Australia’s efforts to improve government fiscal reporting have been highlighted in an OECD report, which recommends greater use of summaries and analyses.

In an era of commitment to transparency and accountability, where everyone from economists and investors to citizens and lobby groups are demanding greater access to probe the state’s finances, governments are under pressure to deliver increasingly sophisticated fiscal reporting.

But this increasing sophistication has often come at the expense of clarity and governments internationally have sought to “rationalise” fiscal reporting to make it more legible for users.

Australia has made some notable progress in the area, according to a new report by the OECD’s budgeting and public expenditure division.

The paper, which looked at Australia, Canada, France and the UK, found the nations’ collective efforts were “a testimony to governments’ commitment to fiscal transparency and accountability.”

Nonetheless, it found there were still a number of mainly “technical” issues with government fiscal reports, such as using different accounting bases or classifications which made them “difficult to navigate”.

“In addition, information provided in fiscal reports is sometimes overly technical, hence difficult to understand and make use of for non-technical readers,” said the paper’s author Delphine Moretti, a senior policy analyst who leads the division’s work on finance management and reporting.

Australian initiatives 

In all countries studied there has been a push for “faster closure” of year-end financial reports, Ms Moretti found, and “good results” were found in Australia where audited financial statements are published within three and five months after the end of the financial year for the whole of the Australian Government.

Australia was also performing well in the provision of data underpinning charts and tables online which allows for secondary analysis or use.

While Australia, France and the UK publish excel sheets or CSV files containing budget data in addition to their year-end financial reports, the “comprehensiveness and regularity of the data publication varies depending on countries.”

Australia publishes “a relatively large set of data compared to other countries both monthly and at year-end,” Ms Moretti found.

Elsewhere, with parliaments internationally calling for more performance information, which is crucial to scrutiny and government accountability, Ms Moretti points to Australia and Canada’s new performance frameworks:

“Under these new frameworks departments are expected to define performance objectives in annual ‘plans’ and report their results in their annual financial reports. For example, under the Australian Government’s new performance framework, reporting entities (portfolio departments and agencies) have been required to include summary performance information in documents presented to parliament to inform the budget discussion…”

Australia is also cited for its leading work in providing cost-benefit assessments around the production of fiscal reports.

“Australia is the only country that provided such information: the cost of producing in-year and year-end Australian Government financial statements is estimated at $2.1 per annum,” she noted.

Innovations overseas

Highlighting the potential use of open data, Ms Moretti highlighted Canada’s implementation in 2016 of a searchable online database to provide information on departmental spending by program type.

“The government plans to publish high-level annual reports that will tell a clear story of what departments plan on doing, what they achieve, and the resources used to do so, while detailed, searchable online program information… will be available for detailed searches.”

Discussing the importance of reader-friendly summaries and commentaries of technical and complex fiscal reports, Ms Moretti pointed to France’s Citizen’s Budgets and citizen’s financial statements.

Recommendations

Ms Moretti said her analysis highlighted the need to use IT to allow readers to delve into the detail of fiscal reports, for accessbile summaries of reports for citizens and the provision of analysis and interpretation of complex and technical government financial information.

The case studies also highlighted the need for:

• forecasts, budgets and accounts to be aligned with tables to allow for comparability
• governments to unsure a mix of in-year provisional reports and comprehensive audited year-end report
• financial and non-financial performance information to be brought into a single and unified report.

The analysis was published in the OECD Journal on Budgeting.

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