Associate Professor in Accounting, Geoff Burrows gives his review of this year’s joint research lecture presented by CPA Australia and the University of Melbourne.
On 19 October 2017, the Victorian Auditor-General, Andrew Greaves, gave the 78th Annual CPA Australia – University of Melbourne Research Lecture, the oldest continuous lecture series in the University’s calendar, also the world’s longest-running lecture in the accounting discipline.
Delivered in the University’s packed Copland Theatre, the lecture’s provenance was reinforced by the presence in the audience of 92-year-old Mrs Win Leslie, daughter of Sir Alec Fitzgerald, who gave the inaugural lecture in 1940.
In his opening remarks Mr Greaves noted that, despite the lecture’s longevity, he was only the third public servant to speak in the series. Coincidentally, his public service predecessors had both been Auditors-General – the Australian Auditor-General, Steel Craik (1980), and the Victorian Auditor-General, Richard Humphrey (1986).
The lecture, entitled ‘measuring and reporting performance in the public sector’ focused on the relevance of General Purpose Financial Reporting (GPFR) statements to not-for-profit public sector entities, which he labelled public benefit entities (PBEs).
Observing that Australia was an outlier in applying GPFR standards to PBEs – most countries apply accounting standards specifically tailored to PBEs – Mr Greaves provided a range of case studies highlighting problems in applying GPFRs.
A fundamental problem was that the ‘bottom line’, or net profit, applying to business enterprises had little relevance to PBEs. One telling example was the role of trusts controlling sporting facilities such as the Melbourne Cricket Ground. Their remit specifically excluded profit-making and their charges were set to exclude the major expense of depreciation. In effect, these bodies were established to make operating losses in terms of GPFR standards.
Another problem was the ‘going concern’ concept which, while a vital consideration for the private sector, had no relevance to PBEs whose existence and continuity reflected political decisions rather than financial performance.
Mr Greaves’ solution to these reporting problems was the development of measures showing the success or otherwise of service delivery by PBEs. However, he also flagged a major obstacle to the implementation of this concept: the reluctance of politicians to agree to measures against which the performance of their departments and programs could be judged.
Following a lively question and answer session, CPA’s Victorian Division President, Terence Brooks, closed proceeding by referring to his own experience with Victoria Police emergency helicopter rescues. This activity, while inordinately expensive and inherently unprofitable, was an essential community service.