Coping with COVID-19: the role of accounting in shaping charities' financial resilience

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Abstract

Purpose: The purpose of this paper is to explore the role of accounting in shaping charities' financial resilience during the COVID-19 crisis. Design/methodology/approach: A case study of a charity was conducted. The financial resilience framework (Barbera et al., 2017) was applied to explore how accounting contributes to charities' capacity to cope with crises. Findings: The results show how the accounting practices of budgeting, forecasting and performance reporting (financial and nonfinancial), as well as “accounting talk,” form part of the anticipatory and coping capacities that provided the charity the financial resilience to navigate the COVID-19 crisis. Practical implications: The paper evidences the important role accounting plays in establishing financial resilience to help charities cope with crises, particularly the importance of having accounting practices established prior to a crisis and accounting information forming part of managers' discussions. The study also demonstrates that financial reserves have an important buffering capacity role. Originality/value: This is the first paper to examine the role of accounting within a charity during an economic crisis. The authors explore the role of accounting in shaping a charity's financial resilience and demonstrate the applicability of the financial resilience framework to a sudden, unexpected crisis such as COVID-19. They extend the accounting talk literature by highlighting its importance to a charity and during a crisis.

Original languageEnglish
Number of pages14
JournalAccounting, Auditing & Accountability Journal
DOIs
Publication statusAccepted/In press - 2021

Keywords

  • Accounting talk
  • Charities
  • COVID-19
  • Crisis
  • Financial resilience
  • NFP
  • NGO
  • Not-for-profit

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