The financial management of a large voluntary organisation in Malta : a case study

Abstract

PURPOSE: Voluntary organisations (VOs) play a significant role in society as they render a service which undertakes responsibility for the social and development needs of the country. The purpose of this dissertation is to evaluate the financial management within a large VO, understand the processes and procedures which are applied, assess different areas of financial management, and finally suggest recommendations. DESIGN: Throughout the dissertation, a qualitative approach has been applied through semi-structured interviews and direct observations. Interviews were held with high ranking officials as well as managers. FINDINGS: For the purpose of this dissertation, the following aspects which make up financial management were analysed in detail: funds, financial reporting, management accounting, corporate governance, and controls. The organisation has to rely on funds to operate, especially those from the government. Even though being a VO, the organisation still adopts financial reporting systems such as IFRSs in the same way as businesses. Moreover, their annual accounts and financial statements are audited by an external auditor for the statutory audit. The controls are also audited for the performance audits. Budgets are the primary tool of management accounting that is used by the VO. Corporate Governance in the organisation is still being made stronger through the changes which have currently been experienced in the Board of Trustees (BOT). CONCLUSIONS: This study concludes that overall the organisation has proper financial management due to the company’s robust procedures and good overall communication in the organisation. VALUE: This study shows that at times, for voluntary organisations to succeed, it is essential that they are run in a business-like manner. Financial Management is important both for profit-making organisations as well as not-for-profit organisations. Sound financial management in a voluntary organisation brings about various benefits towards the organisation which would result in a strong organisational plan and aid the organisation to achieve objectives and prepare for long-term financial stability amongst others.