ANALYSIS OF THE USE AND USEFULNESS OF PUBLIC SECTOR ENTITIES REPORTS IN THE REPUBLIC OF CROATIA

Ivana Pajkovic ()
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Ivana Pajkovic: University of Zagreb, Faculty of Economics and Business

Economic Thought and Practice, 2023, vol. 32, issue 1, 195-218

Abstract: The purpose of the financial reports of public sector entities is to provide information about financial position and financial performance as well as cash flows. Therefore, financial reports are crucial when improving the accountability and decision-making of public managers. Given that the quality of information presented in financial reports depends on the accounting basis, and financial reports prepared on an accrual accounting basis provide the highest quality and most complete information, the goal of this paper is to determine whether financial reports prepared under modified accrual basis are useful in the decision-making process from two perspectives: the perspectives of public managers and the perspectives of accountants in the public sector of the Republic of Croatia, who participate in the process of preparing prescribed financial reports. Besides financial reports, public sector entities also prepare budget execution reports, and there is often a discrepancy between the prescribed reports due to the application of different accounting bases. In many countries, there is a dual reporting system, and the research conducted in these countries indicated the fact that budget execution reports are more preferred in the decision-making process. Furthermore, the purpose of the paper is to determine whether public managers prefer to use budget execution reports rather than prescribed financial reports. Also, considering that previously conducted research pointed to the fact that there is a difference in the use and usefulness of prescribed reports of public sector entities, the research will determine whether the perception of the usefulness of prescribed reports is greater than use. The research was conducted using a survey method on a sample of managers and accountants in the public sector in the Republic of Croatia. The research determined that financial reports do not fully meet the needs of public managers, and reforms in public sector accounting in the Republic of Croatia are expected in the near future.

Keywords: financial reporting; dual reporting system; use and usefulness; accounting basis; public managers (search for similar items in EconPapers)
JEL-codes: H60 H83 M41 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.17818/EMIP/2023/1.10

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