Local government: Improving the usefulness of annual reports.

Activity is a good or service provided by, or on behalf of, a local authority or a council-controlled organisation. It includes providing facilities and amenities, making grants, and performing regulatory and other governmental functions.

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, so a broad interpretation should be taken consistent with the expectation that the major activities that entities carry out add real value at a reasonable cost. Assessing cost-effectiveness, and identifying cost-effectiveness intentions, involve 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.

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.

Group of activities means one or more related activities provided by, or on behalf of, a local authority or council-controlled organisation.

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.

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

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 may 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 an entity. For this purpose, readers are assumed to have a reasonable knowledge and willingness to 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; and
  • an annual component that incorporates a service performance report (often referred to as a statement of service performance), 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 generally accepted accounting practice.

A Statement of service performance reports on the extent to which intended levels of service and service performance were met during the financial year.

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