A public accountability index for annual reporting by New Zealand universities

Abstract

This thesis addresses two questions about accountability and annual reporting in the context of New Zealand universities. The first is to identify what information should be disclosed in universities’ annual reports to meet public accountability expectations. The second question asks how the quality of annual reports may be measured from a public accountability perspective. An historical overview of universities’ annual reporting since the establishment of New Zealand’s first university at Otago in 1869 sets the scene for the thesis in Chapter Two. For over 120 years annual reports were ritualistic documents with a circulation limited to the oversight agencies in Wellington. Massive economic reform instigated by the 1984 Labour government culminated in legislative changes in 1990 which necessitated more timely and comprehensive reporting by the universities. The objectives of reporting and the meaning of accountability are explored in depth, first from a functionalist standpoint and then using a political economy approach. It is argued that accountability plays a critical role in organisational power relationships, and acts as an important check against undesirable traits such as provider capture, low efficiency and effectiveness which may develop in public organisations. The delphi technique is used with 39 university stakeholder and preparer panellists to evaluate a normative framework of reporting and provide a stakeholders’ perspective on disclosure priorities. This information is used to develop a Public Accountability Index for measuring the quality of universities’ reports. The Index advances knowledge by virtue of its theoretical development, empirical testing by stakeholder groups, parametric statistical qualities, and more comprehensive coverage of disclosure items than the extant indices. The most important contribution of the thesis is its advocacy of a public accountability reporting which emphasises openness over secrecy, service performance over financial performance, and narrative, statistical and other quantitative disclosures over financial statements. Public accountability reporting gives stakeholders the opportunity to gain valuable insights about organisations’ activities, and their objectives and success in meeting these. Public accountability reporting has important implications for the accountancy profession because it is not clear which organisational officials are best equipped to take responsibility for the new reporting. This is both an opportunity and a threat for accountants.