Evaluation of the Online Accountability of the Portuguese Private Institutions of Social Solidarity

Evaluation of the Online Accountability of the Portuguese Private Institutions of Social Solidarity

Augusta da Conceição Santos Ferreira (University of Aveiro, Portugal), Rui Pedro Figueiredo Marques (University of Aveiro, Portugal), Carlos Santos (University of Aveiro, Portugal), Graça Maria do Carmo Azevedo (University of Aveiro, Portugal) and Helena Carla Antunes Mendes (University of Aveiro, Portugal)
Copyright: © 2019 |Pages: 18
DOI: 10.4018/978-1-5225-8482-7.ch011


In Portugal, in order to make the management of public resources more accountable, regulations on financial disclosure have emerged. Currently, the Private Institutions of Social Solidarity, through the Decree-Law No. 172-A/2014, are required to publish the financial reporting on their websites from 2016. Given the diffusion of innovations and the institutional theory, based on coercive isomorphism, the IPSS may have already created the conditions to fulfill this requirement. This chapter intends to ascertain whether the IPSS have conditions to comply with the mandatory disclosure under the law. This research shows that there is very limited presence of IPSS on the internet, the websites reveal low maturity levels and are little sophisticated. Furthermore, the IPSS that disclose the financial reporting on their websites, are still a minority, even if required by law to do so. The value of this research are related to the recent innovations introduced by the legal framework. Thus, it is important to monitor the evolution of law compliance by these institutions.
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Faced with the contexts of the globalization, the economic crisis and the aging population the State is becoming less able to directly address all social needs. The non-profit organizations, belonging to the non-profit sector, also called Third Sector, are making efforts to mitigate the impact of the economic environment, developing their activities, generating aid, producing goods and providing services in various social and economic areas. In Portugal, these organizations generally benefit from the declaration of public utility, declared by the State through Decree-Law No. 460/77 (Presidência do Conselho de Ministros, 1977) and some of their activity is financed by the General Government Budget. This financing is then understood to rationalize the financial resources of the State to improve services to citizens.

Being the non-profit organizations, namely the Private Institutions of Social Solidarity (IPSS), considered of public utility and financed, at least partially, by the General Government Budget, it is understandable that the State imposes the use of mechanisms of control and of assessment of the efficiency and effectiveness of the public resources allocated to them and that the accountability of that kind of organizations has an increasingly important role.

The mechanisms of accountability imposed recently on the IPSS are, in particular: disclosure of financial reporting and transparency. Regarding the disclosure of financial reporting, the IPSS became obliged to apply the Accounting Standardization System for Non-profit Entities (SNC-ESNL), approved by Decree-Law No. 36-A/2011 of 9 March (Ministério das Finanças e da Administração Pública, 2011). As regards transparency, as required by paragraph 2 of Article 14-A in Decree-Law 172-A/2014 (Ministério da Solidariedade, 2014) (establishes a new model for IPSS financial supervision): the financial reporting of the previous year must be disclosed on the institution's website until May 31st of the following year, that is, it imposes the disclosure of financial reporting to all stakeholders. This last requirement must be fulfilled, annually, since 2016, regarding the financial reporting of the immediately preceding year.

We have also verified that periodic evaluations of the websites of the Organizations of Direct or Indirect Administration by the State should be made (Presidência do Conselho de Ministros, 2001), in particular, to assess the maturity of websites. In this way, since IPSS are stated of public utility, and they should also be subjected to this evaluation, it is adequate to conduct a study with the following objectives: to assess whether the IPSS are able to comply with the requirement foreseen by Decree-Law No. 172-A/2014 (Ministério da Solidariedade, 2014), and if financial information is already disclosed on their websites. These two objectives will allow us to understand the concern of these institutions regarding accountability.

Notwithstanding the fact that this requirement must only be strictly fulfilled after 2016, the IPSS have been aware of it since November 2014, so, given the diffusion theory of innovation and the institutional theory, based on coercive isomorphism, the IPSS should already create the conditions to be able to disclose these data on their websites. However, a study by Ferreira, Marques, Santos, Azevedo and Mendes (2016), carried out with data from the year immediately prior to the mandatory disclosure of financial reporting, showed that only a minority of IPSS had a website and that, of those which had a website, only a small part disclosed financial information.

In this context, this work intends to assess whether the IPSS, after the obligation to disclose financial reports on their websites, already have the conditions to do so and, if so, to assess if they have been doing so. The evaluation that this chapter presents refers to the period between the situation highlighted by Ferreira et al. (2016) and the date of data collection also analyzed here. Thus, the present study address the following problem: after the obligation of disclose of financial reporting on their institutional website, do the IPSS have conditions to comply with these requirement?

Key Terms in this Chapter

Online Presence: Is the process of presenting and drawing traffic to a personal or professional brand online.

Social Economy: It is the sphere of the so-called third sector, including associativism, cooperativism, and mutualism, as forms of organization of productive activity (NGO-autonomous organizations, aimed at improving social quality, social projects, and non-governmental organizations).

Non-Profit Organizations: Also called not for profit organizations, are privately held entities that don’t provide financial benefits for their members or stakeholders. In other words, they are privately incorporated groups with a charitable purpose of not profiting from the activities they carry.

Financial Reporting: Includes all of a company's communication of financial information to people outside of the company.

Maturity: Indicating the final date for payment of principal and interest.

Private Institutions of Social Solidarity: Are constituted as not-for-profit with the purpose of giving organized expression to the moral duty of solidarity and justice among individuals by private initiative.

Accountability: Obligation of the organs to 1) account for its activities, 2) accept responsibility for these activities, and 3) disclose the results in a transparent manner.

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