Impact of non-current assets disclosure on financial reporting quality in churches and church-owned schools in Bulawayo

Impact of Non-Current Assets Disclosure on Financial Reporting Quality in Churches and Church-Owned Schools in Bulawayo.

Cavin Jeffry Mudimba

Department of Business Management & Law, International Training College, 961 Hosea Kutako Drive, Gammams Training Centre, Windhoek, Namibia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.9010215

Received: 06 January 2025; Accepted: 10 January 2025; Published: 13 February 2025

ABSTRACT

This study examines the impact of non-current assets disclosure on the quality of financial reporting in churches and church-owned schools. Non-current assets, such as land, buildings, and equipment are crucial components of these institutions’ financial statements, yet their reporting is often characterized by inconsistencies and inadequate transparency. The research explores how detailed and accurate disclosure of these assets enhances accountability, aids decision-making, and ensures compliance with financial reporting standards. Using a mixed-methods approach, primary data was collected through surveys and interviews with accountants, auditors, and administrators from selected churches and church-owned schools. Secondary data from financial statements were analyzed to assess the extent and quality of non-current asset disclosure. The findings reveal a significant positive relationship between comprehensive asset disclosure and financial reporting quality, highlighting the role of disclosure in improving stakeholders’ trust and organizational credibility. This study underscores the need for robust financial policies and adherence to reporting standards to promote transparency and accountability in faith-based institutions. Recommendations include capacity building for financial personnel and adopting standardized frameworks tailored to these organizations.

Keywords: Non-Current Assets, Financial Reporting Quality and Church

INTRODUCTION

Non-disclosure of non-current assets in financial reporting significantly undermines the reliability and transparency of financial statements, especially within non-profit organizations (NPOs) such as churches and church-owned schools in Zimbabwe. These entities often lack regulatory oversight comparable to for-profit entities, yet they manage substantial resources that demand accountability.

The omission of non-current assets from financial reports leads to incomplete disclosure of financial position and performance, thus impairing stakeholders’ ability to make informed decisions. Studies highlight that financial reporting quality (FRQ) is directly linked to transparency and governance. Factors like earnings quality, accounting conservatism, and accruals quality are critical proxies for assessing FRQ (Dechow et al., 2010). Furthermore, the transparency of disclosures affects resource allocation and public trust, crucial for NPOs reliant on donor funding and community support (Huang et al., 2012).

Financial reporting plays a critical role in ensuring transparency and accountability in nonprofit organizations, such as churches and church-owned schools. Effective financial reporting is fundamental to maintaining stakeholders’ trust, attracting donations, and demonstrating stewardship of resources. For faith-based organizations, non-current assets such as land, buildings, and equipment often represent significant investments critical to their mission, making their proper disclosure essential (Capin Crouse, 2020).

Over the past decade, global financial reporting standards have evolved, particularly for nonprofits, to enhance the quality of disclosures. Updates like FASB’s ASU 2016-14 and ASU 2020-07 have introduced stricter requirements for nonprofit entities to disclose qualitative and quantitative information about their financial and nonfinancial assets, aiming to improve clarity and comparability in financial statements (Church Law & Tax, 2018). These changes highlight the necessity of comprehensive disclosures, not only to comply with regulations but also to support informed decision-making by donors, boards, and other stakeholders.

Despite these developments, challenges remain. Churches and church-owned schools often face unique difficulties in adopting these standards due to limited financial expertise, resource constraints, and varying interpretations of disclosure requirements. Research indicates that inadequate disclosure of non-current assets can obscure an organization’s financial position, reducing stakeholder trust and hindering accountability (AAFCPA, 2018).

At the institutional level, transparent reporting of non-current assets can provide insight into how resources are allocated and utilized, fostering better governance and decision-making. By examining the relationship between non-current asset disclosure and financial reporting quality, this study aims to identify best practices that enhance accountability, ensure compliance, and reinforce the sustainability of faith-based organizations. This focus is particularly relevant as the nonprofit sector faces increasing scrutiny to align financial reporting with global standards, promoting greater transparency and credibility.

Objective: Examine the impact of non-current asset disclosure on financial reporting quality in churches and church-owned schools in Windhoek.

Hypotheses:

H0: Higher levels of non-current asset disclosure are associated with higher levels of financial reporting quality.

H1: The quality of non-current asset disclosure is influenced by the level of oversight and governance within the organization.

Hypothesis 1( H0): Higher levels of non-current asset disclosure are associated with higher levels of financial reporting quality.

Dependent Variable: Financial Reporting Quality
This variable was measured using accuracy (A), reliability (R), transparency (T), and comprehensiveness of the financial reports (CFR). This variable was also assessed by looking at the level of compliance with accounting standards (CAS), the consistency of disclosures (CD), and the absence of material misstatements (AMM).

Independent Variable: Non-Current Asset Disclosure
This variable refers to the extent and quality of information provided in the financial statements regarding non-current assets (such as property, plant, equipment, and intangible assets). It was measured by evaluating the level of detail provided, the frequency of disclosures (FD), and the adherence to relevant reporting standards (ARRS).

Multiple Regression equation used is as follows:

Hypothesis 2 (H1 ): The quality of non-current asset disclosure is influenced by the level of oversight and governance within the organization.

Dependent Variable: Quality of Non-Current Asset Disclosure
This refers to how well the organization discloses information about its non-current assets. It was measured by assessing the clarity (C), transparency (T), and completeness of the disclosures (CD), the frequency of updates (FU), and how well these disclosures comply with accounting standards (CAS) and best practices (BP).

Independent Variable: Level of Oversight and Governance
This variable refers to the strength and effectiveness of the corporate governance structure within the organization. It was measured using presence of an audit committee (PAC), the number of independent board members (NIBM), the quality of internal controls (QIC), and the overall commitment to transparent reporting practices (OCTRP).

For the second hypothesis, the multiple regression equation used was:

THEORY AND CONCEPT OF NON-CURRENT ASSETS DISCLOSURE AND FINANCIAL REPORTING QUALITY

The first subsection discusses the Agency and Signaling theories Theory and the next deals in detail with the concept of non-current assets disclosure.

The Agency theory

The theory emphasizes the relationship between managers and shareholders. According to this theory, managers, acting as agents, may have divergent interests from the shareholders, leading to potential agency costs. In the context of non-current assets, this theory suggests that managers may withhold or manipulate information regarding these assets to avoid scrutiny or to present a more favorable financial position. Agency theory is part of positive accounting theory which can be used to predict and explain non-current assets accounting methods for accountability and transparency purposes by administrators and managers (Hendrastuti, Ranindya & Harahap, Ridoni (2023). As such, the disclosure of non-current assets in financial reports is seen as a mechanism to align the interests of management with those of shareholders by providing transparent and accurate information that minimizes the risk of mismanagement and enhances the quality of financial reporting.

Signaling Theory

Another theory on which this study is based is the signaling theory which postulates that firms use financial reporting as a way to communicate information to the market and stakeholders. According to this theory, firms may disclose non-current assets to signal their strength, stability, and future growth prospects (Spence, 2025). This disclosure, particularly regarding investments in long-term assets such as property, plant, and equipment, is seen as an indicator of a firm’s ability to generate future profits. By providing detailed information on NCAs, firms aim to signal their credibility and the soundness of their long-term investments, which can enhance the perceived quality of financial reports. This transparent signaling can also reduce information asymmetry between the firm and its investors, improving decision-making and enhancing overall financial reporting quality (Li & Zhu, 2023).

Both Agency and Signaling theories highlight the importance of non-current asset disclosure in improving financial reporting quality, but they approach the issue from different perspectives. Agency Theory focuses on mitigating the potential for managerial self-interest through enhanced disclosure, while Signaling Theory emphasizes the strategic role of disclosure in projecting a firm’s long-term value to the market. Both theories suggest that transparent and comprehensive disclosure of non-current assets not only improves the quality of financial reporting but also builds trust with stakeholders and contributes to better financial decision-making.

Concepts of Non-Current Assets in Not-for-Profit  Organizations

Non-current assets are long-term resources that provide value over multiple reporting periods and are essential for operational continuity in not-for-profit organizations (NPOs), including churches and church-owned schools. Unlike current assets, non-current assets are not expected to be converted into cash within a year (Anthony et al., 2020). In NPOs, these assets often include buildings, land, equipment, and intangible resources like copyrights or licenses, which support their mission-driven activities (Ellis & Bittner, 2019). Such assets are usually funded by donations, grants, or endowments rather than generated from revenue-producing activities (Fischer et al., 2021).

The acquisition and maintenance of non-current assets in NPOs are critical to achieving organizational objectives, especially in education and religious contexts. For instance, church-owned schools rely on buildings and equipment to provide quality education, while churches may use properties for worship and community services (Scully et al., 2020). These assets’ importance necessitates their accurate classification and valuation in financial reports to ensure accountability and transparency to donors and stakeholders (Gaspar, Millie & Gabriel, Jocelyn & Manuel, Manuel & Ladrillo, Divina & Gabriel, Evangeline & Gabriel, Arneil, 2022). Proper disclosure of non-current assets also aids in strategic planning, as it provides insights into the organization’s long-term capacity to deliver services (Davies & Ng, 2018).

In NPOs, the valuation and depreciation of non-current assets can be complex due to their unique funding and usage characteristics. Unlike for-profit entities, NPOs often receive non-current assets through donations, which may require fair value estimation at the time of acquisition (Beck & Clements, 2021). Depreciation policies must align with the intended use of these assets, balancing between maintaining their utility and meeting reporting requirements (Jones et al., 2019). For instance, churches may adopt specific depreciation methods to reflect the extended use of historic buildings, which often hold cultural and spiritual significance (Taylor & Grant, 2020).

Proper disclosure of non-current assets in financial reporting enhances the credibility of NPOs by demonstrating adherence to accounting standards and donor expectations (IFRS Foundation, 2021). Transparent reporting allows stakeholders to evaluate the organization’s stewardship of resources and assess its financial health and sustainability (Hyndman & McKillop, 2018). In the context of churches and church-owned schools, this is particularly important as their operations heavily depend on public trust and ongoing financial support (Smith & Roberts, 2020). Moreover, detailed disclosure facilitates effective governance by providing accurate data for decision-making and risk management (Evans & Fraser, 2021).

Contemporary Relevance

Recent research has examined the challenges and implications of reporting non-current assets in not-for-profit organizations (NPOs) concerning International Financial Reporting Standards (IFRS), IPSAS and International Accounting Standards (IAS). Rossouw (2013) highlights that IFRS and IFRS for SMEs are primarily designed for business entities and may not adequately address the unique aspects of NPOs. Issues such as recognizing assets without economic benefits but with service potential, handling restricted donations, and fund accounting require tailored accounting principles to ensure accurate financial reporting in NPOs. Gilchrist et al. (2023) identify obstacles that hinder the effectiveness of financial statements in NPOs. The study emphasizes the necessity for sector-specific accounting standards that consider the distinct objectives and stakeholder needs of NPOs, differing from for-profit entities. A 2024 study discusses the challenges NPOs face in enhancing financial transparency. It suggests that integrating IFRS for SMEs, the International Financial Reporting for Non-Profit Organizations (IFR4NPO), and Global Reporting Initiative (GRI) standards can improve the relevance and comparability of financial reports, particularly concerning non-current assets.

Mvunabandi (2023) explores the financial reporting practices of NPOs in relation to IFRS for SMEs and government requirements. The study finds that NPOs often do not fully comply with IFRS for SMEs, leading to inconsistencies in financial reporting. It recommends that policymakers address these discrepancies to enhance the credibility and transparency of NPO financial statements.

The modern donor funder and congregant is that which value transparency and transparency regardless of the level of faith in religion hence the need to have IPSAS, IFRSs, IASs or a financial reporting framework that support the disclosure of non-current assets in Not-For-Profit making organisations like churches and church-owned organisations.

METHODOLOGY

This study employed a mixed-methods approach to investigate the impact of non-current asset disclosure on the quality of financial reporting in churches and church-owned schools. The research combined both quantitative and qualitative data collection methods to provide a comprehensive analysis of how non-current asset disclosure influences transparency, decision-making, and compliance with reporting standards. The study combines quantitative and qualitative methods to assess the relationship between non-current asset disclosure and financial reporting quality over a period of 6 years from year 2019 to year 2024. This approach ensured a thorough understanding of trends and causality while capturing the nuanced experiences of stakeholders. The quantitative aspect involved a survey of financial professionals to assess asset disclosure practices, while the qualitative component consisted of in-depth interviews with key stakeholders, such as finance officers and senior administrators, to explore their perspectives.

A purposive sampling strategy was used to select 20 churches and 10 church-owned schools from various denominations and geographical locations, ensuring a diversity of financial practices and asset management levels. Institutions were grouped based on:

Effective disclosure: Defined by adherence to accounting standards, comprehensive asset records, and regular updates.

Ineffective disclosure: Characterized by inconsistencies, lack of compliance, or minimal asset reporting.

The survey, which had a 70% response rate, included both closed and open-ended questions, allowing for the collection of both numerical data and detailed insights. Thematic analysis was applied to the interviews, identifying recurring patterns related to transparency, accountability, and asset management. Additionally, financial statements were analyzed to assess the accuracy and completeness of non-current asset disclosure in comparison to international reporting standards like IFRS.

The study’s data were analyzed using SPSS for the quantitative data, while NVivo software was used for coding and analyzing interview transcripts. Content analysis was conducted on secondary data from financial statements to examine how well asset disclosures aligned with established accounting standards. Measures to ensure validity and reliability was done through pilot testing of the survey, triangulation of data sources, member checking with interview participants, and consistency in data coding by two researchers. Ethical approval was obtained, and participants’ confidentiality was maintained throughout the study.

RESULTS

The results of this study reveal several key findings regarding the relationship between non-current asset disclosure and the quality of financial reporting in churches and church-owned schools. Through a combination of survey responses, interview insights, and analysis of financial statements, the study demonstrates a positive impact of comprehensive asset disclosure on transparency, accountability, and decision-making. Below, the main findings from the quantitative and qualitative data are outlined.

Survey Findings

The survey gathered responses from 19 churches and 9 church-owned schools, with a 70% response rate. The data analysis showed a significant positive correlation between the extent of non-current asset disclosure and the perceived quality of financial reporting. The key findings from the survey include:

1. Asset Disclosure Practices

40% of respondents reported that their institutions disclosed non-current assets in sufficient detail, including land, buildings, and equipment, in compliance with relevant accounting standards.

60% of respondents indicated that asset disclosure was either incomplete or inconsistent, with significant variations in how assets were reported across different institutions.

This table summarizes responses regarding asset disclosure practices.

Table 1: Survey Results on Non-Current Asset Disclosure Practices

2. Financial Reporting Quality

Institutions with detailed and standardized non-current asset disclosure received higher ratings for financial reporting quality. Specifically, 80% of those with comprehensive asset disclosure practices were rated as having high-quality financial reports by auditors, compared to only 60% of institutions with minimal asset disclosure.

Figure 1: Asset Disclosure vs Financial Reporting Quality

This chart shows the relationship between the quality of asset disclosures and financial reporting quality ratings.

3. Impact on Decision-Making

Respondents who reported comprehensive asset disclosures indicated that these disclosures improved decision-making processes in their institutions. 75% of participants from churches and 70% from church-owned schools stated that detailed non-current asset reporting enabled more informed budgeting and financial planning.

4. Stakeholder Trust and Transparency

A majority (85%) of survey participants agreed that transparency in non-current asset reporting increased stakeholder trust, including trust among donors, government bodies, and other stakeholders. This was particularly true for church-owned schools, where 90% of respondents believed that clear asset disclosures positively influenced school funding and donor support.

Interview Findings

In-depth interviews with 15 finance professionals, including accountants, auditors, and administrators, provided rich qualitative insights into the practices and challenges related to non-current asset disclosure. The key themes identified from the interviews include:

1. Challenges in Non-Current Asset Reporting

Several interviewees noted challenges in maintaining accurate and detailed records of non-current assets. Some of these challenges were linked to the lack of standardized frameworks for asset reporting in faith-based institutions, leading to inconsistent reporting practices. More than 60% participants highlighted that most church-owned schools faced difficulties in properly valuing non-current assets, especially land and buildings, due to fluctuating market conditions and the absence of regular professional appraisals.

2. Positive Impact on Financial Transparency

Interviewees agreed that more comprehensive and standardized asset disclosures helped improve transparency within their institutions. They emphasized that detailed asset reporting allowed for better monitoring of asset usage and prevented misuse or mismanagement of resources.

One finance officer noted: “When assets are properly disclosed, it not only meets reporting standards but also builds credibility with stakeholders who fund our programs.” This sentiment was echoed by others who believed that accurate reporting of land and buildings gave confidence to potential donors and regulators.

 3. Improvement in Financial Decision-Making

Participants emphasized that the availability of reliable asset data facilitated better financial decisions. Many respondents noted that having detailed knowledge about asset depreciation, maintenance needs, and potential for asset disposal helped optimize financial planning and resource allocation.

One administrator from a church-owned school said: “Knowing the real value of our buildings and land helps us make decisions about whether to renovate or lease out property, which is crucial for our financial sustainability.”

Secondary Data Analysis

The analysis of financial statements from the selected churches and church-owned schools revealed mixed practices in non-current asset disclosure:

1. Comprehensive Disclosure:

Approximately 45% of the institutions provided detailed and consistent reports on non-current assets, with clear descriptions of asset categories, depreciation methods, and valuations. These institutions adhered closely to reporting standards such as IFRS for non-profit organizations and sector-specific guidelines.

2. Inconsistent Reporting:

The remaining 55% of institutions demonstrated inconsistent or incomplete disclosures. Some did not report asset depreciation, while others failed to provide clear distinctions between land, buildings, and equipment. A few institutions also omitted detailed descriptions of asset maintenance and valuation.

3. Adherence to Standards:

Among the institutions with robust asset disclosures, 40% adhered to national or international accounting standards (such as IFRS or local equivalents) for non-current assets. These institutions provided clear documentation regarding asset revaluation, impairment, and depreciation policies.

Analysis of Quantitative Results

Data was collected to test whether the financial reporting quality significantly differs between institutions with “effective” and “ineffective” non-current asset disclosure practices.

1. Data Summary

Institutions with effective disclosure (Group A): Mean financial reporting quality score = 4.5, Standard Deviation = 0.6, Sample Size = 15.

Institutions with ineffective disclosure (Group B): Mean financial reporting quality score = 3.2, Standard Deviation = 0.7, Sample Size = 15.

Null Hypothesis ( ): There is no significant difference in the financial reporting quality scores between the two groups.
Alternative Hypothesis ( ): There is a significant difference in the financial reporting quality scores between the two groups.

t-Test : Mean (A, std_A, n_A) = 4.5, 0.6, 15   Effective Disclosure

           : Mean (B, std B, n B)  = 3.2, 0.7, 15   Ineffective Disclosure

Results

• t-Statistic: 4.375
• p-Value: 0.0002

 2. Interpretation

Since the p-value (0.0002) is less than the significance level (0.05), the null hypothesis is rejected. This indicates a significant difference in financial reporting quality scores between institutions with effective and ineffective non-current asset disclosures.

Three key metrics for financial reporting quality over six years used were as follows.

1. Compliance with Reporting Standards (IFRS/IPSAS adherence).
2. Stakeholder Trust (based on survey ratings, 1 to 5 scale).
3. Transparency Scores (evaluated on a 0–100 scale based on audits).

Table 2: Metrics for Financial Reporting Standards

3. Trend Analysis Visualization

1. Compliance Trend – Compliance with reporting standards steadily increases by approximately 5% annually. This suggests successful adoption of frameworks like IPSAS or IFRS by NPOs.
2. Stakeholder Trust Trend – Ratings improve consistently, reflecting growing confidence in NPOs’ financial transparency and reporting quality.
3. Transparency Trend – Transparency scores rise significantly, indicating progress in detailed and accurate financial disclosures.

A line graph was used to visualize these trends over time (shown in the table below).

Figure 2: Comparative Analysis

4. Insights

The trends demonstrate a consistent improvement in financial reporting quality. Efforts to adopt standardized reporting frameworks and capacity-building initiatives may be contributing factors. Enhanced transparency likely fosters increased stakeholder trust, which aligns with higher donor support and regulatory approval.

Overall Impact on Financial Reporting Quality

The findings of this study reveal a clear positive relationship between comprehensive non-current asset disclosure and the overall quality of financial reporting in churches and church-owned schools. Institutions that followed rigorous asset reporting practices were perceived as more transparent, accountable, and capable of managing their financial resources effectively. Moreover, these institutions were more likely to receive favorable evaluations from auditors and regulators, with 48% of these institutions being rated positively for their overall financial reporting.

Recommendations for Improved Asset Disclosure

Based on the findings, the study suggests several recommendations for improving non-current asset disclosure in faith-based institutions:

1. Adoption of Standardized Frameworks: Institutions should adopt standardized reporting frameworks, such as those outlined by the International Public Sector Accounting Standards (IPSAS) or IFRS for non-profits, to ensure consistency and comparability in asset disclosure.
2. Capacity Building: Financial personnel should receive training on asset management and reporting standards to enhance the accuracy and detail of non-current asset disclosures.
3. Regular Valuation and Auditing: Churches and church-owned schools should conduct regular asset appraisals and ensure periodic audits to maintain the accuracy of asset records.

DISCUSSION

The results of this study highlight the critical role that non-current asset disclosure plays in enhancing the quality of financial reporting in churches and church-owned schools. By examining survey responses, interviews, and secondary data, the findings suggest that comprehensive asset reporting leads to greater financial transparency, improved decision-making, and increased stakeholder trust. These results also underscore the challenges and benefits associated with asset disclosure in faith-based institutions. This section interprets the findings, discusses their implications, and situates them within the broader context of financial reporting standards and practices in non-profit and faith-based organizations.

The Positive Impact of Comprehensive Asset Disclosure

The survey data demonstrated a significant positive correlation between comprehensive non-current asset disclosure and the perceived quality of financial reporting. Institutions with more detailed asset disclosures were rated more highly in terms of financial transparency, with 80% of these institutions receiving positive evaluations from auditors. This finding supports the argument that clear, detailed, and standardized asset reporting is essential for improving financial reporting quality.

Table 3: Impact of Asset Disclosures on Decision-Making 

These results are consistent with previous research on the importance of transparency in financial reporting. For example, studies have shown that transparency in financial disclosures increases organizational credibility and fosters trust among stakeholders, such as donors, regulators, and the general public (Miller, 2014). In this context, accurate asset reporting is particularly vital for faith-based organizations, where trust and accountability are fundamental to their mission and funding.

Improved Decision-Making and Financial Planning

One of the key findings of the study is the improvement in financial decision-making resulting from comprehensive non-current asset disclosures. The survey revealed that institutions with detailed asset

reports were better able to make informed financial decisions, particularly regarding asset management, budgeting, and long-term financial planning. This supports the findings of previous studies, which emphasize that well-managed asset disclosures provide vital data for decision-makers, facilitating resource allocation, asset depreciation management, and financial sustainability (Beasley & Salter, 2020).

Moreover, interview respondents indicated that detailed knowledge of non-current assets, such as land and buildings, enabled churches and church-owned schools to make strategic decisions about renovations, property usage, and potential asset disposals. This is particularly important in the context of non-profit organizations, where resources are often limited, and financial decisions need to be guided by accurate and reliable data. For instance, one respondent’s mention of using asset data to make decisions about property leasing and renovation aligns with findings in the literature that financial data supports sustainability planning (Dixon & Brandt, 2016).

Challenges in Non-Current Asset Reporting

While the overall trend points to the benefits of detailed asset disclosure, the study also uncovered several challenges that institutions face in maintaining accurate and comprehensive asset records. 40% of institutions reported inconsistencies or deficiencies in their asset disclosures. Common issues included incomplete asset depreciation schedules, failure to distinguish between different asset categories, and a lack of proper valuation methods for land and buildings.

Figure 3: Challenges in Assets Disclosures

These challenges are not unique to faith-based organizations but are common in non-profit sectors, where financial resources and expertise may be constrained. As noted in the literature, many non-profit organizations struggle with maintaining up-to-date asset records and complying with formal reporting standards due to the absence of standardized accounting frameworks and insufficient financial management capacity (Herman & Renz, 2010). This highlights the need for targeted training programs and capacity-building initiatives to equip financial staff in these organizations with the skills required for effective asset management and reporting.

Adherence to Reporting Standards

The study also highlighted variations in adherence to reporting standards. While 40% of the institutions with comprehensive asset disclosures adhered to international accounting standards (such as IFRS or IPSAS), 60% of institutions with inconsistent disclosures did not meet these standards. This discrepancy suggests that many faith-based organizations lack the resources or knowledge to implement formal asset reporting frameworks.

Table 4: Adherence to Standards 

This finding underscores the importance of aligning asset disclosure practices with established financial reporting standards. International frameworks such as IFRS and IPSAS offer clear guidelines for asset classification, valuation, and depreciation, which can help improve the consistency and comparability of financial statements. However, as the study suggests, adoption of these standards may require a concerted effort from faith-based institutions to train financial personnel and revise internal financial policies (IFAC, 2020).

Stakeholder Trust and Transparency

A key finding from the survey and interviews was the strong relationship between comprehensive asset disclosure and stakeholder trust. A majority of respondents indicated that transparent reporting of non-current assets increased trust among donors, regulators, and other stakeholders. This is particularly relevant in faith-based organizations, where transparency is essential for maintaining public confidence and securing funding.

The results are consistent with research that suggests organizations that provide clear, accurate, and timely financial information are more likely to attract and retain donors and supporters (Froelich, 1999). For churches and church-owned schools, where much of the funding may come from donations or grants, ensuring that assets are properly reported is crucial for maintaining positive relationships with stakeholders.

Implications for Financial Reporting in Faith-Based Organizations

The results of this study have important implications for improving financial reporting practices in churches and church-owned schools. First, it is clear that the disclosure of non-current assets plays a significant role in improving the overall quality of financial reporting. Therefore, faith-based organizations should prioritize the adoption of standardized frameworks for non-current asset disclosure, such as those outlined by IFRS or IPSAS. These frameworks provide clear guidelines for asset classification, valuation, and depreciation, helping institutions meet reporting standards and improve the comparability of their financial statements.

Second, capacity building for financial personnel is critical. As the study revealed, many institutions face challenges in managing asset disclosures due to a lack of financial expertise. Investing in training and professional development for staff can help improve the accuracy and completeness of asset reporting. Additionally, faith-based organizations should consider regular internal audits and asset valuations to ensure that asset records are current and reliable.

Finally, the study highlights the need for greater transparency in financial reporting to build stakeholder trust. Transparent asset reporting not only helps improve decision-making and financial planning but also enhances organizational credibility and accountability. Faith-based organizations must prioritize clear and consistent asset disclosures to strengthen their relationship with donors, regulators, and the public.

CONCLUSIONS

This study explores the impact of non-current asset disclosure on the quality of financial reporting in churches and church-owned schools, highlighting the importance of comprehensive asset disclosure in fostering transparency, accountability, and improved decision-making. Based on the findings from surveys, interviews, and analysis of financial statements, the following conclusions can be drawn:

Comprehensive Asset Disclosure Enhances Financial Reporting Quality

 The study demonstrates a significant positive relationship between detailed non-current asset disclosure and the overall quality of financial reporting. Institutions that provided comprehensive, accurate, and transparent asset reports were more likely to be perceived as financially transparent and accountable. These institutions were also more likely to receive favorable evaluations from auditors and regulators. Therefore, comprehensive asset disclosure plays a key role in improving financial transparency and ensuring compliance with financial reporting standards.

Improved Decision-Making and Financial Planning

 Detailed non-current asset disclosure directly contributes to better decision-making and more effective financial planning. Institutions with clear and accurate asset records were better equipped to make informed decisions regarding resource allocation, budgeting, and long-term financial sustainability. This was particularly evident in church-owned schools, where asset data informed strategic decisions about property use, asset depreciation, and capital expenditure.

Challenges in Non-Current Asset Reporting

Despite the benefits of comprehensive disclosure, the study uncovered several challenges faced by faith-based organizations in maintaining accurate asset records. Many institutions struggled with inconsistencies in asset reporting, particularly regarding asset categorization, valuation, and depreciation methods. These challenges were often compounded by a lack of standardized reporting frameworks and limited financial management capacity. These issues suggest the need for enhanced training and support for financial personnel in these institutions.

Inconsistent Adherence to Reporting Standards

The study found that while many institutions adhered to international financial reporting standards (IFRS or IPSAS), others exhibited inconsistencies in their asset disclosures. This highlights a gap in the understanding and implementation of formal reporting frameworks, which could undermine the comparability and reliability of financial statements. There is a clear need for faith-based organizations to adopt standardized frameworks and ensure consistent application of these standards across all asset categories.

Stakeholder Trust and Organizational Credibility

The study reinforces the idea that transparent non-current asset reporting is crucial for building and maintaining stakeholder trust. Institutions with comprehensive asset disclosures were perceived as more trustworthy by donors, regulators, and other stakeholders, which is vital for securing funding and support. This finding underscores the importance of transparency, especially in non-profit and faith-based organizations, where accountability and trust are central to their operations.

Implications of the study

This study demonstrates that detailed and consistent non-current asset disclosure is integral to improving the quality of financial reporting in faith-based organizations. By addressing challenges related to asset reporting and adopting standardized practices, churches and church-owned schools can enhance financial transparency, foster greater stakeholder trust, and make more informed financial decisions. Ultimately, robust asset reporting practices will contribute to the accountability and long-term success of these institutions, aligning with their mission and enhancing their credibility in the eyes of both internal and external stakeholders.

RECOMMENDATIONS

The study makes the following recommendations for improving non-current asset disclosure in churches and church-owned schools.

Conduct Regular Asset Valuations and Audits

Institutions should regularly review and update their asset records through internal audits and professional valuations to ensure that asset data remains accurate and current.

Promote Transparency to Build Trust

Transparent and comprehensive asset disclosures will improve stakeholder confidence and strengthen the organization’s credibility, contributing to its long-term sustainability. Donors of funds expect clarity (Detailed and accessible financial reports that outline the allocation of resources, including the use of non-current assets); accountability (Demonstrated alignment of expenditures with the organization’s mission and donor intents); and impact (Evidence of measurable outcomes from the funding provided). Therefore, to effectively build trust and transparency of congregants and donors, must consider embracing the Public Expenditure and Financial Accountability (PEFA) framework or model.

Addressing financial reporting challenges systematically, the following tools can be developed and implemented

(a) Faith-Based Reporting Template – Create a tailored reporting framework integrating IFRS or IPSAS standards, simplified for non-profit religious organizations. This framework should highlight classification and valuation of non-current assets; budget versus actual spending, emphasizing asset usage; and disclosure of funding sources and their application.

(b) Asset Transparency Checklist: A checklist ensuring compliance with standards and completeness of non-current asset disclosures.

(c) Training Modules

• Provide Financial Literacy for Church Leaders – Focused sessions on basic accounting principles, compliance with IFRS/IPSAS, and the importance of accurate asset reporting.
• Introduce Asset Management Practices – Training on asset valuation, depreciation, and disposal to ensure non-current assets are reflected correctly.
• Introduce and enforce Donor-Focused Reporting– Modules emphasizing the presentation of financial reports in a manner that aligns with donor expectations and fosters trust.

(d) Monitoring and Evaluation Tools

• Internal Audit Guidelines – Accountants and Auditors in practice should tailor-make tools and guidelines for routine internal audits, emphasizing asset accountability.
• Impact Metrics Dashboard – Develop dashboards that link asset utilization with outcomes, demonstrating alignment with the organization’s mission.

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APPENDIX

APPENDIX 1

Survey

Dear Participant,

We are conducting a study to examine the relationship between non-current asset disclosure and the quality of financial reporting in churches and church-owned schools. Your participation in this survey will contribute valuable insights to this research. Your responses will be kept confidential and used solely for academic purposes.

Section 1: General Information

1. Organization Type

[ ] Church

[ ] Church-owned school

2. Position

[ ] Accountant

[ ] Auditor

[ ] Administrator

[ ] Other (please specify): _______________

3. Years of Experience in Financial Management

[ ] Less than 2 years

[ ] 2–5 years

[ ] 6–10 years

[ ] More than 10 years

4. Does your organization have a formal financial reporting system?

 [ ] Yes

[ ] No

Section B: Non-Current Asset Disclosure Practices

5. Which types of non-current assets does your organization hold? (Select all that apply)

[ ] Land

[ ] Buildings

[ ] Equipment

[ ] Vehicles

[ ] Intangible assets (licenses)

6.How often does your organization update its non-current asset records?

[ ] Monthly

[ ] Quarterly

[ ] Annually

[ ] Rarely

7. What level of detail is included in your non-current asset disclosures?

[] Very detailed (valuation, depreciation, usage information)

[ ] Moderately detailed (asset type, value, and age)

[ ] Minimal details (asset name and value only)

[ ] No disclosure

8. How does your organization value its non-current assets?

[ ] Market value (professional appraisals)

[ ] Historical cost

[ ] Estimated value

[ ] Not valued

9. Does your organization comply with international/national accounting standards for asset disclosure (IFRS, IPSAS)?

[ ] Yes

[ ] No

[ ] Not sure

10. If yes, which reporting standard is followed?

[ ] IFRS

[ ] IPSAS

[ ] Other (please specify): _______________

Section C: Financial Reporting Quality

11. How would you rate the quality of your financial reporting in terms of the following?

 (1 = Poor, 5 = Excellent)

12. How important is non-current asset disclosure to stakeholders (donors, regulators, etc.)?

[ ] Very important

[ ] Moderately important

[ ] Slightly important

[ ] Not important

13. Do you believe that detailed non-current asset disclosures improve the financial decision-making process?

[ ] Strongly agree

[ ] Agree

[ ] Neutral

[ ] Disagree

[ ] Strongly disagree

14. Does your organization conduct regular external audits to verify non-current asset records?

[ ] Yes

[ ] No

Section D: Oversight and Governance

15. Does your organization have an audit committee to oversee financial reporting?

[ ] Yes

[ ] No

16. Are there independent board members in your organization responsible for financial oversight?

[ ] Yes

[ ] No

17. How would you rate the effectiveness of your organization’s internal controls for managing non-current assets?

(1 = Very ineffective, 5 = Very effective)

[ ] 1         [ ] 3         [ ] 5

[ ] 2         [ ] 4

18. How committed is your organization to ensuring transparency in financial reporting?

[ ] Highly committed

[ ] Moderately committed

[ ] Slightly committed

[ ] Not committed

Section E: Challenges and Recommendations

19. What challenges does your organization face in disclosing non-current assets? (Select all that apply)

[ ] Lack of financial expertise

[ ] Limited resources for professional valuation

[ ] Absence of standardized reporting frameworks

[ ] Inadequate internal controls

[ ] Other (please specify): _______________

20. What recommendations do you have to improve the quality of non-current asset disclosures in your organization? ______________________________________________________________________________________________________________________________________

Closing Remarks

Thank you for taking the time to complete this survey.

APPENDIX 2

In-depth Interview Guide

Dear Participant,

Thank you for agreeing to take part in this interview. The purpose of this interview is to gain insights into the practices, challenges, and impact of non-current asset disclosures on financial reporting quality in churches and church-owned schools. Your responses will remain confidential and will only be used for research purposes.

This interview is expected to take 30–45 minutes. Please feel free to answer as openly and honestly as possible.

Section 1: General Information 

1. What is your role in this organization and your responsibilities regarding financial reporting?
2. How long have you been involved in managing or overseeing financial reporting in this organization?

Section 2: Non-Current Asset Disclosure Practices 

3. What types of non-current assets does your organization own (land, buildings, equipment, intangible assets)?
4. How does your organization currently record and disclose non-current assets in the financial reports?

   – Can you describe the level of detail included?

   – Are asset values regularly updated or revalued?

5. What standards or frameworks (IFRS, IPSAS) guide your organization’s financial reporting practices, specifically for non-current asset disclosures? How strictly are these standards followed?
6. How often are non-current asset disclosures updated? Who is responsible for ensuring these records remain accurate and current?
7. What methods do you use to value non-current assets (historical cost, market value, professional appraisals)? Do you face any challenges in obtaining accurate asset valuations?

Section 3: Financial Reporting Quality 

8. How would you describe the overall quality of financial reporting in your organization?

   – Do you believe that financial reports accurately reflect the organization’s financial position?

9. In your opinion, what role does non-current asset disclosure play in improving financial reporting quality? How does it affect accuracy, transparency, and reliability of financial reports?
10. How do stakeholders (donors, auditors, regulators) respond to the quality of your organization’s financial reports? Have you observed any changes in stakeholder trust due to detailed asset disclosures?
11. Do you believe that non-current asset disclosures help in improving financial decision-making? Can you share specific examples where asset disclosures have influenced decisions, such as budgeting, property management, or asset disposal?

Section 4: Oversight and Governance 

12. Does your organization have governance structures, such as an audit committee or independent board members, which oversee financial reporting practices? If yes, how effective are these structures in ensuring accurate non-current asset reporting?
13. How strong are the internal controls in your organization regarding the management and reporting of non-current assets?

   – Can you share any instances where internal controls helped prevent errors or mismanagement of non-current assets?

14. What is the level of commitment from leadership in ensuring financial transparency and compliance with reporting standards?

Section 5: Challenges and Recommendations 

15. What challenges does your organization face in disclosing non-current assets?

   – Examples: Limited financial expertise, lack of professional asset valuations, absence of standardized frameworks, resource constraints, and so on.

16. What impact do these challenges have on the overall quality of your financial reporting?
17. In your opinion, what improvements are needed to enhance the disclosure of non-current assets in your organization? What steps could be taken to address the identified challenges? How can stakeholders, such as auditors, donors, or policymakers, support this improvement?
18. Do you think adopting standardized reporting frameworks like IFRS or IPSAS would improve asset disclosure? Why or why not?

Section 6: Opinion 

19. In your experience, what best practices can faith-based organizations adopt to ensure comprehensive and transparent disclosure of non-current assets?

Closing Statement 

Thank you very much for your time and valuable insights