Public Sector Consolidated Statements-an Assessment

Judgments potentially made by various participants in (or observers of) the public sector on the basis of aggregative financial information about governments are reviewed. Distinctions are drawn between judgments that are made routinely, or under certain conditions, by decision makers or observers. It is recognized that (in Australia) the financial information that is relevant to the majority of these judgments is already supplied by other sources (principally budget documents, or in Government Finance Statistics) rather than by public sector consolidated statements. It is concluded that a number of routine judgments could be based on financial information presented in the form of consolidated statements (of varying scope). Alternative criteria for determining the scope of consolidated statements are reviewed. Accountability and control are noted as potential bases. Depending on the adopted objective, it is concluded that tests of control are either not relevant, or inappropriate. It is contended that prior studies that have recommended use of control have focused on processes (trying to find a suitable test for determining the ambit of consolidated statements) rather than on objectives, and examining in some detail what information would be relevant to different users and uses.