Introduction.. One Fundamental Difference Between Government,

1540 WordsFeb 17, 20177 Pages
INTRODUCTION. One fundamental difference between Government, not-for-profit and private, for-profit entities; the private entity is more concerned with making a profit, while government agencies are focused on achieving outcomes (Granof & Wardlow, 2011, pg. 2). This essential difference depicts what information is required when reporting to stakeholders; financial data provided by a not-for-profit entity could depict a profit deficit, however all objectives may have been achieved. Poister advocates that performance measurement bridges that information gap by assessing outcomes (2003, pg. XV). Nevertheless, unlike the double-entry accounting system, performance measures do not have specific standards; allowing each government body to…show more content…
The Auditor General is not employed by the NSW Audit Office, however the role acts in a similar position to the Audit Office, as a chief-executive officer would within a for-profit company. The auditor general hires officers, determines employment conditions, enters into agreements regarding industrial matters and can delegate auditor general’s tasks to any staff member of the Audit Office (Public Finance and Audit Act 1983, No 15). Although the major role of the auditor general is to audit the government sectors, the performance of the auditor general and audit office is also scrutinised by external auditors (Audit Office of NSW, 2016b). FINANCIAL ANALYSIS OF THE NSW AUDIT OFFICE. Financial ratios are used in many companies because they can indicate economic and financial success or failure; and provide information and guidance to decision makers. These ratios are generally broken down into 4 types; profitability, liquidity, efficiency and leverage. (Silvia, 2011, pg. 237). One ratio of each type has been calculated in table 1 below, comparing annual reports of two companies within the same industry; the NSW Audit Office (a not-for-profit entity) and KPMG (UK) (a for-profit company). Tennent (2008, pg. 210) maintains that financial ratios used for determining performance of small local business, are just as valid for large international companies. However as outlined below, this theory may
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