Date of Award


Degree Type


Degree Name

Bachelor of Business Honours


Faculty of Business

First Advisor

Dr Colin Dolley


This thesis is an exploratory study that examines a measure of the extent and nature of financial reporting by Western Australian local governments against the requirements and recommendations specified in the legislation, regulations and accounting standards. In addition, several economic and political factors which may provide some explanation for the variation in reporting practices of Western Australian local government councils is examined. Three disclosure measures are reported to provide descriptive information about Western Australian local government councils, compliance with mandatory reporting requirements, their voluntary disclosure of additional financial information and their policy of disseminating their annual financial information to the municipality. Pearson Product Moment Correlation coefficients are established to measure the relationship between the economic and political factors and the disclosure indexes. Linear regression models are developed to assess the explanatory power of these economic and political factors in relation to councils' identified reporting practices in the financial years, 1990/91 and 1991/92. The survey results indicate, that as expected, councils in the main comply with the accounting directions specified in the state government's legislation and regulations. In addition, to the regulatory reporting requirements, the Local Government Act 196Q-1982 allows councils to disclose additional financial information considered necessary or desirable. The financial statements were examined for voluntarily adoption of Australian Accounting Standard AAS 27 "Financial Reporting by Local Governments" and the disclosure of additional financial information in line with private sector reporting practices. The disclosure of additional information is found to be at best minimal. It is concluded that councils' current reporting practices are not sufficient to ensure the adequate discharging of their accountability responsibilities. Examination of the economic and political factors' explanatory power suggests that councils with larger populations more adequately discharge their financial reporting responsibilities than councils with smaller populations. This maybe attributable to the council being 'separated' from the residents and ratepayers, which leads to the formation of interest groups within the municipality. Given the exploratory nature of this research, several areas have been identified which may warrant further research to provide a better understanding of local government financial reporting. In particular, more specific research is suggested to investigate the variation in reporting noted between small and large councils. Other matters identified that may be worthy of further investigation include: the auditor's role in ensuring adequate financial disclosure by councils, the use of newspapers as a possible alternate information source, why councils appear not to report non-financial performance measures and the motivation for early adoption of public sector accounting standards which have multi-year adoption periods.