Business research is performed either to start a business or to assist managers in making business decisions. The purpose of conducting business research is to identify problems and opportunities. It can also be conducted to improve processes, strategies and tactics. Conducting business research is essential to make sound business decisions. For example, in local government, conducting research on finances assists with budgeting and planning.
Since I work in local government, I searched for articles on research studies within local government agencies and their financial performance measures. The research study I found is called, “Local Government Measurement and Use of Performance Accounting and Financial Reporting Data in Planning and Budgeting Decision Support” (2009). The study used a multi case study approach. The study was done to identify debt obligation performance in financial reports to assess the measurement of debt performance.
The researcher selected three county government agencies to perform the study. The selection of the county agencies was based on history and similarity of the use of performance measures and the use of debt performance data in their budget decision making. The counties also share similar characteristics in city age, population, general fund revenues and geographic region. The counties selected for the study are Solano County in California, Prince William County in Virginia and Kent County in Michigan. The study used the Comprehensive Annual Financial Reports and budget for each county to examine the debt obligation performance. The researcher used these reports because they are audited and seem more credible than self-reported financial reports.
Financial performance measurement information provides information to Council members and residents on how the agency is performing and managing tax payer’s dollars. It is also vital in supporting decisions for the counties infrastructure, staffing, technology, equipment and other operational needs. Beckett-Camarata stated that 95.7 percent of counties uses financial measure in measuring performance. It clearly contributes to budgetary decision making. The research question for the study was “To what extent do the three county government cases use financial reporting data on debt to measure debt obligation performance?” (Beckett-Camarata, 2009). The study examined how the county government agencies report performance date on debt obligations.
The study analyzed each of the county’s Comprehensive Annual Financial Reports. The reports list debt obligations and performance measures for its debt. Some states have regulations that limit the amount of general obligation debt an agency can have. For the states that do not have those limits, the governing body on each agency sets its debt limitation. The study demonstrated that each county’s debt obligation was significantly less than the allotted limit. It also quantified the contributing factor for obtaining the debt obligation for each county.
The analysis portion of the study found that all three counties pay attention to measuring and reporting debt obligations. Their budget reports are detailed and describe the debt levels, legal debt limits and explain existing debt. Beckett-Camarata found the performance measures in each counties budget surprising. The analysis revealed that all three had received budget award certifications from the Government Finance Officers Association. They are very involved and meticulous in creating the documents for the budget reports. The recommendation for Kent County was that they report percentage increase in the Comprehensive Annual Financial Report and percentage expended. It was recommended that Solano County report percentage of assessed value in their budget and the Comprehensive Annual Financial Report. The recommendations were made to ensure consistency in reporting financial obligations.
In conclusion, the study was done to identify debt obligation performance in financial reports to assess the measurement of debt performance. There were three county agencies who were chosen for the researched. All three were provided with a summary, analysis, discussion, implications and recommendations. This research was an exploratory research since literature is limited but it was well thought out and explained. The research suggested that consistency in performance reporting helps the governing bodies understand long term implications of debt and improving or maintaining their financial position.