The relationship between accounting information and performance management in the Northern Cape Provincial legislature
Botha, Garth Reginald
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Performance in the public sector is measured in terms of the economic, efficient and effective (three E‟s) use of resources in order to achieve the service delivery output. While accounting information is used in the private sector to measure the extent of performance, the same does not seem to hold true in the public sector. Furthermore different bases of accounting are used in the private and public sector. The accrual basis of accounting is used in the private sector and cash basis of accounting is used in public sector. The Northern Cape Provincial Legislature receives unqualified audit opinions on the state of their finances, while at the same time receiving qualified reports on its performance outcomes. This study is a comprehensive investigation into the relationship between cash-based accounting information and performance management (three E‟s) in the Northern Cape Provincial Legislature. A detailed study of existing literature on the subjects of both performance management and basis of accounting was done. Both quantitative and qualitative research methods were applied in gathering and analysing data to support findings and conclusions in the study. The findings were also evaluated against the existing literature. The study found that managers in the Northern Cape Provincial Legislature regard the quality of financial information as well as performance information as poor. The study further finds that management of the Northern Cape Provincial Legislature does cannot see a clear link between the financial information and performance information. The study also reveals that the management of the Northern Cape Provincial Legislature is not doing well in terms of managing its resources, in terms of the economy, efficiency and effectiveness. The current cash system of financial reporting and the current system of performance reporting are found to the most problematic in terms of what contributes to poor resource management. The adoption of accrual accounting, according to the study, will greatly improve management of resources and in turn improve performance outcomes. The study also goes on to indentify some problems with the implementation of accrual accounting and the transition from cash to accrual is by no means an easy feat. The findings for the study suggest that there are specific benefits for the NCPL if an accrual basis of accounting is implemented. However the implementation of a new basis of accounting is not without problems and aspects such as costs and personnel should be carefully considered before such implementation take place. The study recommends a three stage approach to implementation of accrual accounting in the Northern Cape Provincial Legislature. Proper planning for all resource requirements is recommended as well as continuous monitoring, evaluation and feedback into the planning stage.
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