2.5 Statement of service performance
Statutory requirement: section 153 of the CEA:
(1) A statement of service performance must—
(a) be prepared in accordance with generally accepted accounting practice; and
(b) describe each class of outputs supplied by the entity during the financial year; and
(c) include, for each class of outputs,—
(i) the standards of delivery performance achieved by the entity, as compared with the forecast standards included in the entity's statement of forecast service performance at the start of the financial year [in the Statement of Intent]; and
(ii) the actual revenue earned and output expenses incurred, as compared with the expected revenue and proposed output expenses included in the entity's statement of forecast service performance at the start of the financial year [in the Statement of Intent].
(2) A Crown entity need not prepare a statement of service performance in respect of outputs for which it has an exemption under section 143.
A statement of service performance reports on the extent to which intended levels of service and service performance were met during the period at an output class level.
Outputs are goods and services produced by the reporting Crown entity - that is, they are supplied for third parties. They exclude goods and services produced entirely for consumption within the Crown entity. Output classes are groups of similar outputs. The statement of service performance should not report on internal Crown entity activities or intermediate products consumed in-house. Outputs may be defined in a Crown entity's statement of intent or in an output agreement with its responsible Minister.
Output classes are groups of similar outputs. The structure and descriptions of output classes are expected to be consistent with those already disclosed in the statement of forecast service performance in the Crown entity's related statement of intent.
Where a Crown entity receives funding from the Crown, the descriptions of output classes in the statement of service performance and annual report should be aligned with the scope of the corresponding non-departmental output expense appropriations in the Estimates of Appropriations. This facilitates reporting and accountability to Parliament for public money ie, it provides assurance to Parliament that the outputs supplied on behalf of, or to, the Crown by the Crown entity reflect the scope of the appropriation and the amount appropriated. If consistency between the Crown entity’s statement of service performance and the Estimates of Appropriations cannot be shown, the Minister responsible for the appropriation and the department administering the Vote run the risk of breaching appropriations.
The CEA requires Crown entities to provide output performance information in their statement of service performance. The emphasis in preparing the annual report should be on providing a coherent account of achievement. Crown entities are required to present information to make clear how outputs are impacting on outcomes. A statement of service performance is not complete unless the outcomes to which the outputs are intended to contribute to are disclosed either in the statement of service performance or elsewhere in the annual report. Accordingly, Crown entities must present both output and outcome non-financial performance information to comply with GAAP.
Auditors will provide detailed feedback on the statement of service performance in accordance with AG-4 (revised): The audit of service performance reports and may include recommendations for improvement in service performance reporting.[14] The auditors will form an opinion on whether the service performance report:
- complies with GAAP, and
- fairly reflects the service performance of the Crown entity for the period.
Crown entities may find the Technical Practice Aid (TPA) No. 9 (2007 revised) on Service Performance Reporting is also helpful guidance.[15]
A repackaged copy of TPA No. 9 is now available as Appendix C of PBE IPSAS 1 Presentation of Financial Statements issued by the External Reporting Board (XRB) in May 2013.[16] A copy of PBE IPSAS 1, Appendix C can be found here: http://www.xrb.govt.nz/Site/Accounting_Standards/Current_Standards/Standards_for_Public_Sector_PBEs/Standards_after_1_July_14/default.aspx
Notes
- [14]AG-4 was updated in March 2011, and can be found here http://www.oag.govt.nz/2011/auditing-standards/docs/27-ag-4-service-performance.pdf/view
- [15]TPA No.9 was originally issued by the Financial Reporting Standards Board, the previous standard setting body of the New Zealand Institute of Chartered Accountants. In July 2011 the External Reporting Board (XRB), a new independent Crown entity, was established and the previous standard setting function of the Institute was transferred to the XRB. As a result, a PDF copy of TPA No. 9 (2007 revised) can be obtained using a search engine on the internet or through the resources available to members of the Institute of Chartered Accountants.
- [16]In May 2013 the XRB (and its sub board, the New Zealand Accounting Standards Board, NZASB) issued a package of new standards that will apply to public sector public benefit entities from the 2014/15 financial year, including PBE IPSAS 1. As an interim measure, the XRB and NZASB incorporated the current TPA No.9 (repackaged) as Appendix C of PBE IPSAS 1, while they work on a project to develop a standard on service performance reporting.
