Magazine article Government Finance Review

Measuring Performance: Accountability Is Not Synonymous with Accounting

Magazine article Government Finance Review

Measuring Performance: Accountability Is Not Synonymous with Accounting

Article excerpt

Wherever we look governments, not-for-profit organizations and corporations are placing increased emphasis on quality. It is likely that the decade of the nineties will be looked upon as a time when all institutions faced up to the challenges of global competition, thin profit margins or limited resources. Streamlining operations, contracting-out services, and improving the quality of services and products are in the forefront of these efforts today.

In the public sector, citizens rightfully demand the very highest level of services and productivity from government officials. Governments at all levels are engaging in programs to "reinvent government," privatize some services and develop total quality management programs. At no time is the need for quality and efficiency more keenly felt than during periods of fiscal stress, when governments face the difficult challenge of meeting increased needs with diminished resources.

Measuring productivity and performance can play a critical role in helping public officials improve the quality of services. It can provide the factual basis needed by public officials to make sound funding decisions and can be an invaluable asset to managers wishing to assess the economy, efficiency and effectiveness of programs and activities. Ensuring that public funds are spent in accordance with law and regulation is only a first step toward meeting our responsibility for accountability. It is also the responsibility of public managers to ensure that programs and activities meet their assigned objectives and are operated economically and efficiently.

Given the importance of measuring performance, it is only natural that the GFOA would be in the forefront of those calling for the development and use of appropriate indicators. The GFOA has taken the lead in establishing a national interorganizational task force on state and local government budgeting, which will be promoting the increased use of performance reporting in the context of the budgetary process. This task force, which includes representatives of state and local budget offices, state legislatures, county officials, city/county managers, rating agencies, academics and elected officials, is chaired by Mayor Paul Soglin of Madison, Wisconsin.

The GFOA is not alone in its support for performance measurement and reporting. The Governmental Accounting Standards Board (GASB) also has played an important role by encouraging experimentation in this area. In particular, the GASB has sponsored a series of important research studies, Service Efforts and Accomplishments Reporting--Its Time Has Come, which provides valuable information for those considering the possibility of experimenting with this kind of measurement and reporting.

Unfortunately, the GASB has not focused its efforts on those measures of performance clearly related to its area of expertise, i.e., accounting and financial reporting. Instead, it has recently proposed to include all types of service efforts and accomplishments measures, including nonfinancial measures of the quality of service, within the scope of general purpose external financial reporting. This proposal is contained in a recent GASB exposure draft of a proposed concepts statement on Service Efforts and Accomplishments Reporting.

The GFOA has objected repeatedly to any attempt to place all types of service efforts and accomplishments measures (including nonfinancial measures of the quality of service) within the scope of general purpose external financial reporting. …

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