(2005), “Conflict and rationality: accounting in the Northern-Ireland’s devolved assembly”, Financial Accountability and Management, Vol. Demaj, L. and Summermatter, L. (2012), “What should we know about politicians’ performance information need and use?”, International Public Management Review, Vol. Phone: +353 (0)1 4433 400 at the Spring Workshop of PSG XII of EGPA at Rostock/Germany, and of papers presented by I. Saliterer et al. 36 No. Yamamoto, K. (2008), “What matters in legislators’ information use for financial reporting? Finally, intermediaries may play a role between users and preparers. The Public Sector Committee of the Institute of Certified Public Accountants of Cyprus initiated the project to identify the needs of the users of public sector financial reports and determine whether these needs are being met. a revision of the underlying policies, or a better, i.e. Here the user plays a more active role as a co-producer of AI. Based on our literature review, we have tried to draw a more diverse and nuanced picture of the different variables in the complex context of the “user needs-usability-use intensity” framework. The factors explaining usability are the relevant antecedents. 849-866. Performance information for democracy: the missing link? Making sense of the users of public sector accounting information and their needs @article{Helden2019MakingSO, title={Making sense of the users of public sector accounting information and their needs}, author={J. V. Helden and C. Reichard}, journal={Journal of Public Budgeting, Accounting & Financial Management}, year={2019}, … Overview: Financial Statements are the reports that provide the detail of the entity’s financial information including assets, liabilities, equities, incomes and expenses, shareholders’ contribution, cash flow, and other related information during the period of time.. Another not widely applied option for engaging users in the design of accounting documents is the co-creation by consultants or researchers and users of renewed accounting standards or documents. their ability to read and understand various formats of AI, e.g. Assess accountability of elected officials Assess whether government is funding oods and services from current taxes. 29 No. The budget is an expression of these political priorities, and hence, budgeting and ensuring that budgets and related plans are executed according to laws and political priorities is core in the public sector. This Standard requires that the financial statements of public sector entities that make their approved budget(s) publicly available include: (a) A comparison of actual amounts with amounts in the original and final budget. However, the 2018 Conceptual Framework has cut this back to just three key groups. Mutiganda, J.C. (2016), “How do politicians shape and use budgets to govern public sector organizations? As far as we know, this approach has not been applied in practice until now. These reports used for effective for operating the business by the internal users, on the other hand, the external users use the information to get a real picture of the financial state of the organization. The big question for performance management: why do managers use performance information? 85-105. Antecedents can play a role at the individual level of decision making, for instance, when financial expertise or experience of actors is expected to have a positive impact on AI use (Buylen and Christiaens, 2016). Public companies are generally much larger (in terms of annual sales and total assets) than private companies, as you would expect. This means that either the information in an accounting document is tailor-made, given the interests of a specific user group, which can be opportune for budgets and financial reports for specific groups of managers, or presented in GPFR which contain information on various accounting issues that are relevant to the decision making or accountability of diverging user groups[4]. Furthermore, public companies generally are more complex — concerning employee compensation, […] Two major purposes are frequently mentioned: rendering accountability to various stakeholders and supporting decision making. Public – The general public is also among users of accounting information. Tagesson, T. (2014), “The conditions for and the users of public sector accounting”, in Budding, T., Grossi, G. and Tagesson, T. (Eds), Public Sector Accounting, Chapter 1, Routledge, London, pp. 19 No. 31 No. Budgetary decisions remain to be predominantly taking place on an input-base, but the background information on performances may play a role, which may give rise to certain questions: why has the performance gone down, while the budget remained the same, or why is a budget increase proposed while performance remains the same? IPSASB (2006), “Public sector conceptual framework”, International Public Sector Accounting Standards Board, Toronto, December. (2 marks) ii) When preparing financial reports for the Consolidated Fund of Government, identify THREE 579-600. special information needs with regard to rendering accountability). Other interesting methods are observational studies or experiments. Moreover, the type of AI is partly specific to the governmental level. 36 No. There is poor evidence about the specifics of different formats and documents providing AI: while there is some evidence about the usability and use of for instance general purpose financial statements or budgets, we do not know much about the usability features of, e.g., mid-year reports, whole-of-government reports or various other specific formats of the provision of AI (including for instance the role of informal talks of users with experts or of variants of narratives). Most authors used primarily a descriptive approach. While several articles confirm a higher usability of accrual data (mainly for internal management decisions; Andriani et al., 2010; Kober et al., 2010; Paulson, 2006), other authors identify a higher usability of cash data (Brusca and Montesinos, 2013; ACCA, 2015; Caruana and Farrugia, 2018). In addition, we are largely disregarding a discussion of the possible consequences of the use or non-use of accounting information, for example, directly by avoiding interference of oversight bodies, and indirectly through impacts on reputation, performance evaluation and public relations. Members of legislative and other governing bodies. IPSASB (2012, p. 11) lists a broader set of criteria to which financial reports must adhere: relevance, faithful representation, understandability, timeliness, comparability and verifiability. More detailed empirical data are available with regard to politicians as potential AI users: here, a politician’s role in legislation (member of majority or opposition party, member of budget committee or “outsider”), political ideology and political competition is seen as antecedents (Buylen and Christiaens, 2016; Giacomini et al., 2016). ; the case of Japan”, in Jorge, S. Creditors and investors, often seen as the main users of private sector financial reports, are likely to belong to either the second or the third group. Another drawback may be the inclination of respondents to giving socially desirable responses, which can lead to an upward bias in their responses. Mack, J. Second, accounting literacy and familiarity with AI are influential (ACCA, 2015; Andriani et al., 2010; Ezzamel et al., 2005). Other than the inside users of the same that includes the managers, employees and owners; there are also a number of external users of the same. Moreover, citizens are represented by elected politicians in the legislative, who due to their involvement in the decision making or accountability about policy programs and projects have to be seen as a main group of AI users. As a first step in introducing this budgetary form as a substitute for an input-budget, some performance information for all policy fields can be provided, but merely as background information (performance-informed budgeting; OECD, 2007, p. 21; Mauro et al., 2017). In the same way, small business owners need financial information to determine if the business is profitable and whether to continue, improve or drop it. Hence, there does not seem to be much room for differentiation in financial reports according to the diverging needs of the various user groups. 3, pp. 7, pp. 455-456; van Helden, 2016, pp. 4, pp. 7, pp. 1, pp. Here the user of AI is addressed in a passive way, that is, his/her needs are just registered. In some cases, authors do not differentiate clearly between the two aspects. 4, pp. Outliers in a negative direction (related to underlying goals) can be an incentive for taking corrective actions. The starting point of our selection of articles is papers published in a special issue of Public Money and Management in 2016 (Vol. 36 No. the accountants who produce all kinds of AI such as annual reports. Stockholders of corporations need financial information to help them make decisions on what to do with their investments (shares of stock), i.e. 36 No. Understandability is a multidimensional phenomenon, including the format of the information as laid down in an accounting document (for instance, its structure in items, and the way in which accounting terms are explained), as well as the channels through which it is made available (e.g. Tensions and dilemmas of public sector accounting users are reflected in Section 6, and Section 7 presents our conclusions and reflects on future research directions. 14 No. Jones (1992) highlights that users and needs debated in the various documents are not based on empirical research but just on normative assumptions (“hypothesized” users and their needs). (2004), “Politicians in search of performance information? ; the case of Japan, Implementing Reforms in Public Sector Accounting, https://doi.org/10.1108/JPBAFM-10-2018-0124, www.cigar-network.net/index.php/news/news-latest/125-the-contribution-of-international-research-networks-on-public-sector-accounting-towards-improving-public-sector-financial-management-and-reporting. The passage of Wisconsin’s Act 10”, Public Money & Management, Vol. Cascino et al., 2014), this is not the case in public sector organizations, which also points to a new research route. 478-495. https://doi.org/10.1108/JPBAFM-10-2018-0124, Copyright © 2019, Emerald Publishing Limited. The same applies to potential users such as private or nonprofit suppliers of goods and services to the public. 2, pp. Accounting standards are often important in identifying various types of users and their needs for AI. 31 No. In a similar vein, accounting standards established by IPSAS can be applied in individual countries at different levels of the governmental system. Guarini, E. (2016), “The day after: newly-elected politicians and the use of accounting information”, Public Money & Management, Vol. Members of the second group are capable of expressing their user needs due to their accounting expertise. This normative view on user needs – what users ought to need – also underplayed that users might want certain kinds of AI for other than rational purposes, for example, for justifying their vested interests. Several antecedents are thinkable, both at the individual decision-making level and at the organizational level. IPSAS 1, “Presentation of Financial Statements” (IPSAS 1) is set out in paragraphs PUBLIC SECTOR 1−155 and Appendices A−B. purposes of financial information. on paper or in digital form; in a comprehensive and detailed format or in a summarizing format). 38-59. 19 No. Therefore, this group, although important, is not of primary interest in discussing the themes as introduced in Section 1, where we highlighted the importance of users being capable of digesting AI. about consultation procedures, co-creation by producers/users and learning devices, specific examples are presented for engaging users in the design of accounting documents. The issues do not only relate to financial reports but also to budgeting documents. 36 No. This will be illustrated by a case study about a renewal of budgetary information in the province of Groningen, the Netherlands, where two consultant-researchers were involved (ter Bogt and van Helden, 2011; ter Bogt et al., 2015). the labor unions and the business sector), as well as the consultancy industry. The concept of institutional logics also seems to have some explanatory power (explaining users’ behavior with certain logics, such as a professional or political logic; Vakkuri, 2010; Pettersen and Solstad, 2014). MBZK (2015), “Hoofdlijnen vernieuwing Besluit Begroting en Verantwoording”, Ministerie van Binnenlandse Zaken en Koninkrijkrelaties, Den Haag. They have been mentioned as follows: Depending on their interests and underlying information needs, different user groups perceive the usability of certain kinds of AI differently. and by L.-M. Sinervo and P. Haapala at the Annual EGPA-Conference 2018 in Lausanne (PSG XII). The Conceptual framework lists the primary users of financial statements as: This site uses cookies. This method allows a more open way of approaching respondents than surveys, which are almost always based on pre-structured answer categories for each question. And third, what are the antecedents of the users, their needs, the perceived usability and the actual use of accounting documents, and how do these antecedents influence the various links among these variables? Below are the major variables being relevant to describe and understand AI use as included in the reviewed articles. citizens in their various roles as voters, tax payers, service consumers, donors or volunteers can be seen as the most important interest group. 4, pp. are therefore determined by reference to the users of GPFRs, and their information needs. We still have to better understand the theoretical interrelations between the elements of the “user needs-usability-use”-model and their various contingencies. So far, mostly user surveys, interviews and consultations of stakeholders have been applied, whereas more promising methods are thinkable. Journal of Public Administration Research and Theory, How do politicians shape and use budgets to govern public sector organizations? 255-279. 8 No. and Solstad, E. (2014), “Managerialism and profession-based logic: the use of accounting information in changing hospitals”, Financial Accountability and Management, Vol. 22 No. Ouda, H. (2017), “Towards an information fit theory based on accounting information matching between producers and users”, paper presented at the 16th CIGAR Conference June 8–9, University of Coimbra, Porto. Pallot, J. 36, Issue 7) which focused particularly on politicians’ use of AI. General-purpose financial statements provide much of the information needed by external users of financial accounting. OECD (2007), Performance Budgeting in OECD Countries, OECD Publishing, Paris. 1, pp. You can join in the discussion by joining the community or logging in here.You can also find out more about Emerald Engage. The terms “usefulness” and “usability” are often used in a synonymous way. Our thematic analysis of user needs, usability and use of public AI gives rise to some more specific suggestions for future research: There is a need for empirical studies about the antecedents of the usability and the use of AI by politicians and managers at various contextual levels, i.e. A preliminary picture of the links between user needs, usability and use of accounting information, An elaborated picture of the links between user needs, usability and use of accounting information, including important antecedents, The diverging importance of addressed issues in either budgets or financial reports to various user groups of accounting information, Notes: 0, Irrelevant; +, minor relevance; ++, somewhat relevant; +++, relevant. The following list presents the more likely users: Customers . Although there is a general opinion that – at least in the past – preparers decide about the content and the understandability of AI (“accounting is what accountants do,” Young, 2006), there is not much research on the role and attitudes of preparers of AI (see Kober et al., 2010 who conducted their survey on perceived usability of AI not only among users but also among preparers of AI; see also Christensen et al., 2018 who analyze the role of public sector accounting practitioners as preparers and users of AI). Suppliers rely more on certain items than others, especially those … Third, a hybrid group in-between the above groups: members of the executive or managers with some accounting expertise are belonging to this group, and probably also some media representatives as intermediaries between the public sector organization and the citizens. A possible tension is then thinkable, which leads to a dilemma. Contrasted to that, making a minimum level of profit, irrespective of how this profit is accomplished, is the bottom line in the private sector, and budgeting in this sector is primarily an internal matter, i.e. Subsequently, these users are asked to reflect on their experiences, and then consider proposals for improving these documents. However, the majority of users covered in the reviewed articles are either politicians or managers; other types of users have been largely ignored. The link between diverging user groups and their specific needs for AI is one of the most promising research routes. Theoretical arguments, in general, did not play an important role in the reviewed articles. 125-126) claim that financial reporting “above all must be useful,” but these authors also highlight that “[…] accounting can be based, not on users and their needs, but on hypothesized users and hypothesized user needs” (p. 126; see also Jones, 1992, p. 259). Caruana, J. and Farrugia, B. Moreover, their use of accounting documents is often obligatory. Brusca, I. and Montesinos, V. (2013), “From rhetoric to practice: the case of Spanish local government reforms”, Financial Accountability and Management, Vol. information overload as perceived by parliamentarians (Caruana and Farrugia, 2018), size and financial position of a public sector organization (Buylen and Christiaens, 2016) or the role of intermediaries (Jorge et al., 2016). 911-931. 185-209. 20 No. (2016), “A critical literature review and a challenging research agenda on politicians’ use of accounting information”, Public Money & Management, Vol. Empirical research needs to underpin these indications for the relative importance of accounting issues, as will be further elaborated in the final section. more efficient operation. To find out more, see our Cookies Policy Another implication is that each of the themes can be linked to findings of the literature review, which gives these themes a broader than just a subjective justification. services with a homogeneous output, such as waste water collection, refuse collection and housing permits in a local government context. IPSAS 1 should be read in the context of its objective, the Basis for Conclusions, and the “Preface to International Public Sector Accounting Standards.” IPSAS 3, 4, pp. In accordance with the target objective several kinds of audit can be defined in Public Sector. Major prospective customers will want to review a firm’s financial information to see if it is stable enough to be a long-term supplier , or if th The older conceptual frameworks identified groups such as government and general public as primary users. The level of perceived usability of AI is depending on several supply factors, e.g. 02-240, Washington, DC, New development: the conceptual underpinnings of international public sector accounting, Conflict and rationality: accounting in the Northern-Ireland’s devolved assembly, Contextualizing politicians’ uses of accounting information: accounting as reassuring and ammunition machine, The day after: newly-elected politicians and the use of accounting information, International Public Sector Accounting Standards Board, Toronto, December, Conceptual framework for general purpose financial reporting by public sector entities: presentation in general purpose financial reports, Consultation Paper, International Public Sector Accounting Standards Board, Toronto, January, The development of conceptual frameworks of accounting for the public sector, Information brokers and the use of budgetary and financial information by politicians: the case of Portugal, Mind your accrual: perceived usefulness of financial information in the Australian public sector under different accounting systems, An investigation of the information requirements of the users of Australian public sector financial reports, Reflections on the theoretical underpinnings of the general purpose financial reports, Insight into performance-based budgeting in the public sector: a literature review and a research agenda, Hoofdlijnen vernieuwing Besluit Begroting en Verantwoording, Ministerie van Binnenlandse Zaken en Koninkrijkrelaties, Den Haag. 7, pp. In addition, a set of working committees was erected for elaborating each of the proposals of the advisory committee. Several of the reviewed articles identify a number of antecedents having an impact on user attitudes and on the level of perceived usability and actual use. Jones, R. and Pendlebury, M. (2000), Public Sector Accounting, 5th ed., Pearson, Essex. 28 No. We will largely disregard the perspective of preparers of AI, and we will also ignore another issue as addressed in the literature review, i.e. (2018), “Governmental accounting practitioners: cardigan removed, research agenda revealed”, Accounting, Auditing and Accountability Journal, Vol. (2016), “Talking numbers? The subsequent conceptual reflections deal with so far less regarded user groups, with options to strengthen the user perspective in budgeting and financial reporting, with approaches for engaging users in the content of accounting documents, with interrelations between user needs, usability and use intensity, including various antecedents of the different variables of the information-use issue. van Helden, J. and Reichard, C. (2019), "Making sense of the users of public sector accounting information and their needs", Journal of Public Budgeting, Accounting & Financial Management, Vol. 999-1024, (*). The proportions of dependent and independent users are varying across different types of public sector organizations (Mack, 2004). ACCA (2015), “Consolidated government accounts: how are they used?”, Association of Chartered Certified Accountants, London (*). The common wisdom about users of public sector accounting documents is articulated by Tagesson (2014, p. 7) as follows: “To produce financial reports tailored to each individual stakeholder would not be economically viable or even possible. Investors will likely require financial statements to be provided, since they are the owners … One of the first publications indicated the following user groups (Anthony, 1980): governing bodies, investors and creditors, resource providers, oversight bodies and constituents, while user needs pointed to: financial viability, fiscal compliance, management performance and costs of services. Specific needs for AI of various groups of AI for various decisions likely require financial statements must meet actual... Money & Management, Vol they definitely value quick and accurate statistics to evaluate the of... Accounting information are the result of the Journal for their valuable comments on earlier versions of this paper IPSASB 2006... Reports of their municipality ( Cohen and Karatzimas, 2015 ), “ performance budgeting serves as an of! By producers/users and learning devices, specific examples are presented for engaging users in the public with! Themselves about certain financial issues it aims to stimulate research on the financial reports or intermediate.! Different variants, e.g the conventional wisdom of accounting documents containing information that is of interest to thinkable! Will usually be presented in table I are thinkable also should shed some light the... The non-identical twins ”, accounting & financial Management much larger ( in terms of annual and... Accounting process that transferred to the reviewed papers are based on survey data, issue 7 ) which focused on. ), as will be further elaborated in the reviewed papers are on. Arena, depending on their interests and underlying information needs the lower levels of government or! Also should shed some light on the interrelations between user needs and interest in AI matter, certain! A literature review and conceptual reflections public – the general public is a... Support users in the design of accounting documents containing information that is, his/her needs are just registered Appendices! Hyndman, N., Johnsen, Å., Lapsley, I. and,... We still have to rely on the conditions or contexts that are contributive to the literature, there also be! Papers presented by I. Saliterer et al established by IPSAS can be an incentive for taking corrective actions assets! Preferences of the market for AI of various groups of users already mentioned, e.g are... Look again at accrual budgeting ”, Ministerie van Binnenlandse Zaken en Koninkrijkrelaties, Den Haag shown in the of... Position-Practice approach ”, public sector accounting, 5th ed., Pearson, Essex local government context themes to! Output, such as government and general public is also a broader understanding of both sides the... Partly similar way to measure user needs is a promising route for research broader of! In contrast, user needs due to their accounting expertise L.-M. Sinervo and p. Haapala at the level! Factors on users groups perceive the usability of AI, e.g fundamentally different from the target 's! Provided, since they are the major variables being relevant to describe and understand various formats AI! Accounting knowledge is more disputable for purely financial information generated by a business October... Politicians, would be another relevant field of study their understandability the societal level, as! P. 9 ) the literacy of users AI and estimates for each the importance. A case study context marked with * belong to the organization benefits in.