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Reflections on the theoretical underpinnings of the general‐purpose financial reports of Australian government departments

Reflections on the theoretical underpinnings of the general‐purpose financial reports of... Purpose – The purpose of this paper is to determine the appropriateness of a general‐purpose financial reporting model derived from a “decision‐useful” framework for government departments. Design/methodology/approach – This research in this paper uses a survey methodology to access users of government department general purpose financial reports and is innovative because it has directly studied actual users across the entire public sector. Findings – The findings of this paper indicate that general‐purpose financial reports are used to satisfy financial accountability and public accountability rather than decision making – indicative of users having an accountability focus rather than a “decision‐useful” focus. This provides systematic empirical evidence against the current financial reporting model used internationally in the public sector. Research limitations/implications – The paper has important implications for policy makers since the choice of an accounting framework has the capacity to affect the information content of reports – what is reported and how it is measured, and thus have a direct impact on the operations of government. The paper argues that it is crucial that public policy regulators re‐examine the financial reports provided to stakeholders. Originality/value – The research in this paper is original in that it has, for the first time, systematically reviewed all of the three elements of the public sector general‐purpose financial reporting model as well as directly accessing users. The authors can categorically argue for the abandonment of the model in favour of one, which is better suited to the public sector. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting, Auditing & Accountability Journal Emerald Publishing

Reflections on the theoretical underpinnings of the general‐purpose financial reports of Australian government departments

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Publisher
Emerald Publishing
Copyright
Copyright © 2006 Emerald Group Publishing Limited. All rights reserved.
ISSN
0951-3574
DOI
10.1108/09513570610679146
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to determine the appropriateness of a general‐purpose financial reporting model derived from a “decision‐useful” framework for government departments. Design/methodology/approach – This research in this paper uses a survey methodology to access users of government department general purpose financial reports and is innovative because it has directly studied actual users across the entire public sector. Findings – The findings of this paper indicate that general‐purpose financial reports are used to satisfy financial accountability and public accountability rather than decision making – indicative of users having an accountability focus rather than a “decision‐useful” focus. This provides systematic empirical evidence against the current financial reporting model used internationally in the public sector. Research limitations/implications – The paper has important implications for policy makers since the choice of an accounting framework has the capacity to affect the information content of reports – what is reported and how it is measured, and thus have a direct impact on the operations of government. The paper argues that it is crucial that public policy regulators re‐examine the financial reports provided to stakeholders. Originality/value – The research in this paper is original in that it has, for the first time, systematically reviewed all of the three elements of the public sector general‐purpose financial reporting model as well as directly accessing users. The authors can categorically argue for the abandonment of the model in favour of one, which is better suited to the public sector.

Journal

Accounting, Auditing & Accountability JournalEmerald Publishing

Published: Jul 1, 2006

Keywords: Government departments; Financial reporting; Australia

References

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