The Extent of Informations Disclosure On Non Profit Organization In Indonesia
Wenni Anggita1*, Nur Ahmad Ricky Rudianto1
1 Faculty of Economic, Universitas Bangka Belitung, Bangka Belitung, Indonesia
*Corresponding Author: [email protected]
Accepted: 15 September 2020 | Published: 30 September 2020
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Abstract: This study analyzes the disclosure of information made by non-profit organizations in Indonesia registered with the Ministry of Home Affairs by using the Non Profit Organization Disclosure Index (2015) initiated by Zainon et al. This research using the Resource Dependence Theory theory shows that as an organization cannot produce all the resources needed for it to survive, it must rely on external resources. It is also supported by stakeholder theory which was popularized in 1980 (Freeman, 1984) also asserted that companies must adjust their strategies to meet the demands of various parties and ensure the existence of the company by obtaining support from company stakeholders (Darus et al 2014). The results of this study indicate that the variables of organizational performance, company size, type of organization and age of organization have no positive effect on information disclosure in non-profit organizations. This indicates that the lack of regulations on disclosure carried out by non-profit organizations so that non-profit organizations seem to pay less attention to accountability to the public.
Keywords: Non profit Organizations, Financial reporting, Non Profit Organization Disclosure Index
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1. Introduction
The demands for companies to provide informations, accountable organizations and good corporate governance have increasingly forced companies to provide more effective and relevant information in their financial reports. Stakeholders need information about the extent of the company's performance to make investment decisions for the company. Disclosure standards and practices are influenced by financial resources, laws, relating to politics and economics, level of economic development, education, culture, and other influences.
IFRS standards regarding the procedures for reporting and disclosing financial information must be applied to entities with public accountability such as: Issuers, public companies, banking, insurance, and BUMNs but can also be applied by other entities, for example in non profit or non profit organizations. Non profit organizations or non profit organizations are organizations that aim to support an issue or matter in attracting the public for a purpose that is not commercial, without any attention to things that are for profit (monetary).
PSAK No. 45 Year 2010 has regulated financial reporting for non-profit organizations which began to be effective on January 1, 2012. In PSAK No. 45 paragraph 4 states that "This statement establishes certain basic information that is presented in the financial statements of non-profit organizations. Regulations that are not regulated in this statement refer to SAK, or
by Calabrese (2011) in his research which states that the majority of non-profit organizations are currently not subject to a public audit mandate, but the majority still report financial statements on an accrual basis. Baber and Gore (2008) stated that financial disclosure regulation has the potential to increase public benefits. Zainon, et al (2014) revealed that with the preparation of transparent and accountable financial reports, it is not uncommon for non profit organizations to disclose the information reflected in these financial statements.
Although disclosure of financial reports to non profit organizations is still voluntary, the need for information regarding funding allocations by donors is a separate obligation for a non profit organization to disclose and report. The provision of comprehensive information in the annual report of a non-profit organization is an important mechanism in increasing organizational credibility and public trust. However, non-profit organizations are less subject to strict reporting requirements, so the information reported may lack of transparency.
This study aims to see the breadth of information leveraging carried out by non profit organizations in Indonesia. This is because most of the non profit organizations do not pay attention to the rules and standards that have been applied by the government such as PSAK No. 45 on Financial Statements of Non Profit Organizations.
2. Literature Review
Non Profit Organization
Anggita, et al (2018) said that a non-profit organization is an organization that aims to support an issue or matter in attracting donors for a non-commercial purpose, without any attention to things that are for profit (monetary). PSAK No.45 states that a non-profit organization obtains its resources from the donations of members and other donors (donors) who do not expect anything in return from the organization. (IAI, 2004: 45.1). Meanwhile, according to Pahala Nainggolan (2005), a non-profit institution or organization is an institution or collection of several individuals who have specific goals and work together to achieve these goals, in carrying out the activities they do are not oriented solely in accumulating wealth.
Abdul Azis Wahab (2008, p. 4) describes some of the characteristics of an organization including 1) A social entity; 2) Aimed at or directed by the goal (goal directed): 3) Have a structured activity system that is deliberate and; 4) with clear boundaries. Meanwhile, according to Gerlof (1998, p. 6) the characteristics of an organization are: 1) Objectives; 2 persons; 3) Plan. Non-profit organizations have very different characteristics compared to business organizations. The special characteristics that underlie these differences according to PSAK 45 concerning the financial reporting of non-profit financial organizations mainly lies in the way that non-profit organizations obtain the resources needed to carry out various operating activities.
This study uses the Resource Dependence Theory which states that in order for an organization to survive, it must acquire resources. The perspective developed by Pfeffer and Salancik (1978) explains that according to them, organizations depend externally on resources. The argument that is based on the concept put forward by Emerson (1962) above is the core (core) of Resource Dependency Theory. Zainon et al (2014) developed an index that can measure how important Voluntary Disclosure is carried out by non-profit organizations called the Non-Profit Organizations Reporting Index. This study will use the Non-Profit Organizations Reporting Index to see the extent of disclosures made by non profit
organizations related to the disclosure of both financial and non-financial organizational information.
Hipotesis
Research by Zainon et al (2011) and research from Arshad et al (2013) revealed that donors (funders) are more likely to demand a higher level of disclosure because of their lack of knowledge or their deep understanding of the performance of non-profit entities. This refers to the funders will be more interested in non profit entities that provide relevant and accountable information about the performance of the organization and the activities that the organization carries out with the funds they have provided.
H1 : Organizational performance has a positive effect on the level of information disclosure of non profit organizations
Trussel and Parsons (2008) argue that organizational growth can only be achieved if the non- profit organization can continue to generate income for several years. In other words, size may represent an organization's ability to attract revenue and contributions from external organizations and institutions. Sutomo (2004) states that large companies tend to disclose more information than small companies. Sutomo's research results (2004) indicate that company size affects the extent of disclosure.
H2: Organizational’s size has a positive effect on the level of information disclosure of non profit organizations
As with non governmental organizations, several studies have reported that differences in the level of disclosure exist between funded and unfunded organizations (Desai and Yetman, 2005; Fischer et al., 2010; Gordon et al., 2002). Research by Zainon et al (2014) states that the stability of the sources of income available through funding will cause a significant difference in the level of disclosure between funded and non-funded non profit organizations.
Due to the strict supervision it is possible to disclose financial information to non-profit organizations. higher.
H3 : Organizational’s type has a positive effect on the level of information disclosure of non profit organizations
The age of an organization also refers to the better disclosure of an organization. Anggita (2015) states that the age of the organization which is the control variable in his research has a positive effect on the disclosures made by non profit organizations.
H4 : Organizational’s age has a positive effect on the level of information disclosure of non profit organizations
Population and Sample
The population used in this study is a non-profit organization in Indonesia, which in this case is registered with the Ministry of Home Affairs. The total population was 317 organizations and the sampling was done by purposive sampling totaling 20 organizations with criteria. The criteria for this research sampling include:
1) Active Non Profit Organization
2) Non profit organization that does internet financial reporting
3. Methodology
The population in this study are non-profit organizations in Indonesia registered with the Ministry of Home Affairs. The sampling method in this study is to use a non-probability sampling method with a purposive sampling technique. The analysis used in this research is to use multiple regression analysis method and to process the data the author uses the computer application program eViews 7 for Windows.
4. Conclusion
Based on the results of hypothesis test, the variables show that the p value is greater than the significance value of 0.05. This indicates that the variables of organizational performance, organizational size, type of organization and age of the organization have no positive effect on the disclosure of non profit organizations. This shows that the better the performance of a non-profit organization, the public accountability is not good enough to be disclosed to the general public. As with the size of the organization, it turns out that increasing the size of an organization does not guarantee that the better the level of disclosure that is carried out by the organization.
The age of an organization has no effect on the level of information disclosure of non-profit organizations. It shows that even though an organization has been around for a long time, the tendency to disclose public information is still minimal. Similar to the type of an organization, both governmental and non governmental have a minimal tendency to disclose information.
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