Chapter 3: Accounting, Auditing, and Accountability

Accountability, very much the catch cry in state sector reforms, depends on adequate performance measurement, reporting, and auditing. When combined with a system of rewards and sanctions, as envisaged under the State Sector Act, the requirement to report should lead in turn to improvements in efficiency and effectiveness. The present wave of reforms would not have been possible, however, without the groundwork prepared in the early 1980s by members of the accountancy profession in developing reporting standards for the public sector. Although there has been an international trend towards the establishment of public sector standards-setting bodies, the profession in New Zealand has in several areas gone further than its overseas counterparts; for example, in taking the initiative in developing non-financial measures of performance. In its view, accounting in monetary terms is inseparable from reporting generally, and non-financial measures of performance are critical for meeting the accountability objectives of external reports.