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Summary

The Results-Based Budgeting Act was recently enacted. It is directed at successful service delivery outcomes, program assessments and longer term, strategic prioritization. Public reporting by ministries on performance and results should supplement information in traditional financial statements and budgets. As part of meeting accountability responsibilities, information from the financial statements and budgets should be analyzed and incorporated into the ministries’ reports on performance results.

Each year, ministries set out their goals in a business plan. Performance measures and targets are aligned with the goals. These three items serve several purposes. For the public, they identify matters the government deems important and establish a base for accountability. To those in government, the combination of goals, measures and targets direct planning, resource allocations and staff initiatives.

As an accountability mechanism, there is public reporting of the analysis of significant performance measure variances between current year actual results, the business plan targets for the measures and recent historical results. The framework for this reporting is presented in the Government Accountability Act, Ministry Business Plan Standards and Reference Guide and Ministry Annual Report Standards.

Ideally, information from the variance analysis is used in subsequent review, planning and operational decision making processes, such as those envisaged under the Results-Based Budgeting Act. Once variances have been critically examined and explained, the information and learning from the analysis process should guide the next round of planning.

What we examined

Our audit objective was to assess the quality of performance measure variance analysis used by ministries in their business plan and annual report preparation processes.

Why it is important to Albertans

The analysis ministries perform to evaluate actual results against targets and prior years’ results provides information to decision makers to determine whether desired outcomes were achieved, progress was made and value was received for money spent. It also helps assess what needs to change, how changes should be made and how to improve future plans.

What we found

Ministries take a wide variety of approaches towards their results analysis reporting, including the performance measures variance analysis component. The variety of approaches, and the associated processes, by itself is not problematic.

The concerns, and hence our recommendations, are with the varying degrees of inconsistent interpretations of the current performance measure reporting requirements and non-compliance with certain of the performance measure reporting standards.

Overall, the ministry reporting commitments to Albertans for performance measures are only being partially met—a high percentage of significant performance measure variances are not being explained in ministry annual reports. The quality of performance analysis and reporting can be improved.

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