PurposeThe purpose of this paper is to determine the appropriateness of a general‐purpose financial reporting model derived from a “decision‐useful” framework for government departments.Design/methodology/approachThis research in this paper uses a survey methodology to access users of government department general purpose financial reports and is innovative because it has directly studied actual users across the entire public sector.FindingsThe findings of this paper indicate that general‐purpose financial reports are used to satisfy financial accountability and public accountability rather than decision making – indicative of users having an accountability focus rather than a “decision‐useful” focus. This provides systematic empirical evidence against the current financial reporting model used internationally in the public sector.Research limitations/implicationsThe paper has important implications for policy makers since the choice of an accounting framework has the capacity to affect the information content of reports – what is reported and how it is measured, and thus have a direct impact on the operations of government. The paper argues that it is crucial that public policy regulators re‐examine the financial reports provided to stakeholders.Originality/valueThe research in this paper is original in that it has, for the first time, systematically reviewed all of the three elements of the public sector general‐purpose financial reporting model as well as directly accessing users. The authors can categorically argue for the abandonment of the model in favour of one, which is better suited to the public sector.

This paper raises the issue of whether not‐for‐profit (NFP) oganisations require a conceptual framework that acknowledges their mission imperative and enables them to discharge their broader accountability. Relying on publicly available documentation and literature, it suggests the current Conceptual Frameworks for the for‐profit and public sectors are inadequate in meeting the accountability needs of NFPs. A NFP‐specific conceptual framework would allow the demonstration of broader NFP‐specific accountability and the formulation of NFP‐appropriate reporting practice, including the provision of financial and non‐financial reporting. The paper thus theoretically challenges existing financial reporting arrangements and invites debate on their future direction.

Using a sample of companies from the top 500 listed firms in Australia, we investigate whether the presence of a designated nomination committee and female representation on the nomination committee affect board gender diversity. We also examine whether gender diversity on the board affects firm risk and financial performance. We find that board gender diversity is significantly and positively associated with the presence of a designated nomination committee and that female representation on the nomination committee is a significant explanatory factor of increasing board gender diversity following the release of the 2010 Australian Securities Exchange Corporate Governance Council (ASXCGC) recommendations. Further, our results support the business case for board gender diversity as we find greater gender diversity moderates excessive firm risk which in turn improves firms' financial performance. Our results are robust after correcting for selection bias and controlling for other board, firm and industry characteristics.

Annual reports, including general purpose financial statements, have been adopted as a key mechanism by which public sector entities discharge their accountability. However, there is concern about the complexity of public sector general purpose financial statements and consequently their effectiveness as an accountability mechanism. In Australia, the Queensland government has moved to address this issue in local government authorities by introducing a Community Financial Report as a means of simplifying the financial statements. A feature of this initiative was the lack of prescription given to local government authorities in the preparation of this report. This paper examines the form and content included in Community Financial Reports and also uses a disclosure index to determine the level of disclosure in the reports. The results of this research show that the form and content of the Community Financial Reports varied considerably. There was no definitive style, with each report being unique. The disclosure index revealed low levels of disclosure by local government authorities in the first year of the report as well as a lack of analysis of the Statements of Financial Performance, Position and Cash Flows. As well, there was a significant difference in the disclosures made by rural local government authorities compared with urban local government authorities. The results of this research will be of interest to local government authorities and local government regulators as they aim to provide useful, understandable information for stakeholders.

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