Reporting on Nonfinancial Information

The past few years have seen a growing focus on social responsibility and policy results in the public sector. Governors, politicians, controllers, and government audit offices have become more interested in performance information in budgets and reports. Much of the information on social performance and effects is of a nonfinancial nature. It does not concern uniform measurable monetary units but rather numbers or processes and systems. Public sector users are especially interested in nonfinancial information, which reflects the results and effects of government policy. Therefore, the reliability and relevance of this information are highly important. Auditors can play an important role in providing assurance on the reliability of nonfinancial information.

Unlike reporting on financial information, reporting of nonfinancial effects is still comparatively new, and no generally accepted principles are yet available. Moreover, the data are very diverse; the more qualitative the data are, the more difficult they are to measure and assess. Also, the audit of nonfinancial information is a new audit subject for many auditors. For this reason, Royal Nivra (the Dutch organization for the accounting profession) initiated a project that resulted in the Nivra guide Nonfinancial information in progress, a guide to the reporting and assurance of nonfinancial information in the public sector. The guide aims to help develop a universal basis for reporting and providing assurance on nonfinancial information. It is the result of the work of representatives from different sections and disciplines in the Dutch public sector, including the Netherlands Court of Audit, the Dutch SAI.

This article presents the main findings reported in the guide, including a number of recommendations and an agenda for the future audit of nonfinancial information.

Need for Guidance on Nonfinancial Information

For financial information, comprehensive registration systems and generally accepted principles for presenting information have been in existence for a considerable time. However, this is not the case for nonfinancial information, where there are fewer safeguards for reliability and the quality requirements for the information are not yet standardized. Because suitable criteria and a frame of reference for nonfinancial information are not available, it is not always possible or desirable to provide assurance, especially in regard to measuring policy effects. A theatrical performance may be performed perfectly and meet all kinds of objective quality...