In a central government setting supra-national institutions can be important, such as the EU Commission for European countries and the IMF for countries receiving budget support. 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. To find out more, see our Cookies Policy Buylen, B. and Christiaens, J. Empirical research needs to underpin these indications for the relative importance of accounting issues, as will be further elaborated in the final section. and Pandey, S.K. Another partly similar way to measure user needs is interviewing (potential) users of AI. Users of accounting information are either internal or external to the organization. 6, pp. 36 No. Second, accounting literacy and familiarity with AI are influential (ACCA, 2015; Andriani et al., 2010; Ezzamel et al., 2005). 5, pp. The starting point of our selection of articles is papers published in a special issue of Public Money and Management in 2016 (Vol. Whilst private sector financial reports have to serve predominantly the needs of the economic-rational user, public sector financial reports need to ensure at least a minimum level of information that is relevant, or ought to be relevant to all users. Another option is a learning approach where users are at first exposed to accounting documents to test their understandability. more efficient operation. General-purpose financial statements provide much of the information needed by external users of financial accounting. Second, by introducing indicator values to measure the actual situation and development of an issue (e.g. 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. 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. It is, for example, well-known that large parts of the accounting profession (especially controllers and auditors, supported by consultants and scholars) prefer accrual accounting for both budgeting and financial reporting above cash accounting (Blöndal, 2003; Warren, 2015). After a discussion between these consultant-researchers and councilors, it was decided that the following principles would underlie the renewed budget: selectivity (presenting performance information for only the programs or subprograms of political importance or sensitivity); and concreteness and controllability of performance information for the selected programs or subprograms. 5 No. 4, pp. Here we confine ourselves to two factors. 7, pp. The findings of a survey by Clark (2001) in respect of users public sector annual reports in Victoria, Australia are contrasted with the findings of a later survey of the needs of users of public sector financial reports conducted in Cyprus (Krambia-Kapardis & Clark 2010). Second, professional users with solid accounting expertise: representatives of oversight bodies, inspectorates, auditing institutions and firms, but also controllers and internal auditors can be attributed to this group. The reviewed literature in Section 2 suggests that, in general, a lower extent of usability and use of AI is observed in studies based on interviews than when surveys were conducted. Some authors assess the usability of AI as perceived by certain user groups and find that managers, as well as politicians, are quite positive about the usability of AI (ter Bogt et al., 2015; Kober et al., 2010; Liguori et al., 2012). We see a need that future researchers reflect more explicitly about theoretical arguments explaining the use (or non-use) of financial information in various situations and under different antecedents and conditions. 4, pp. The authors’ view is based on the available literature which points to unresolved or contested issues, and also on our own research experience. Does the business have enough capital for future growth? (2010), “Struggling with ambiguity: public managers as users of NPM-oriented management instruments”, Public Administration, Vol. the quality of the provided information (e.g. The passage of Wisconsin’s Act 10”, Public Money & Management, Vol. All the paragraphs have equal authority. Pettersen and Solstad, 2014; Vakkuri, 2010). 4, pp. 113-129. For these selected services the budget amount is equal to the number of units multiplied by the cost per unit (direct performance budgeting; OECD, 2007, p. 21). A widely used approach to the assessment of user needs is a survey among users of accounting documents. In this respect rather than “general purpose financial reporting,” “specific purpose financial reporting” is at stake. First, although municipalities and provinces have a large extent of freedom to structure their budget into programs, they additionally have to present a budget according to a pre-defined set of policy fields with prescribed performance indicators. IPSASB (2012), “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. In addition, a set of working committees was erected for elaborating each of the proposals of the advisory committee. The literature review in Section 2 indicates that most of the empirical research is dedicated to politicians and managers as users of public sector AI. At first, information needs and interest in AI matter, for instance, availability of AI for various decisions. Terms & Conditions Evidence from capital providers”, Accounting in Europe, Vol. While professional accountants as users expect clear and distinct figures and are able to comprehend and interpret them, laymen-users face the risk of getting lost in such situations and depend on further explanation and illustration, eventually at the expense of concision and lucidity. by answering questions such as: what could be done to avoid a budget deficit or a too low solvency? 478-495. https://doi.org/10.1108/JPBAFM-10-2018-0124, Copyright © 2019, Emerald Publishing Limited. Additional users of central government AI are various nation-wide interest groups and their representatives (e.g. Ouda (2017) claims that this dilemma can be eliminated when there is a cognitive fit (matching) between the information provided by the producer and the information required by the user for several stages in the decision-making process. Moreover, their use of accounting documents is often obligatory. Diamond, J. Finally, intermediaries may play a role between users and preparers. Mack, J. Guarini, 2016; Pernsteiner et al., 2016). 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. 31 No. The IPSAS-Board, for instance, issues regularly proposals (exposure drafts) for new or updated accounting standards and asks for comments and feedback (e.g. OECD (2007), Performance Budgeting in OECD Countries, OECD Publishing, Paris. Some evidence is presented about influential factors on users. 7, pp. 3 No. All such purposes can be classified as purposeful use (Moynihan and Pandey, 2010). After a review of the recent literature on user types and their needs, use purposes and issues of usability and use of financial information are presented in Section 2, the subsequent Sections 3–5 address the themes as introduced above. The latter obligation is inspired by the desire to stimulate members of the legislative to compare the performance of their own policy fields with that of colleague-governments (benchmarking), and in doing so, stimulate an active use of the budget by these councilors. 7, pp. in Anglo-Saxon countries where the democratic legislator mandates accounting bodies for setting up accounting standards. Altogether, from the about 50 identified articles we selected 30 articles for a detailed review which explicitly dealt with the subjects of our study. Moreover, the type of AI is partly specific to the governmental level. ; 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. Here service recipients and local interest groups are holding a prominent position in using AI. Stockholders of corporations need financial information to help them make decisions on what to do with their investments (shares of stock), i.e. 20 No. Demaj, L. and Summermatter, L. (2012), “What should we know about politicians’ performance information need and use?”, International Public Management Review, Vol. Jones, R. and Pendlebury, M. (2000), Public Sector Accounting, 5th ed., Pearson, Essex. Alternatively, pairwise comparisons of accounting items for particular groups of accounting users are a possible concept. (2016), “Talking numbers? The literature review in Section 2 indicates that surveys and interviews with (potential) users of AI are the predominant methods of measuring user needs. – survey research on Dutch aldermen’s use of performance information, The role of consultant-researchers in the design and implementation process of a programme budget in a local government organization, Challenging the NPM Ideas about performance management: selectivity and differentiation in outcome-oriented performance budgeting, Struggling with ambiguity: public managers as users of NPM-oriented management instruments, A critical literature review and a challenging research agenda on politicians’ use of accounting information, Cash or accruals for budgeting: why some countries changed their budgeting mode and others not, What matters in legislators’ information use for financial reporting? 30 No. The other is the degree to which users have adopted some accounting knowledge necessary for an understanding of the provided AI, for example, through training or practical experience; this can be called accounting expertise (see, e.g., Buylen and Christiaens, 2016). and Solstad, E. (2014), “Managerialism and profession-based logic: the use of accounting information in changing hospitals”, Financial Accountability and Management, Vol. However, the majority of users covered in the reviewed articles are either politicians or managers; other types of users have been largely ignored. If, for example, user groups (i.e., service users and resource providers), as well as objectives (i.e. balanced budget, liquidity and solvency). May 2, 2020 There are various different users of financial statements, each with different information needs. These financial statements are formal reports providing information on a company’s financial position, cash inflows and outflows, and the results of operations. This is good news because this theme was under-researched for a long time. However, this is an all too simple picture, as will be clarified below. In this context, research also should shed some light on the interrelations between user needs and purposes of financial information use (e.g. at the Spring Workshop of PSG XII of EGPA at Rostock/Germany, and of papers presented by I. Saliterer et al. citizens in their various roles as voters, tax payers, service consumers, donors or volunteers can be seen as the most important interest group. In addition, methods relying on co-creation of adapted budgetary or financial reporting information as well as applications of a learning approach appear promising. Contrasted to surveys and interviews, observational studies are aiming at measuring the actual behavior of actors. Performance budgeting – is accrual accounting required? Many organizations at various governmental layers have introduced some form of performance budgeting over the last two decades (see OECD, 2007 for an overview at the central government level). Two major purposes are frequently mentioned: rendering accountability to various stakeholders and supporting decision making. 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. 2, pp. the accountants who produce all kinds of AI such as annual reports. Usability means that the users of the information in an accounting document potentially appreciate it for supporting their decision making or accountability. services with a homogeneous output, such as waste water collection, refuse collection and housing permits in a local government context. 3, pp. Pallot, J. Three major themes about users of public sector AI will be discussed. 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Missing link? ”, accounting, Coimbra University Press, Coimbra University,! Major purposes are frequently mentioned: rendering accountability ) or budget spectacle mandates accounting bodies for setting accounting! Further relevant sources [ 2 ] understand AI use as included in the discussion joining. Den Haag understand AI use as included in the final Section inspiration for future?... As included in the design of accounting information in an accounting document is,...

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