Appendix 3: Glossary

Central government: Case studies in reporting forecast performance information.

Cost-effectiveness is the relationship between the level of resources used (costs) and progress toward a predetermined outcome (effect). The terms "cost-effectiveness" and "interventions" are not formally defined in legislation or specifically required, except by the Public Finance Act 1989, so a broad interpretation should be taken consistent with the expectation that the major activities the entities carry out add real value at a reasonable cost. Assessing cost-effectiveness, and identifying cost-effectiveness intentions, involves entities tracking performance over time to allow readers to understand whether the costs of services are justified by the impact and outcome results produced.

Dimensions of performance are the aspects or properties of performance that a particular performance measure can address. They include, but are not limited to, quantity, quality, timeliness, location, and cost.

Demand-driven means a result or reaction as the need arises and in response to factors external to the entity (for example, demand from customers). Demand-driven matters can be planned for but they cannot be controlled by the entity. They are useful for understanding the context that resulted in the performance achieved rather than for assessing whether the entity has successfully achieved performance intentions.

Elements of non-financial performance reporting include inputs, outputs, impacts, and outcomes, which can be measured for the purpose of reporting and assessing the entity's performance.

Impacts are the contributions made to an outcome by a specified set of outputs. Often referred to as "intermediate outcomes", they represent the relatively immediate or direct effect on stakeholders of the entity's outputs.

Main measures are the medium-term (at least three-year) measures the entity uses to assess and report on its impacts, outcomes, or objectives, and the cost-effectiveness of its interventions. Main measures can cover the entity's organisational health and capability to perform its functions and conduct its operations effectively, and any other matters necessary to understand its operating intentions and direction specified (for government departments) by the Minister.

Objectives are not defined in the Public Finance Act 1989 so has the ordinary meaning of "goals" or "aims". The inclusion of "objectives" in the Crown Entities Act 2004 alongside "impacts" and "outcomes" recognises that not all outputs and activities are intended to achieve "outcomes" as that term is defined below. Some outputs and activities do not target a direct societal, economic, or environmental effect, and their effectiveness should not be judged on that basis. Nevertheless, they can be important in the context of an entity's performance, and objectives will feature in the shaping of some entities' results-focused planning.

Outcomes refer to changes in the state, condition, effects on, or consequences for the community, society, economy, or environment resulting from the operations of the reporting entity.

Output classes are groups of outputs of a similar nature.

Outputs are the goods and services produced by the reporting entity. The term refers only to the goods and services produced for third parties. It excludes goods and services consumed within the reporting entity (such as services provided by legal, research, human resource, or information technology functions to other functional areas within the same entity, which are often referred to as "internal outputs").

Performance means how well an entity performs against its objectives. It is a comprehensive concept because performance can relate to a wide range of elements, such as outcomes (including impacts or other intermediate-level outcomes), outputs, inputs, and capability. Performance may also be expressed in relational terms, such as efficiency (that is, relationship of inputs to outputs) or effectiveness (that is, relationship of outputs to outcomes).

Performance measures are the specific criteria or means used to measure performance (most commonly of output production and achievement of impacts and outcomes). They may be expressed as (but are not limited to) absolute numbers, percentages, ratios, point estimates, or ranges. They might also be qualitative in nature.

Performance standards or targets are the specific levels of performance (usually relating to outputs produced and outcomes achieved) that the entity aims to meet.

Readers are people who rely on the published (that is, external) general purpose reports as their major source of financial and non-financial information about the entity. For this purpose, readers are assumed to have a reasonable knowledge and willingness to diligently study the reported information.

Service performance reports are reports to readers that provide primarily non-financial information that records the output delivery performance of an entity against specified measures and targets. This information is usually shown in statements of service performance (or equivalent reports) and is compared with information contained in forecast non-financial performance reports. Service performance is concerned not only with how well services are delivered (output delivery performance) but also with how effective the services are at achieving the entity's objectives (achievement of impacts and outcomes). Therefore, service performance reports should provide some link to impact and outcome information. For the purpose of published, statutory accountability reports, service performance reports typically comprise:

  • a medium-term component that incorporates an outcome-oriented statement of intended or actual achievements, which should include information on the entity's objectives, outcomes, impacts, and operating intentions, together with related performance measures and targets and other information required by legislation and generally accepted accounting practice (GAAP); and
  • an annual component that incorporates a service performance report (often referred to as a "statement of service performance" or "SSP"), which is an output-oriented statement of forecast or historical service (that is, output) delivery, together with related performance measures and targets and other information required by legislation and GAAP.

Statement of Intent is a medium-term forecast intended to promote the public accountability of a Crown entity to the Crown and Parliament, and provide a base against which the Crown entity's actual performance can later be assessed.

Statement of Service Performance reports on the extent to which intended levels of service and service performance were met during the period. It must:

  • be prepared in accordance with GAAP;
  • describe each class of outputs supplied by the entity during the financial year; and
  • include, for each class of outputs:
    • the standards of delivery performance achieved by the entity, compared with the forecast standards included in the statement of forecast service performance at the start of the financial year; and
    • the actual revenue earned and output expenses incurred, compared with the expected revenue and proposed output expenses included in the entity's statement of forecast service performance at the start of the financial year.
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