The Perceived Importance of the Annual Report

Abstract

The increased emphasis on performance and accountability that has occurred in the public sector in the last quarter of a century has led to a greater awareness of mechanisms that are available to discharge accountability. In this respect, the role of the annual report as a mechanism of discharging public accountability has received increased prominence. It is commonly argued that annual reports enable government agencies to discharge their accountability obligations to a diverse group of stakeholders and that they are the only comprehensive statement of stewardship available to the public. There is, however, little empirical evidence on the importance of annual reports as an information source to users. This study uses a survey method to obtain the views of recipients of annual reports to determine whether stakeholders in the public sector consider the annual report to be an important information source. The study assesses the importance of the annual report relative to other information sources and determines whether there is any variation across entities or among stakeholder groups as to the importance placed on the annual report. The first finding of this study is that for all respondents the annual report is considered as an important source of information about the entity although it ranks second in order of importance behind personal contact as an information source. The second finding is that there are differences between the views of respondents from different entity types and different stakeholder categories with regard to the importance of the annual report. Respondents from local government authorities and government owned corporations rate annual reports as being a ‘very important’ source of information as do three of the stakeholder categories other resource providers, elected officials and oversight bodies The annual report was the most important information source for government owned corporations and for oversight bodies. This research has important implications for policy makers consideration of accountability mechanisms to stakeholders.

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