Results-oriented Budget Practice in oecd countries odi working Papers 209

“Outcomes: What influence the government (of the day) wishes to have on the community;
•
Outputs and administered items
2
: How the government wishes to achieve that influence; and 
•
Performance indicators: How the government and the community know whether that influence is 
being achieved in an efficient and effective way.” (Chan et al 2002, p 35)
Thus, Outcome Statements “articulate government’s priorities and objectives, and therefore define 
the purpose of agencies” which act as an equivalent to mission statements and “explain the purpose 
of monies appropriated to agencies” (Chan et al, 2002, p 39-45). 
Full accruals accounting enables the impact of long-term expenditure to be realised over time 
because “allocation is made of the cost of long-lived assets to the periods enjoying their use” 
(United Nations, 1986, p 45). They argue that “accruals accounting is appropriate in all cases 
where break-even concepts apply and where economic cost is an important consideration”. Hughes 
argues that accruals accounting “allows for the long-term consequences of spending to be calculated 
more precisely by its effects on the overall balance sheet as it includes changes in asset values. 
Using cash accounting is actually a distortion. For instance, paying for a new ship for the navy as 
cash is poor accounting as the asset has a finite life and should be depreciated over that time” 
(contribution to a mailbase discussion, 2001). 
Pollitt (2001) identifies the technical difficulties of moving beyond output measures to outcome 
measures, especially the linking of budgetary allocations to effectiveness measures. He identifies a 
number of problems: 
•
Outcomes are likely to be realised (or not realised) over a period longer than the budgetary year.
On this point, the Canadian Auditor General notes that departmental reports have “[t]oo much 
focus on the latest year. Most outcomes that governments seek take a number of years to 
achieve. A ‘performance story’ focussed on outcomes requires a discussion of the chain of 
results over several years. In recognition of this fact, departmental performance reports “clearly 
indicate on the front that they cover the period up to 31 March of that year rather than only the 
12 months in the fiscal year” (Auditor General of Canada, 2000). 
•
There are other intervening variables over which managers have no control. He calls this the 
attribution of outcomes issue. Citing the case of education allocations where efficiency 
2
In the management of Commonwealth resources, a distinction is made between activities controlled by agencies (agency outputs),
and resources agencies administer on behalf of the government (administered items). Administered items include grants, subsidies, 
benefits and funding for outputs delivered by state governments. They comprise around 80% of the Commonwealth Budget. 

---

24
measures may be ‘radically disconnected’ from educational outcomes and therefore it would be 
foolish to withdraw resources from inefficient programmes (Pollitt, 2001, p 24). 
Pollitt argues that some types of budget are more amenable to performance management than 
others. Line budgets (staffing, rents etc.) may not permit anything other than the monitoring of 
compliance with input appropriations. Global budgeting “presupposes a move to a performance-
based accountability regime” (Pollitt, 2001, p 18), though, as Schick points out, devolution of 
managerial control has advanced further than has the assimilation of new accountability methods 
(Schick cited in Pollitt, 2001, p 18). According to an account by a United States Office of 
Management and Budget official, agencies in the US encounter difficulties in aligning resources 
with performance goals because budget accounts have evolved historically catering for the needs of 
various users, with many structured to allocate funds by units not performance goals. Changing the 
system would require time and congressional approval (Groszyk, 2002, p 137). 
In an attempt to make budgets predictable over time, Canada has increased the percentage carry 
over from one financial year to the next from 2 to 5% (Auditor General of Canada, 2001).
Managers welcomed this greater flexibility which reduced pressure to use funds before the year 
end.