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AG-4 (revised): The audit of service performance reports.

  1. For the purpose of this Standard, the following terms have the meanings attributed below:
    1. Appropriateness - Appropriateness refers to the usefulness or suitability of various aspects of the non-financial performance report and can be used in relation to:
      1. The non-financial performance reporting framework;
      2. The elements reported;
      3. The performance measures; and
      4. The targeted levels of performance or historical results.
      In assessing whether the service performance report is appropriate, consideration is given to whether the information is relevant to the interests of users, reliable (i.e. faithfully represented, supportable, neutral, complete, and balanced), understandable, and comparable. The subject matter should be sufficiently appropriate to allow for an informed assessment of the entity’s service performance.
    2. Dimensions of performance - Dimensions of performance are the aspects or properties of performance that may be captured by a particular performance measure. They include, but are not limited to, quantity, quality, timeliness, location, and cost.
    3. Elements of non-financial performance reporting - 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.
    4. Impacts - 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.
    5. Inputs - Inputs are the resources used by the entity to produce its outputs.
    6. Management - Management is defined broadly as meaning the governing body, audit committee, individual member of the governing body, officer(s) and/or other person(s) having responsibility for planning and directing the activities of an entity.
    7. Non-financial performance reporting framework - For the purpose of published, statutory accountability reports, a non-financial performance reporting framework will typically comprise the following components:
      1. 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).
      2. An annual component that incorporates a service performance report (often referred to as a “statement of service performance” or “SSP”) - an output-oriented statement of forecast or historical service (i.e. output) delivery, together with related performance measures and targets and other information required by legislation and GAAP.
      To constitute a “framework”, these components need to provide enough context and links (a) to strategic-level information and (b) within and between the information in the two components to provide a coherent structure for reporting. They need to clearly demonstrate the rationale for, and the relationships among, the contextual information, elements, performance measures, and performance targets. The framework, including the two components described above, should be evident both in the forecast non-financial performance report and in the historical (or “actual”) non-financial performance report. The historical non-financial performance report is typically included in the annual report and should report historical outcome and output performance against the targets set in the forecast non-financial performance report, together with related performance measures and targets and other information required by legislation and GAAP.
    8. Non-financial performance reports - Non-financial performance reports are reports to users that provide primarily non-financial information that records the performance of an entity against specified objectives. They can encompass a comprehensive range of performance elements (incl. outcomes, impacts, outputs, inputs, and capability), and the information can be presented in various statements (e.g. Information Supporting the Estimates of Appropriation, Statements of Intent, Statements of Corporate Intent, LTCCPs, annual plans, statements of service performance, and other statements within annual reports).

      “Service performance reports” are non-financial reports concerned primarily with the reporting of output performance information.

      Non-financial performance reports can be:
      1. Forecast performance reports, which are before-the-event or “ex ante” statements that express intended, expected, or targeted performance for the period; or
      2. Historical performance reports, which are after-the-event or “ex post” statements that report results or achievements for the period, ideally against the forecast levels of performance.
    9. Outcomes - Outcomes refer to changes in the state, condition, impacts on, or consequences for the community, society, economy, or environment resulting from the existence and operations of the reporting entity. (The outcomes sought provide the rationale for the range of outputs delivered by the entity.)
    10. Output classes - Output classes are groups of outputs of a similar nature. (They are sometimes referred to as “groups of activities”.)
    11. Outputs - 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, HR, and IT functions to other functional areas within the same entity, which are often referred to as “internal outputs”).

      (The Local Government Act 2002 uses the term, “activity” to refer to goods and services. The term “outputs” is used in this Standard to refer to goods and services, and the term “activity” carries its common meaning.)
    12. Performance - Performance refers to how well an entity performs against its objectives. It is a comprehensive concept, as 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 (i.e. relationship of inputs to outputs) or effectiveness (i.e. relationship of outputs to outcomes).

      The term “service performance” relates specifically to outputs.
    13. Performance measures - 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.

      Examples of output performance measures might include the following:
      1. The average waiting time for radiation treatment;
      2. The number of hectares of public reserve per head of population;
      3. The percentage of investigations completed within x months of receiving notification of an event; and
      4. The percentage of decisions overturned on appeal.
    14. Performance targets - Performance targets are the specific levels of performance (usually relating to outputs produced and outcomes achieved) that the entity aims to meet.

      Various pronouncements and literature on performance reporting often use the term “performance standards” to refer to levels of planned performance. This term carries the nuance of levels determined by legislative or other mandatory requirements; by contrast the term “targets” is often reserved for levels that are aspirational or otherwise discretionary. This Standard uses the term “targets” as an over-arching concept to describe performance levels and, therefore, the term “performance targets” encompasses the notion of “performance standards”.

      Examples of output performance targets, based on the examples of performance measures in (m) above, might include the following:
      1. Ninety per cent of patients wait less than 10 weeks between first assessment and treatment;
      2. At least 1.7 hectares of public reserve per 1,000 people;
      3. Eighty-five per cent of investigations are completed within five months of receiving notification of an event; and
      4. Less than five per cent of decisions are overturned on appeal.
    15. Service performance reports - Service performance reports are reports to users 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 (e.g. Information Supporting the Estimates of Appropriation, Statements of Intent, Statements of Corporate Intent, LTCCPs, and annual plans).

      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). Service performance reports should therefore provide some link to impact and outcome information.
    16. Stakeholders - Stakeholders are the primary users of an entity’s financial and non-financial performance reports and are those to whom the entity is primarily accountable (e.g. Parliament, taxpayers, and ratepayers).
    17. Users - Users are those persons who rely on published (i.e. external), general purpose reports as their major source of financial and non-financial information about the entity. For this purpose, users are assumed to have a reasonable knowledge and willingness to study the reported information with reasonable diligence.

      In relation to the public sector, specific users of published, general purpose non-financial performance reports may include customers (i.e. the recipients of public goods or services), funders and financial supporters (incl. taxpayers and ratepayers), elected or appointed representatives (e.g. Members of Parliament and Select Committees), and interested members of the public (e.g. media commentators, academics and other analysts, and members of relevant professional or community groups).

      Although governors (e.g. Ministers and local authority councillors), central agencies, other monitoring agencies, some grant providers, and entities’ management are also users of published reports, they have access to, or are able to request, additional financial and non-financial performance information (i.e. special purpose reports) in carrying out their governance, monitoring, or management responsibilities.
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AG-4 (revised): The audit of service performance reports

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