Comparability issues. One of the objectives of the Commonwealth is to ’allow benchmarking and a better understanding of contestability through comparable data’. As a result of problems with the existing reporting format, information produced by the SHAs was not reliable and was consequently not used by the Commonwealth to either review the operations or to compare SHAs. Two areas in particular, which require resolution are allocation of revenue and expenses to segments, and different accounting policies. Allocation of revenue and expenses to segments When SHAs are required to allocate income and expenses to segments, information may be incomparable due to different methods of allocation between segments. This issue was covered briefly in Section 4.2. The problem can be avoided by removing the requirement to break up the consolidated results. This is the primary rationale behind our recommendation for consolidated reporting rather than segmented reporting. Different accounting policies The second issue relates to the underlying differences between the accounting numbers due to the adoption of different accounting policies by SHAs. The results of the SHAs could be materially affected by the use of one accounting policy over another. Table 3 shows the significant account balances affected by different accounting policies. As much as possible, states and territories should be encouraged to use nationally consistent accounting policies. An attempt at this was made in March 1995 when Xxxxxxx & Xxxxxxx (now PricewaterhouseCoopers) was commissioned to prepare standard accounting policies which were to be used by all SHAs. While these policies appear to have been adopted as much as possible, there are still cases where inconsistencies are experienced. As the Commonwealth cannot enforce these policies, other procedures will need to be adopted to ensure that information is able to be compared against other SHAs and against benchmarks. Three possible solutions to this problem are as follows:
