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For the past decade, a research programme led by Professor Noel Hyndman has investigated accountability and governance in the UK charity sector. Outputs from the research have shaped the national draft reporting and accounting framework, Statement of Recommended Practice (SORP), which provides a mechanism for charities to meet legal accounting requirements and provides consistency in the sector's interpretation of accounting standards. The new framework will apply to more than 200,000 charities in the UK, which have an estimated total annual income of over £60 billion.
The Charity Law and Policy Unit (part of Liverpool University Law School) has a Steering Committee which advises on research strategy. Under its guidance, research outputs produced by Barr, Morris and Warburton have had two key impacts during the assessment period. First, they directly led to an improved legislative framework for the charity sector. Second, they significantly enhanced the policy and practice underpinning the effective operation of the charity sector.
Specific impacts are:
The financial crisis has prompted a public policy debate about the appropriate regulatory framework for financial reporting and audit. Evidence produced by this research on the current regulatory system has informed and influenced this debate in the House of Lords, particularly regarding the respective roles of auditors and audit committees. Furthermore, findings have had a significant impact on the audit procedures of Deloitte, one of the Big Four global audit firms. Their National Audit Technical Partner stated that it had prompted a reconsideration of the timing of their audit processes and the nature of interaction with their audit clients.
The findings of Prof. Warwick Funnell and Prof. Robert Jupe have stimulated international policy debates on government accountability and the provision of public services. By challenging conventional free market wisdom, their analysis of the limits to effective privatisation have been used by stakeholders concerned by the direction of public sector reform, including government representatives, professionals and political pressure groups. They achieved this through accessible publications and close partnerships with these stakeholders that provide a platform for associated discussion events, seminars and media commentary.
Research on International Financial Reporting Standard 8 `Operating segments' (IFRS8), undertaken by academics in the University of Dundee's School of Business, has been used to frame the international debate concerning listed company reporting of disaggregated (segmental) information about business unit and geographic activities. Three bodies involved in regulation and compliance, have drawn on the research to inform their positions and strategies in relation to the standard. Firstly, the IASB's review of IFRS8 was informed by the research. Secondly, the key findings were fed into the Financial Reporting Council's proposals to amend IFRS8. Thirdly, the research underpinned the Institute of Chartered Accountants of Scotland's (ICAS) response to the IASB's request for information on how the standard was being applied, what challenges were encountered and associated costs.
This case study focuses on the impact of research studies and their influence on International Financial Reporting Standards (IFRS) carried out by Manchester Business School (MBS). International accounting harmonisation is currently the most topical issue debated in the accountancy world. These studies have attracted the attention of practitioners, e.g. Association of Chartered Certified Accountants (ACCA), and policy makers, e.g. the UK Accounting Standards Board (ASB). The research has informed the policy debate of whether IFRS should be mandated further, and been taken up in the negotiating position of several key bodies. It has been used to justify the continued application of IFRS among UK quoted companies.
In the wake of the Enron Scandal in 2002, the global landscape of auditing practices radically changed, significantly transforming the UK regulatory system. University of Glasgow research into the high-level financial reporting interactions between UK companies and external auditors has influenced public debate in the House of Lords and prompted several recommendations of the Select Committee on Economic Affairs. It has also contributed to an ongoing Competition Commission investigation into the market concentration of audit companies, and shaped the working practices at Deloitte, one of the Big Four international audit firms, influencing the industry at a global level.
Aberdeen public sector accounting research into adopting accruals accounting, the application of international accounting principles and standards, the treatment of privately financed public assets and the basis of Whole of Government Accounts was used extensively by the principal researcher in advisory work for UK and devolved governments, international agencies, professional bodies and regulators. It contributed directly to changes in the way governments budget, manage and report the performance of resource use, to increased stakeholder awareness of public accounting issues nationally and internationally, and to improved public understanding of these complex issues. It mainstreamed accounting research into the public policy process.
Sheila Ellwood (at Bristol from 2006) examined how managerial freedoms created through the trend to decentralise public service organisations need to be tempered through `better' accounting. Her research has led to her appointment as a non executive director (2000-2005) and a Treasury Panel member (2009-11). The research impacts on both national policy and local financial management. Her impact is seen in the financial reporting policy in local public bodies; the policy on auditing local public bodies and in the costing/ pricing of healthcare. Her work has been used in UK parliamentary committees and incorporated into government accounting manuals. International recognition includes dissemination of her work by the Chinese Treasury.
Unique research at the University of Manchester highlights the shortcomings of public accountability and the high cost, to the public purse, of PPPs and the Private Finance Initiative (PFI) using critical financial analysis. Lead researchers have been invited to engage in dialogue with national audit regulators, give evidence to parliamentary committees and contribute to policy debate through international roundtables. The work has been used to challenge government policy and has significantly influenced the national and international public debate about the costs, affordability and value for money of PPPs. The UK government has now renegotiated existing PFI projects to achieve cost savings, and we have given evidence by invitation to international committees concerned with public accountability and policy development.