., Belal, A.R. and Thomson, I., (2019, January). NGO accounting and accountability: past, present and future. In Accounting forum (Vol. 43, No. 1, pp. 1-15). Routledge. https://www.tandfonline.com/doi/pdf/10.1080/01559982.2019.1593577
Lai, A., Melloni, G. and Stacchezzini, R., (2018). Integrated reporting and narrative accountability: the role of preparers. Accounting, Auditing & Accountability Journal. https://ueaeprints.uea.ac.uk/id/eprint/66233/1/Accepted_manuscript.pdf
Ortega-Rodríguez, C., Licerán-Gutiérrez, A. and Moreno-Albarracín, A.L., (2020). Transparency as a key element in accountability in non-profit organizations: A systematic literature review. Sustainability, 12(14), p.5834. https://www.mdpi.com/2071-1050/12/14/5834/pdf