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Service performance reporting in the public sector

Author: ICAEW Insights

Published: 09 Nov 2022

In New Zealand, a shift away from the terminology of inputs, outputs and outcomes to allow public sector organisations to choose how to tell their service performance stories is boosting accountability.

At this year’s Public Sector Standards Setters Forum, hosted by the International Public Sector Accounting Standards Board (IPSASB), a number of different projects were pitted against one another to see who would garner the most votes among the delegates. The idea was to provide IPSASB with a non-binding list of potential projects to include in their upcoming work plan for 2024-2028. 

The winner was Anthony Heffernan, Director of Accounting Standards at New Zealand’s accounting standard setter, XRB (External Reporting Board), who won over the audience with his pitch on ‘service performance reporting’. 

What is service performance reporting? 

Service performance reporting in New Zealand is the provision of information about what the entity had done during the reporting period – which for the public sector is the delivery of goods and services to improve the wellbeing of citizens. 

What are the requirements?

The New Zealand Standards Board issued the standard PBE FRS 48 Service Performance Reporting, which became effective from 1 January 2022. 

This standard requires all public sector reporting entities to include within their general-purpose financial reports information about why the entity exists and what it intends to achieve over the medium to long term. They must also include details of what the entity has done during the current reporting period in working towards its broader aims and objectives. 

Information about what the entity has done could be focused on either the actual goods or services delivered to citizens and/or information about the impact of its activities.

In developing the standard, the XRB consciously moved away from the terminology of inputs, outputs and outcomes. These traditional service performance terms were causing confusion in practice and were not seen as helpful. Instead, they focused on developing a principles-based standard that provides the flexibility for the entity to choose how to tell its service performance story.

Contextual information

The standard requires contextual information; that is information about the entity, what it does and why. 

Each entity decides whether the service performance information should focus on the goods and services it has delivered during the period, or the effects of its work (whether described as outcomes or impacts). Entities decide which focus and mix of information is most appropriate. 

If an entity provides a limited number of services, all of which are clearly linked to its mission, the contextual information might be quite short. In other cases, more explanation might be helpful. For some entities selecting information and deciding what to report will be straightforward and is likely to be the case for entities that deliver small and easily identifiable and measurable goods or services. 

When providing information, an entity should think about the following:

  • What are the entity’s strategies for delivering against its key objectives? 
  • How does the entity monitor progress against its key strategies? 
  • What is best practice for reporting service performance for entities conducting similar activities? 
  • What information do funders and the key users regard as important? 
  • What information do service recipients regard as important? 

Location and audit

An entity has the flexibility to choose where and how it reports its service performance information within its annual report. 

However, it is important that a complete set of service performance information presented in accordance with the standard can be easily identified. This becomes particularly important when the service performance information is subject to audit. 

In most cases service performance information prepared in accordance with PBE FRS 48 and reported in the annual report will need to be audited. 

Accountability and transparency

The reporting of service performance information at an entity level, including central and local government, should be subject to the same level of accountability and transparency as the financial information. 

Providing information on what the purpose of an entity is, what goods and services it has delivered and, most importantly, what the effects of those goods and services have had is in the public interest. The information would be useful for holding the entity to account as it would be more meaningful to a wider set of stakeholders than financial statements on their own. 

Anthony Heffernan said he was very pleased to see PBE FRS 48 become effective from the beginning of this year. “I think service performance information is extremely important for public sector accountability as it really shows what taxpayers’ money has been spent on and whether this spending had the desired outcomes. This information will hopefully be more accessible to a wider group of people.”

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