Question

Copley (2018) stated "neither governmental nor not-for-profit financial statements are particularly effective in measuring organizational effectiveness…The fundamental problem is that government and not-for-profit effectiveness cannot be expressed solely in financial terms" (p. 389). In other words, we should not only look at a school district's average spend per child compared to its peer districts and draw conclusions regarding organizational effectiveness, but also consider qualitative measures of performance. GASB Concepts Statement 2, Service Efforts and Accomplishments (SEA) Reporting, which provides a framework for combining financial and nonfinancial information for the users of the governmental financial statements to understand organizational effectiveness as a whole. Although Statement 2 exists, GASB has not issued any standards for the nonfinancial reporting. Thus it is voluntary to include an SEA report. As a taxpayer who funds government activities, you likely have an opinion on the ability to rely on financial and nonfinancial data to communicate effectively. Choose a stance—"financial information should stand alone just like for-profit businesses" or "financial and nonfinancial information is critical and should be assimilated together"—and debate with your classmates one last time in this course! There are no right or wrong answers for this assignment, just the opportunity to voice your opinion on the subject matter.

Answer 1

For better evaluation and understanding, financial and non financial information is to be studied and taken into account as a whole.

This is because financial information alone cannot measure efficiency.

For example, in school average spend per child is not the sole parameter, the growth of the students should also be taken into account.

Similarly, for hospitals, no. Of beds , average spending of patients is not enough. Recovery rate also plays and important role

In this way, we would find, both financial and non financial information should be analysed wholistically.

Hence both of them are critical.