Academic journal article Journal of Accountancy

Study Examines Performance Measurement for Government Businesses

Academic journal article Journal of Accountancy

Study Examines Performance Measurement for Government Businesses

Article excerpt

The public sector committee of the International Federation of Accountants has issued a new study on performance measurement data used in government business enterprises, such as national railways, energy utilities and communication services, that is supplemental to information provided in financial statements.

The report, Performance Reporting by Government Business Enterprises: The Provision of Financial and Non-Financial Performance Information in General Purpose Financial Reports, says public sector financial reporting on its own does not offer sufficient information on overall performance. According to the report, although government business enterprises normally are required to operate commercially and usually take the same legal form as private sector businesses, they often enjoy a monopoly and their political context makes their financial reports unreliable for simplistic measures such as return on capital employed.

These entities often do not deliver services in circumstances that compare with a competitive market. "The test of relative market efficiency and effectiveness cannot always be applied" says the report. "The issue therefore is how to formulate performance measures that wig allow judgments on efficiency and effectiveness."

"This study is important reading for anyone generally involved in performance measures for government, because it has broader applicability than just government business enterprises" said Donald H. …

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