Degree Name

Doctor of Philosophy


Department of Accounting and Finance


In recent years the nonprofit sector has been increasingly influenced by commercial practices, following the lead given by the public sector, which has instituted a series of reforms. The greater emphasis on a business-like culture which has resulted has included the adoption of accounting practices in the nonprofit sector which have previously been used only by organizations which exist for profit-making purposes.

Institutional theory recognizes the influence on organizations of powerful expectations and pressures which require organizations to behave in certain defined ways. These expectations are deeply embedded in society and organizations. The adoption of business-oriented accounting practices is one such requirement. Organizations situated within the nonprofit sector, such as religious/charitable organizations, are highly dependent on governments and the public for funding, and therefore particularly vulnerable to these expectations. If fulfilled, they are capable of providing a legitimacy which enables organizations to receive the funding they need in order to continue their operations. Changes in societal expectations in recent years, particularly in accounting practices, have placed great pressures on such organizations which, by their very nature, have been unaccustomed to performing in a manner once reserved for the forprofit sector.

This thesis provides a study of the introduction of several of these accounting practices in one religious/charitable organization. Since accounting systems do not exist as selfcontained independent entities, the backdrop to the study, the organization's o wn unique history and culture on the one hand and societal expectations on the other, has been carefully developed.

Against this backdrop organizational accounting practices and changes to those practices have been documented. These are the adoption of accrual accounting, the publication of corporate style financial statements, the change to a global budgeting system, the use of accounting information in decision making, the reliance on advice provided by external consultants and the introduction of benchmarking and businessoriented accounting practices.

These accounting techniques have not been adopted lightly. As the profile of accounting has been raised, increasing pressure has been placed on existing organization members and greater reliance has been placed on accounting professionals. The task for the organization has been to fulfil societal expectations and maintain its reputation as a worthy recipient of public funds, while at the same time developing expertise as an entrepreneurial provider of funds generated by means of business operations. A s this task has been undertaken, the challenge for the organization has been to balance the application of commercialized accounting and business practices against the imperatives of its mission.

While the particular dynamics of these changing practices may be unique to this organization, it is to be expected that other organizations involved in this sector will be experiencing similar challenges. These changing institutional arrangements have the potential to alter dramatically the provision of services by charitable welfare organizations.



Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.