We thank Doris Hui for her invaluable research assistance on this project. AbstractCharities are becoming recognised as playing an important part in communities by furthering government's social objectives through increasing support to disadvantaged members of society. As charities multiply in number it becomes increasingly difficult for fund providers and contributors to determine which charity to support. In New Zealand there is a move towards providing public access to the financial accounts of charities to assist stakeholders in their decision making and to enhance transparency in charities.However, this assumes that these financial accounts are understandable by all stakeholders. This paper identifies four problems that limit the way forward of the financial reports of charities. The first problem is fund accounting where different titles are used to describe similar funds and specific funds are utilised to remove items from performance measurements. The second problem involves the practice of recording fixed assets as an

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