Financial Performance Indicators for Australian Local Governments

Australian public sector agencies at local, state and national levels have undergone a period of intense change as strategies to improve the efficiency, effectiveness, appropriateness and value for money of their services have been undertaken. In this light, performance measurement systems and the development of performance indicators are now receiving attention from regulatory authorities, governments, and other stakeholders. However, academic input and associated debate has been limited. This paper considers the key dimensions of financial status and performance of local governments. It is argued that the general purpose financial reports prepared under AAS 27 do not provide all of the information necessary to evaluate the financial performance of local governments. In particular, it is argued that the treatment of capital contributions, and the notion of intergenerational equity are elements which have been neglected in the published literature. This research would be of interest to local government regulatory agencies, practitioners, accounting standard setting bodies and all those interested in local government performance and accountability.