Some Like It NonFinancial. Politicians' and Managers' Views on Performance Information in Local Governments
Over the last decades, the modernization process of the public sector has fostered the adoption of new accounting techniques, such as accruals accounting and non-financial performance measures, that are supplementing traditional budgetary accounting techniques. Ileana Steccolini (Department of Policy Analysis and Public Management), Mariannunziata Liguori (Queen's University Belfast, visiting professor at SDA Bocconi) and Mariafrancesca Sicilia (Bergamo University and SDA Bocconi) propose a comparison between politicians' and managers' views on traditional and new accounting techniques, by testing various hypotheses against the data gathered in a survey of Italian municipalities.
In their paper entitled Some Like It Non-Financial... Politicians' and managers' views on the importance of performance information(Public Management Review, vol. 14, No. 7, 903-22, doi: 10.1080/14719037.2011.650054),Steccolini and her co-authors develop several hypotheses, based on the existing literature, regarding the importance that politicians and managers attach to both financial (budgetary and accrual accounting) and non-financial information. The long-term coexistence of the three types of information (traditional budgetary accounting, accrual accounting and non-financial performance information) that is observed in Italian municipalities represents an appropriate testing ground. The authors administered an ad hoc questionnaire to the top managers of the municipalities' departments and to the respective elected politicians of the 65 biggest Italian municipalities, and asked them to rank the importance attached to different items of performance information (budgetary-accounting items, accrual accounting items, non-financial performance items).
A thorough comparison of the politicians' and managers' answers shows that both actors appear to attach the same importance to performance (financial and non-financial) information, in contrast with previous literature that generally pointed out the politicians' lower interest in performance information. Moreover, the questionnaire revealsthat both politicians and managers attach more importance to non-financial performance measures than to financial ones. Also, the results show no significant difference between politicians and managers in the importance given to external and internal non-financial performance information, contrasting with the idea that managers are "inward-looking" while politicians are "outward-looking". The only divergence in viewpoints concerns accrual accounting, a technique that seems to be more important to politicians than to managers.
The findings, therefore, show that politicians' and managers' preferences tend to be much more aligned than expected. This convergence in perspectives and rationalities might be explained by the willingness of the politicians to appear more attentive to performance information as a consequence of recent reforms in the public sector that pressured them to be more accountable. Furthermore, the results contribute to the ongoing debate on accruals accounting, casting further doubts on its usefulness for internal users. Finally, the study stresses the importance of non-financial information, suggesting that more attention should be devoted to this dimension by legislators and controllers when designing performance systems.