Our recommendations

Central government: Cost-effectiveness and improving annual reports.

In our view:

  • It is both possible and, in the current economic environment, imperative to measure impacts and outcomes (what contributions have been made as a result of activities carried out) and to assess cost-effectiveness (that costs of services are justified by the impacts and outcomes produced).
  • The story of a public entity's performance and the cost-effectiveness of its services would be clearer if improvements were made to impact and outcome measurement; if public entities provided more evaluation and explanation; if they included longer-term trend analysis; and if they better reported their results (the outputs and the cost of service delivery).
  • The annual report is a public entity's opportunity to provide useful achievement information to the wider public. To that end, the annual report should be seen as a tool for communicating performance and cost-effectiveness results and for providing a well-rounded and insightful story of performance and revenue and expenditure results.

Given our views, we have made five recommendations for public entities to improve the information in their annual reports.

Analysing the cost of delivering services

We recommend that public entities:

  1. structure the service performance and cost of service information to show the efficiency and economy aspects of performance; and
  2. provide better analysis and evaluation of their achievements so that readers have a full picture of the entity's performance.

Measuring and reporting impacts, outcomes, and cost-effectiveness

We recommend that public entities:

  1. report on the impacts and outcomes that result from delivering their outputs; and
  2. analyse and evaluate their service performance, cost of service, and impact and outcome results to assess and report on cost-effectiveness.

Analysing trends in performance

We recommend that public entities:

  1. identify services and results (costs, outputs, impacts, and outcomes) that would benefit from longer-term (5-10 year) trend analysis and report that analysis, supported with commentary, in their annual reports.
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