Infrastructure reporting by New Zealand local governments

Abstract

The aim of this study is to identify the contextual factors affecting infrastructure reporting by New Zealand local governments. The study adapts Luder’s (1992) contingency model as the research framework, as it aids in identifying contextual factors that may affect infrastructure reporting by New Zealand local governments. The aim of the study is attained by the achievement of three objectives developed based on Luder’s (1992) contingency model: (1) to investigate the relationship between annual report recipients’ information requirements and the disclosure of infrastructure information; (2) to investigate the influence of annual report recipients on infrastructure information preparers’ perceptions towards the importance of various infrastructure information items; (3) to investigate the relationship between infrastructure information preparers’ perceptions towards the importance of various infrastructure information items and the disclosure of infrastructure information. The findings of this study that annual report recipients’ infrastructure information requirements affect infrastructure information preparers’ perceptions towards the importance of various infrastructure information items is consistent with Luder’s (1992) contingency model. On the contrary, the findings that annual report recipients’ and infrastructure information preparers’ perceptions towards the importance of various infrastructure information items do not determine the ‘disclosure of infrastructure information by New Zealand local governments’ is contrary to Luder’s (1992) contingency model. Hence, Luder’s (1992) contingency model is unable to identify those contextual factors that affect infrastructure reporting by New Zealand local governments. This motivated the present research to interview annual report recipients and infrastructure information preparers of local governments to gain insight into contextual factors that affect New Zealand local governments’ infrastructure reporting in their annual reports. The interviews delineated the reasons behind the influences of annual report recipients on infrastructure information preparers’ perceptions towards the importance of various infrastructure information items is due to informal communication between these two groups. The reasons behind the lack of annual report recipients’ required infrastructure information disclosure in local governments’ annual reports was due to lack of legislative requirements to report infrastructure information required by annual report recipients. The other reason behind such non-disclosure is the lack of formal feedback received by preparers from annual report recipients. The reasons behind the lack of infrastructure information preparers’ perceived ‘important’ infrastructure information disclosure are first, infrastructure information preparers have access to other sources of information and second, resource constraints. The main factors that influence disclosure of infrastructure information by New Zealand local governments in their annual reports identified by interviewees are infrastructure information preparers’ professional judgements and legislative requirements. The factors that affect infrastructure information preparers’ professional judgements are ‘target readers’ of infrastructure information, ‘unusual events’ in the context of organisational strategy and ‘resource constraints.’ ‘Lack of formal feedback from annual report recipients’ also adversely affect preparers’ professional judgements. The ‘legislative requirements’ with regard to the disclosure of infrastructure information include New Zealand Financial Reporting Standards (NZIFRSs),audit requirements and the Local Government Act. The perception of the Minister of Local Governments affects the framing of the Local Government Act. The Department of Internal Affairs of New Zealand provides advice to the Minister of Local Governments. Following the interviews, a model is proposed of contextual factors affecting infrastructure reporting by New Zealand local governments. The proposed model extends Luder’s (1992) contingency model of public sector accounting innovations to infrastructure reporting by New Zealand local governments. This study contributes to New Zealand public sector reporting literature by taking an ‘alternative’ research approach and identifying contextual factors that affect reporting by New Zealand local governments, whereas six out of seven studies in the area of New Zealand public sector reporting adopted a ‘technical’ research approach. The study contributes to infrastructure reporting literature by investigating factors that influenced infrastructure reporting by the public sector concentrating on New Zealand local governments. None of the 27 studies, except that by Eddie and Lee (2001) investigated factors that influenced infrastructure reporting. The study by Eddie and Lee (2001) was limited to the analysis of effects of structural reform only. The present study contributes to theoretical development by testing and extending Luder’s (1992) contingency model of public sector accounting innovations in the context of infrastructure reporting by New Zealand local governments and proposing a new model. The present study contributes towards practice by outlining infrastructure information required by New Zealand local governments’ annual report recipients which has implications for the future development of accounting standards. Other contributions of the present study to practice are in the areas of future development of legislation and future resourcing of New Zealand local governments with regard to annual reporting.

Date of Award	2011
Original language	English
Supervisor	Ian A Eddie (Supervisor) & Monir Mir (Supervisor)