An empirical analysis of the quality of diocesan financial disclosure

Abstract

The Roman Catholic Church in the United States is divided into 166 independent territories called "dioceses." Accounting principles and reporting practices have been recommended for dioceses by the American Institute of Certified Public Accountants (AICPA) and the National Conference of Catholic Bishops (NCCB). The objectives of the study are these: (1) to assess the annual report informational needs of the report users, (2) to evaluate the disclosure practices of dioceses as related to the informational needs, by inspecting and assigning disclosure scores to each report, and (3) to examine the influence of four diocesan characteristics, use of the attest function, type of report distributed, size and geographical location of dioceses, in explaining annual report disclosure differences among dioceses. Six letters were mailed to the 166 dioceses between November, 1983 and November, 1984, requesting copies of their annual financial reports if made available to the public. All but ten dioceses responded to the letters. Directors of 117 dioceses sent their reports for the study; 39 dioceses do not make their reports publicly available. A disclosure score index was constructed based on the format of several corporate and municipal studies. Eighteen items weighted at 100 total points, chosen from essential disclosure items required by the AICPA and NCCB standards, composed the index. The 117 reports were scored using the disclosure index. The mean score of the 117 diocesan reports was 60.48. The standard deviation was 21.26; the range of scores was 8 to 96. Null hypotheses were developed to determine if there were significant relationships between the disclosure scores and the four diocesan characteristics. Using the general linear models (GLM) procedure of the Statistical Analysis System, with a .10 confidence level, it was concluded that reports audited by Big "8" C.P.A. firms and non-Big "8" C.P.A. firms were not significantly different; but the reports not audited by C.P.A. firms were significantly inferior. Reports typed "complete" were significantly superior to the "incomplete" reports...