Improving reporting of non-financial measures and targets

November 2007

Ann Webster, Assistant Auditor-General, Research and Development

Last year, Kevin Brady wrote to government departments and Crown entities advising that we would be placing greater emphasis on the appropriateness of the service performance information in Statements of Service Performance (SSP).

This emphasis involves focusing on service performance reporting, in particular the "appropriateness" of the service performance measures used to give better effect to the 2004 amendments to the Public Finance Act 1989 and the Crown Entities Act 2004. This increased focus will be reflected in the assessments we provide in our reports to Ministers and select committees.

We have been reviewing Statements of Intent (SOI) to determine the context for SSP performance measures as well as entities' process and rationale for selecting them.

So far, our reviews of SOIs have been useful and thought-provoking. In recent years, we've observed generally good development in SOIs, especially in their medium-term components. We have also noticed positive improvements in SOIs' accessibility and presentation.

Our observations suggest that there are three common areas that could be improved. These areas generally relate to the completeness and integration of outcome and output measures in developing 2008/09 SOIs. We’ve come up with some guidelines to help clients ensure continued progress.

Providing measures and standards for outcomes

Many of our clients have done quite a bit of work on the clarity of the intermediate and ultimate outcomes to which entities contribute. However, measures and standards for this information (as required by the Public Finance Act and the Crown Entities Act are often omitted. In our view, given that entities do not control outcomes, it is not sensible to regard ‘standards’ for outcome measures as 'targets'.

However, entities can be clearer about a number of matters in their outcome information:

  • the current state of the outcome sought (to provide a benchmark position that you can track progress against);
  • the direction of change sought (so you can track and assess progress against outcomes); and
  • the intended impact of outputs on outcomes (so readers can understand and evaluate the logic of the relationship between outcomes and outputs).

Improving the completeness of output performance measures

The SOI is intended to provide integrated information about the outcomes, purposes, and services of an entity, as well as risks and the general environment within which it operates. Therefore, within the SOI, the forecast SSP for the delivery of outputs should be understandable in the context of the medium-term information.

A common observation is that the selection of output performance measures within the forecast SSP does not appear to be sufficiently complete in the light of the other SOI information, including the medium-term component and the description of the output class. This creates a sense that the forecast SSP has been 'bolted on' and it is often not clear how, in actual output services, an entity is taking steps to deliver on its outcomes and objectives. This raises questions about the selection and relevance of the forecast SSP performance measures. For example, policy advice and similar advisory and monitoring outputs areas commonly have reasonably low-level process performance measures. However, these outputs have the potential to present richer information that would better integrate the medium-term and forecast SSP information.

Providing comparative information

We’ve already commented that a 'current state' position of outcomes is often not provided. Likewise, it is common for most performance measurement information not to include comparative information about levels of achievement. All measures should provide historical baseline data or other relevant information to aid understanding of their context and provide a basis for evaluating change, as well as allowing an assessment of whether targets represent reasonable best estimates of actual anticipated performance.

Relevance of service performance reports
To be relevant, service performance reports (SOIs and SSPs) should:
  • be presented within the context of the entity’s strategic objectives, past performance, and current environment (including government themes, as appropriate, and other themes and considerations, such as sustainable development);
  • show clear and logical links among entity-level objectives (and themes), outcomes, outputs, performance measures, and performance standards (so that the rationale for their selection is clear);
  • as appropriate, meet the information requirements of stakeholders (including reporting different levels and layers of information) and be useful for decision making; and
  • be clearly linked to the financial information, including significant areas of planned expenditure.
Page last updated: 5 November 2007