Beyond the Balance Sheet

Abstract

Because public enterprises have very broad social and economic objectives, their success or failure cannot be measured by a simple profit and loss account. If good performance is equated with minimal costs and maximal savings, some corporations would be compelled to avoid certain costly but obligatory investments. Even within the framework of financial indicators, certain important aspects of costs and savings are not reflected in a traditional financial statement. To fully understand expenditure patterns, Parliament would need to know the extent to which the authorized funds have been spent, how the activities of the enterprise have affected its organizational structure and how it has performed its statutory obligations. But a focus on these factors implies that the evaluation process will consider the whole public enterprise system rather than particular enterprises. Examining the enterprise system would entail evaluating enterprises, their regulatory structures, and their relationships with government ministries. However, annual reports present the financial picture of each enterprise in isolation. This chapter focuses on the relevance of organizational structures, the management of development funds and economic performance generally to performance evaluation and accountability.