International Journal of Government Auditing–July 2009
Reporting on Nonfinancial Information
by Michèl Admiraal, Royal Nivra, and Rudi Turksema, Netherlands Court of Audit
The past few years have seen a growing focus on social responsibility and policy results
in the public sector. Governors, politicians, controllers, and government audit offices
have become more interested in performance information in budgets and reports.
Much of the information on social performance and effects is of a nonfinancial
nature. It does not concern uniform measurable monetary units but rather numbers
or processes and systems. Public sector users are especially interested in nonfinancial
information, which reflects the results and effects of government policy. Therefore, the
reliability and relevance of this information are highly important. Auditors can play an
important role in providing assurance on the reliability of nonfinancial information.
Unlike reporting on financial information, reporting of nonfinancial effects is still
comparatively new, and no generally accepted principles are yet available. Moreover,
the data are very diverse; the more qualitative the data are, the more difficult they
are to measure and assess. Also, the audit of nonfinancial information is a new audit
subject for many auditors. For this reason, Royal Nivra (the Dutch organization for the
accounting profession) initiated a project that resulted in the Nivra guide Nonfinancial
information in progress, a guide to the reporting and assurance of nonfinancial information
in the public sector. The guide aims to help develop a universal basis for reporting
and providing assurance on nonfinancial information. It is the result of the work of
representatives from different sections and disciplines in the Dutch public sector,
including the Netherlands Court of Audit, the Dutch SAI.
This article presents the main findings reported in the guide, including a number of
recommendations and an agenda for the future audit of nonfinancial information.
Need for Guidance on Nonfinancial Information
For financial information, comprehensive registration systems and generally accepted
principles for presenting information have been in existence for a considerable time.
However, this is not the case for nonfinancial information, where there are fewer
safeguards for reliability and the quality requirements for the information are not
yet standardized. Because suitable criteria and a frame of reference for nonfinancial
information are not available, it is not always possible or desirable to provide
assurance, especially in regard to measuring policy effects. A theatrical performance
may be performed perfectly and meet all kinds of objective quality standards, but the
audience determines whether they consider the performance a success. Nonfinancial
information, therefore, requires special diligence in terms of its definition, frame of
reference. and reporting.
In the guide, we use the following definition for nonfinancial in