Summary of Concepts Statement No. 2

Concepts Statement No. 2
Service Efforts and Accomplishments Reporting
(Issued 4/94)


This summary provides highlights of the Concepts Statement and serves as an introduction to the concepts being presented. This Concepts Statement further develops the objective of service efforts and accomplishments (SEA) reporting and identifies its elements and characteristics. The Statement provides background information on the governmental environment (paragraphs 10-12), governmental decision making (paragraphs 13-17), accountability (paragraphs 18-33), and the reporting of performance information as part of general purpose external financial reporting (GPEFR) (paragraphs 34-49) and calls for further extensive experimentation in measuring and reporting SEA before the GASB considers establishing SEA reporting standards (paragraphs 69-79).

SEA Information as Part of GPEFR for State and Local Governmental Entities

General purpose external financial reporting (GPEFR) focuses on providing information to meet the needs of financial report users. This information may be provided in the general purpose financial statements, the comprehensive annual financial report, or other, separate reports. An objective of GPEFR is to provide users with information that will assist them in assessing the performance of the reporting entity. Because the primary purpose of governmental entities is to maintain or improve the well-being of their citizens, information that will assist users in assessing how efficiently and effectively governmental entities are using resources to maintain or improve the well-being of their citizens should play an important role in GPEFR.

The SEA reporting objective as originally stated in GASB Concepts Statement No. 1, "Objectives of Financial Reporting," is based on the Board's belief that SEA information is necessary for assessing accountability and in making informed decisions; therefore, to be more complete, GPEFR for governmental entities needs to include SEA information. This information most likely will be reported in a report separate from the comprehensive annual financial report (CAFR). The assessment of a governmental entity's performance requires information not only about the acquisition and use of resources, but also about the outputs and outcomes of the services provided and the relationship between the use of resources and their outputs and outcomes. By focusing on a variety of financial and nonfinancial measures of inputs, outputs and outcomes, and measures that relate efforts to accomplishments, SEA reporting will assist users of GPEFR to more fully assess governmental performance.

Objective, Elements, and Characteristics of SEA Reporting

The objective of SEA reporting is to provide more complete information about a governmental entity's performance than can be provided by the traditional financial statements and schedules to assist users in assessing the economy, efficiency, and effectiveness of services provided (paragraphs 54-56). The elements of SEA reporting include (a) categories of SEA of service accomplishments (output and outcome indicators), and measures that relate service efforts to service accomplishments (efficiency and cost-outcome indicators) (paragraph 50)and (b) explanatory information (paragraphs 51-53).

To promote achievement of the objective of SEA reporting, SEA information should focus primarily on measures of service accomplishments (outputs and outcomes) and measures of the relationships between service efforts and service accomplishments (efficiency); SEA information also should meet the characteristics of relevance, understandability, comparability, timeliness, consistency, and reliability (paragraphs 57-66). This Statement also discusses limitations of SEA measurement and reporting (paragraph 67) and how to enhance the usefulness of SEA information (paragraph 68).


The Board believes that including SEA measures as part of GPEFR would represent a significant improvement in financial reporting practices for state and local governmental entities. In the past, SEA measures have not been included in external reporting by many governmental entities; however, an expanding number of governmental entities presently are developing and using SEA measures. Extensive further experimentation and analysis are needed (a) to determine whether SEA measures that meet the characteristics set forth in this Concepts Statement can be developed for governmental services and (b) to explore how externally reported SEA information is used and the effects its use has on the quality, effectiveness, and efficiency of the services being reported on.

The services provided by state and local governmental entities are diverse and often complex in nature. The GASB cannot by itself determine relevant SEA measures. Therefore, in addition to accountants and others who are involved in financial management, it is essential that other management personnel (including program personnel, budget personnel, performance evaluators, and professional groups), internal auditors, and elected officials, citizens, and other users become active in developing and using SEA measures.

SEA reporting would expand the amount and types of information being gathered and reported externally; therefore, after further government experimentation in SEA measurement, reporting, and use, the GASB will carefully consider benefits and costs of specific SEA measures for different aspects of various services before establishing requirements. If the GASB proposes to require reporting of specific SEA measures, the benefits of those measures will need to be compared to the costs of gathering, verifying, and reporting the underlying data. In assessing the benefits and costs of a specific measure, consideration will be given to such factors as its particular value in measuring accomplishments, the extent to which it has gained general acceptance, its understandability to citizen and oversight groups, and the relative benefits of other, less costly measures.

Unless otherwise specified, pronouncements of the GASB apply to financial reports of all state and local governmental entities, including public benefit corporations and authorities, public employee retirement systems, utilities, hospitals and other healthcare providers, and colleges and universities. Paragraph 7 discusses the applicability of this Concepts Statement.