Modelo del Negocio

The NZ Framework (para.s 25-42) discusses four qualitative characteristics – relevance, reliability, comparability, and understandability – which underpin

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general purpose financial reports (including the SSP). The Office of the Auditor- General (OAG) has provided supplementary guidance on the qualitative characteristics of SSP information in the Auditor-General‟s Observations on the Quality of Performance Reporting (2008). The qualitative characteristics, based on the NZ Framework (NZICA, 2005) and the OAG‟s (2008) view in the area of SSP reporting, are explained below:

 To be relevant: information should assist users in their decision-making by helping them to evaluate past, present or future events, and to confirm or correct their past evaluations (NZICA, 2005, para 26). The Office of the Auditor-General (2008, para 6.5) adds that relevant information should be presented in the context of present performance of the reporting year, show clear and logical links with an entity‟s objectives, and meet the information requirements of stakeholders.

 To be comparable: information needs to be presented in a manner that facilitates its comparison over time for the same entity, and with similar information for other entities (NZICA, 2005, para 39). However, the OAG (2008, para 6.56) points out that while comparison of the current year‟s performance with other entities may not be appropriate for public- sector entities, a comparison with targets and present years‟ performance is recommended. The latter is consistent with the Act‟s 2002 requirement (Schedule 10, Part 3, 15(e)) for a comparison between actual achievement and the target set out in LTCCP. However, the Act‟s 2002 requirement in Schedule 10, Part 3, 15(e) goes a little further to include explanation of any significant differences between the current year‟s performance and

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targets. In summary, comparable information cannot only compare a council‟s achieved performance for the year in question with the present period‟s results, but also the targets, with explanation of any significant variance.

 To be understandable: information needs to be readily understood by users, assuming those users have a reasonable knowledge and a willingness to study the information with reasonable effort (NZICA, 2005, para 25). Further, OAG (2008, para 6.55) points out that reported items should be clearly classified, presented in a way that engages the reader (for example, through the use of charts, tables, and symbols), and content should be easy to read and written in plain English (with adequate explanation of acronyms, jargon, and technical terms) (Office of the Auditor-General, 2008, para 6.55).

 To be reliable: information must be free from any material error and bias so that users can depend on the actual position being faithfully represented (NZICA, 2005, para 31).

As discussed, the authoritative requirements from the Local Government Act 2002 and relevant GAAP focus on different aspect of SSP reporting and are complementing each other in some way. Schedule 10, Part 3 (15(e)) of the Act provides broad presentation of the statement while NZ IAS 1 and TPA-9 specifically focus on the items to be presented. The NZ Framework provides the overall characteristics of the information presented. In relation to wastewater services, wastewater disclosures in terms of quantity, quality, location, time, and

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cost (according to NZ IAS 1 and TPA-9) should be provided in SSPs in such a manner that the information is relevant, comparable, understandable, and reliable (according to NZ Framework). Note that, the notion of comparability is further reinforced by Schedule 10, Part 3 (15(e)) of the Local Government Act 2002 for the provision of explanation of significant variance, if any. Figure 2.1 presents the building blocks to summarise the connection between these components of the authoritative requirements in the context of wastewater disclosures.

From Figure 2.1, the five dimensions of wastewater services (quantity, quality, location, time and cost) can be individually presented on their relevance and comparability, of which the latter includes the requirement for explanation of any significant variance. All disclosures can then be presented for their understandability and reliability.

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Figure 2.1: Connection of components of authoritative requirements in the context of wastewater disclosures

*LGA 2002 is Local Government Act 2002

NZ I

AS 1

Wastewater disclosures

quantity quality location time cost

NZ Frame w ork LG A 2 002 * relevant comparable

explanation of significant variances, if any

understandable

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Given the authoritative requirements for SSP reporting from legislation and accounting guidance, New Zealand led the world with its requirement for all government financial statements to be reported on a full accrual basis, including the SSP requirement (Pallot, 2001a). While the UK and Australia have adopted a New Public Management focus and accrual accounting (Guthrie, 1993; Humphery, Miller, & Smith, 1998), their emphasis has been on financial reporting aspects, moving only gradually towards all government (financial and non- financial) reporting. Arguably they have not made explicit achievement with the requirement for service performance reporting (Australian Accounting Standards Board, 2010).

Although mandatory requirements and accounting standards for service performance reporting in Australia and the United Kingdom have not been made concurrently, the reporting of such information is not entirely ignored. Both jurisdictions have addressed some aspects of service performance reporting. In Australia, there are varying degrees of enforcement of the service performance reporting requirements for the public-sector across the States. Not only the Australian government agencies but also in a few States (Victoria, Queensland, and Western Australia), public-sector entities are statutorily required to provide performance information, particularly in the form of performance indicators (Australian Accounting Standards Board, 2010). New South Wales, South Australia, Northern Territories and Tasmania public-sector entities were encouraged and provided with guidelines for the reporting of performance information by their State audit offices or other authoritative bodies (Australian Accounting Standards Board, 2010).

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In spite of the statutory requirement or encouragement for service performance reporting, Australian accounting standards for service performance reporting by public-sector entities have not yet been formulated (Australian Accounting Standards Board, 2010; Lee, 2006). However, there are some limited suggestions for reporting on performance indicators in AAS 27 (Financial Reporting by Governments, 1995), AAS 29 (Financial Reporting by Government Departments, 1996) and AAS 31 (Financial Reporting by Governments, 1996) (Lee, 2006).53 Similarly, in the United Kingdom, the statutory requirements and accounting standards for service performance reporting by public-sector entities have not yet been made explicit (Australian Accounting Standards Board, 2010; Rutherford, 2000). However, the Treasury has provided recommendations for performance indicators in the non-mandatory guidance, A Guide to Setting Targets and Measuring Performance (Lee, 2006). Without mandatory requirements and accounting guidelines for service performance information, it is possible that the reporting of service performance would potentially be less uniform and hence less comparable across public-sector entities in both countries.