Abstract:
Performance information indicates how well an institution is meeting its aim
and objectives and which policies and processes are working. This article argues
that the current system of accounting used by government for the preparation
of its accounts has certain limitations in as far as the provision of performance
information is concerned. Existing theory points to the fact that performance in
the public sector is measured in terms of the economical, efficient and effective
use of resources. However, the traditional government accounting system was
developed to respond to the accountability requirements of the public and not to
promote the economical, efficient and effective use of resources. Based on a case
study conducted at the Northern Cape Provincial Legislature, it was determined
that the modified cash basis of accounting used by government does not provide
management with the information needed to enable performance management. The
outcomes point to the fact that the accrual basis of accounting is a more effective
basis for accounting and can contribute to more economical, efficient and effective
use of resources. This is relevant because other government institutions also make
use of the modified cash base of accounting to prepare their financial statements.
