Part 3: Central government statements of intent and service performance information

The Auditor-General's observations on the quality of performance reporting.

This Part summarises our work that looked at the quality of the 2007/08 SOIs and service performance information prepared by government departments and Crown entities.

We reviewed 104 (more than 80%) of the 2007/08 SOIs required to be prepared by government departments and Crown entities. We requested and reviewed many SOIs in draft form as part of our audit work to report on the SSPs within entities’ annual reports. If we did not receive SOIs within enough time to provide feedback to entities on a draft, we reviewed the final SOI.

Service performance information in the statements of intent

Overall, we were disappointed that many entities’ service performance information did not set out coherent performance frameworks showing logical links from the medium-term outcomes sought by the entity to the annual outputs (goods and services) delivered by the entity. Many SOIs did not have well-specified, relevant performance measures and targets for both the medium-term and SSP information.

The first year in which many Crown entities were required to prepare SOIs was 2006/07, and it is therefore likely that they are still going through a learning process. However, government departments have been required by the Public Finance Act 1989 to prepare this information since 2004/05. Before the 2004 amendments to the Public Finance Act, government departments had to prepare SOIs under Cabinet directions that had similar requirements.

Despite the greater experience of government departments, the quality of their 2007/08 SOIs was disappointing. Improvements in quality since the 2004/05 SOIs have still been only small and incremental.1 We have also previously reported that, under our annual assessments for aspects of financial and service performance information systems and controls by government departments, the service performance information systems aspect2 consistently had the lowest proportion of “Excellent” or “Good” ratings between 1993/94 and 2005/06 (compared with the other aspects rated).3

Figure 2 sets out our findings on the 2007/08 SOIs we reviewed.

Figure 2 Our findings on the 2007/08 Statements of Intent we reviewed

Our expectations Our findings

Medium-term component of the SOI
Clearly identified outcomes, which provide the context for the entity’s role and functions. Over 15% of SOIs had shortcomings in the specification of outcomes.
Supporting discussion on the entity’s role, functions, strategic priorities, challenges, and risks. About half of SOIs were well presented and “readable”. Over 40% included useful discussion and contextual information in the medium-term component of the SOI.
Main measures and standards for outcomes, objectives, or impacts are clearly specified, cover a period of three years, and provide baseline data that places measures and standards in a more meaningful context and allows progress to be tracked. Nearly a third of the SOIs had missing or unclear main measures, and another third needed to improve their main measures.
Many SOIs would benefit by adding baseline data about the current state of outcomes, objectives, or impacts, and their associated measures.
Arrow pointing up.
Over 50% of SOIs could improve the structure of the forecast SSP and its links to the medium-term component of the SOI. Weaknesses in the links ranged from minor to more significant – for example, from a lack of clarity in the layout or the use of diagrams to more significant issues that made links difficult to assess, such as a lack of discussion about how outputs contributed to outcomes.
A coherent structure and integrated contextual information that makes evident, through linking within and between the information in the two components:
  • the reasons for the entity’s outputs; and
  • the focus of its reporting, including the rationale for, and the relationships among, the elements, performance measures, and standards.
Arrow pointing down.
Forecast SSP
Logically aggregated output classes/ outputs, with clearly specified outputs that focus on external impacts. We had queries about the basis for the identification and aggregation of output classes, and noted that outputs were missing, incomplete, or not well specified, to a varying degree, for nearly 40% of SOIs.
Clearly specified performance measures and standards that are relevant and balanced, and provide baseline data that places measures and standards in a meaningful context and allows progress to be tracked. About 60% of the forecast SSPs had shortcomings in the range and coverage of performance measures and the specification of standards.

Measures of output quality, in particular, need enhancing.

Many SOIs would benefit from the addition of baseline data about current and recent achievement for output delivery.

In 2007, the Treasury reviewed accountability documents. The review:

  • has resulted in structural changes involving changes to the format of documents and relocation of information from departmental SOIs to the annual Estimates of Appropriation); and
  • over time, proposes to improve the quality of performance information, including through interdepartmental review, although the first year review was primarily focused on improving scope statements for the 2008 Estimates of Appropriation.

1: Our various reports on the results of audits for central government have reported observations on the quality of and issues with SOIs since the first year SOIs were required to be prepared in 2004/05.

2: Service performance information systems are the systems to record service performance (non-financial) data, and the internal controls (manual and computer) to ensure that data is complete and accurate.

3: Central Government: Results of the 2005/06 audits, parliamentary paper B.29[07a], pages 20-24.

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