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2591-2259 / This is an open access article under the CC-BY-SA license https://creativecommons.org/licenses/by-sa/4.0/
DOI: 10.17573/cepar.2025.1.07 1.01 Original scientific article
The Use of Public-Sector Financial 
Reports: A Comparative Analysis of 
Different Information-User Groups
Ivana Barbieri
University of Rijeka, Faculty of Economics and Business, Croatia
ivana.barbieri@efri.uniri.hr
https://orcid.org/0000-0002-3788-0975
Martina Dragija Kostić
University of Zagreb, Faculty of Economics and Business, Croatia
mdragija2@net.efzg.hr
https://orcid.org/0000-0003-0131-0345
Nives Botica Redmayne
Massey University, School of Accountancy, New Zealand
n.redmayne@massey.ac.nz
https://orcid.org/0000-0003-4513-2632
Received: 21. 2. 2025
Revised: 25. 4. 2025
Accepted: 8. 5. 2025
Published: 20. 5. 2025
ABSTRACT
Purpose: This paper investigates the extent to which different user 
groups in the public sector consult financial reports. Because these re-
ports are prepared for a wide audience, we examine whether the in-
tended recipients actually use them and explore variations in how—and 
why—they are used.
Design/methodology/approach: The study concentrates on politicians 
and public managers, adopting a quantitative design. A bespoke ques-
tionnaire was developed and administered by telephone across the Re-
public of Croatia between February and April 2022. Split-half factor analy-
sis, t-tests and χ² tests were employed to identify differences in both the 
frequency of use and the reasons for use between the two groups.
Findings: Respondents reported that they both receive and actively 
consult financial reports. Public managers use the reports significantly 
more often than politicians. Nevertheless, financial reports are gener-
ally treated as secondary sources, whereas budget-execution reports are 
consulted more frequently. The analysis suggests that information rel-
evance and the respondent’s role are the principal determinants of use. 
Barbieri, I., Kostić, M.D., Botica Redmayne, N. (2025). The Use of Different Public-
Sector Financial Reports: A Comparative Analysis of Information-User Groups. 
Central European Public Administration Review, 23(1), pp. 181–201

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Ivana Barbieri, Martina Dragija Kostić, Nives Botica Redmayne
The reliance on a single questionnaire instrument constitutes a limita-
tion, discussed in the cited literature.
Research limitations/implications: Future research could incorporate 
additional data-collection methods (e.g. interviews or document analysis) 
and extend the study to other jurisdictions to enhance generalisability.
Originality/value: The study adds empirical evidence to the internation-
al debate on the purpose of public-sector financial reporting and clarifies 
how specific factors shape report use or non-use.
Keywords: public-sector financial reports, usage intensity, politicians, public 
managers, questionnaire
POVZETEK
Uporaba finančnih poročil v javnem sektorju: primerjalna 
analiza kategorij uporabnikov informacij
Namen: Prispevek raziskuje, koliko različne skupine uporabnikov v javnem 
sektorju pregledujejo finančna poročila. Ker so ta poročila namenjena ši-
rokemu krogu naslovnikov, preverjamo, ali jih ciljni prejemniki dejansko 
uporabljajo, ter preučujemo razlike v tem, kako – in zakaj – jih uporabljajo.
Zasnova/metodologija/pristop: Študija se osredotoča na politike in jav-
ne managerje ter uporablja kvantitativni raziskovalni pristop. Prilagojen 
vprašalnik je bil pripravljen in od februarja do aprila 2022 izveden po te-
lefonu po celotni Republiki Hrvaški. Za ugotavljanje razlik v pogostosti in 
razlogih za uporabo med obema skupinama so bili uporabljeni split-half 
faktorska analiza (metoda razpolovitve), t-testi in χ²-testi.
Ugotovitve: Anketiranci poročajo, da finančna poročila tako prejemajo 
kot jih tudi aktivno pregledujejo. Javni managerji jih uporabljajo precej 
pogosteje kot politiki. Kljub temu se računovodski izkazi praviloma obrav-
navajo kot sekundaren vir, poročila o izvrševanju proračuna pa se pregle-
dujejo pogosteje. Analiza kaže, da sta glavna dejavnika uporabe relevan-
tnost informacij in vloga anketiranca. Uporaba enotnega vprašalnika je 
omejitev, ki je obravnavana v citirani literaturi.
Omejitve raziskave/implikacije: Prihodnje raziskave bi lahko vključile 
dodatne metode zbiranja podatkov (na primer intervjuje ali analizo do-
kumentov) in razširile študijo na druge jurisdikcije, s čimer bi izboljšali po-
splošljivost ugotovitev.
Izvirnost/vrednost: Študija s svojimi empiričnimi rezultati prispeva k 
mednarodni razpravi o namenu finančnega poročanja v javnem sektorju 
in pojasnjuje, kako specifični dejavniki vplivajo na uporabo ali neuporabo 
poročil.
Ključne besede: finančna poročila v javnem sektorju, intenzivnost upora-
be, politiki, javni managerji, vprašalnik
JEL: M41

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The Use of Public Sector Financial Reports: A Comparative Analysis Between Different 
Categories of Information Users
1 Introduction
The reform processes that have been actively implemented in public sector ac-
counting over the last four decades have been aimed at improving the quality 
of public sector management. The reforms also affected the financial report-
ing system (Ruiz, 2000). Systems that were previously quite closed became 
more open and started to provide the same information to different users 
such as politicians, public managers, citizens, control bodies, media and other 
users (Jorge et al., 2019). The reforms implemented influenced the academic 
community, which expressed the need for research on accounting informa-
tion users and their information needs. Thus, research was conducted on the 
following topics: who the users of accounting information are, whether infor-
mation is used at all, why it is used or why it is not used, what information is 
used, how it is used, what information is more useful for what purposes and 
under what circumstances (e.g. Buylen and Christiaens, 2016; Caruana and 
Faruggia, 2018; Liguori et al., 2014; Liguori and Steccolini, 2019; Raudla, 2022).
In democratic societies, the public sector financial reports (hereinafter: PSFRs) 
are expected to be used by politicians and public managers when making deci-
sions and expressing their responsibility to citizens and higher levels of gov-
ernment (Guarini, 2016). However, previous research has shown that the use 
of financial reports is limited, and some authors still emphasize that this is an 
under-researched topic (Jorge et al., 2019; Van Helden and Reichard, 2019).
On the other hand, the budget is the most important financial instrument of 
the state for the executive and legislative authorities to ensure the super-
vision of financial operations and the implementation of various budgetary 
controls. When examining the use of budget execution reports and financial 
reports, it was found that budget execution reports are preferred (e.g. Moret-
ti, 2016; Gomes et al., 2023).
Given that PSFRs are regarded as a crucial tool for accountability in the public 
sector, and that prior research has indicated they are used to a limited extent 
in an under-researched area, there is a clear need for further study. Specifi-
cally, it would be valuable to investigate the users, their use of financial re-
ports, and the reasons behind this usage, to observe any potential changes 
over time. In addition, previous research has mostly focused on just one group 
of respondents. The aim of this study was therefore to carry out empirical 
research and involve different groups of information users to see if they use 
the reports, if there are differences in usage and what the reasons for using 
the reports are. The research was conducted with two groups of respond-
ents, politicians and public managers. The findings confirmed that budget 
execution reports are still preferred over financial reports. However, all re-
spondents indicated a high level of use of the reports. When comparing the 
responses, it was found that there is a difference in usage and reasons for us-
age in relation to the respondents’ role. The responsibility of the respondents 
as well as the relevance of the information prove to be decisive for the use of 
the reports themselves. In addition, knowledge as a personal characteristic af-
fects the use of the reports, i.e. the understanding of the reports themselves. 

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The high level of use implies that the key to more frequent use of reports by 
public sector entities lies in ensuring that reports fulfil the users’ purpose.
The work is divided into five parts. The introduction is followed by the identi-
fication of the users of PSFRs and the development of the theoretical frame-
work. The third part presents the research questions, and the fourth part con-
tains the research approach and the research results. The fifth part develops 
the discussion and draws a conclusion based on the data processed.
2 Background
2.1	 Definition	of	Users	of	PSFRs
Financial reports are considered to be important communication tools in the 
public sector (Cohen and Karatzimas, 2017). In public sector, the purpose of 
reports is to provide users with useful information on accountability and for 
decision making. Intended users and their information needs are critical to 
the form and the content of financial reports (Taggeson, 2015). In the case 
of public sector entities’ reporting, the range of potential users can be very 
wide, as almost every person or business has some type of relationship or 
exchange with the public sector.
There are a number of studies that researched the users of public sector 
entities’ reports (Mack and Ryan, 2007). During the 1970s and 1980s, many 
researchers focused on identifying the users to whom accounting informa-
tion must be provided (Anthony, 1978; Drebin et al., 1981). This work contin-
ued for a couple of decades, until the 1990s. Most of the studies published 
during this period focused on external users (Patton, 1978). These empirical 
studies were conducted considering the needs of different users and uses of 
accounting information. Collins et al. (1991) investigated the use of local au-
thorities’ financial reports by local councils in Scotland. Their research showed 
that although local councils skimmed certain financial chapters of the reports, 
they did not consider them as a primary source of information. These authors 
concluded that the lower use of such information is influenced by the charac-
teristics of information presented in the reports.
Internal users, i.e. public managers, were identified as users of financial re-
ports in Brusca (1997) study. Following Brusca (1997) researchers tend to clas-
sify the potential users of financial reports in public sector as (Steccolini, 2004):
a) external users,
b) internal users.
External users include citizens, that is, citizens receiving public services and 
taxpayers, companies using public services, higher levels of government, 
regulators, auditors, other public entities, as well as foreign investors, banks, 
rating agencies and academic community. Internal users include council mem-
bers in local governments and executive members in national or central gov-

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The Use of Public Sector Financial Reports: A Comparative Analysis Between Different 
Categories of Information Users
ernments, public managers, civil servants and trade unions in the public sec-
tor (Steccolini, 2004).
PSFRs are prepared primarily to meet the needs for information of resource 
providers and service recipients who are not authorized to request specific in-
formation from public sector entities and that is necessary for their decision-
making (IPSASB, 2014). Legislative bodies and parliamentarians or similar rep-
resentative bodies are also considered as primary users of financial reports 
when they act as representatives of service recipients and resource providers 
(IPSASB, 2014).
2.2	 Prior	Empirical	Research
Previous usage analysis examined the use of financial reports as well as the 
use of accounting information that included variety of reports and perfor-
mance information (Buylen and Christianes, 2016; Caruana and Faruggia, 
2018; Jorge et al., 2024; Pajković et al., 2023; Raudla, 2022; Saliterer et al., 
2019). The results of these studies showed that the actual use of financial re-
ports is low, and financial reports do not present a primary source of informa-
tion in public sector. While some authors argue that both the characteristics 
of the information and the characteristics of the reports play key roles in the 
use of reports (Caruana and Faruggia, 2018; Jorge et al., 2019), other authors 
believe that the individual characteristics of the respondents influence the 
use (Yamamoto, 2008; Askim, 2009; Faber and Budding, 2022; Rogošić, 2021; 
Sinervo and Hapala, 2019).
Although the number of papers investigating the use and usefulness of PS-
FRs has increased in the last ten years, this area still remains an unexplored 
topic, especially in Southeastern European countries. Namely, previous pa-
pers have mainly focused on the analysis of budget and accounting bases 
and their relationship to financial reporting systems. For example, Poljašević 
et al. (2019) analyzed the application of budget and accounting bases and 
their relationship to financial reporting systems through a comparative 
study of three Southeastern European countries: Slovenia, Croatia, and Bos-
nia and Herzegovina (the entity of Republika Srpska). The analysis showed 
that budgetary reports based on the cash basis represent the primary source 
of information for decision-making, while financial reports based on the ac-
crual/modified accrual basis are not the result of the information needs of 
decision-makers. Furthermore, the monograph (Vašiček and Roje, eds., 2019) 
provided a comprehensive overview of the practices and development of ac-
counting, auditing and control systems in the public sector of seven South-
eastern European countries. Each chapter analyzed the territorial organi-
zation, the scope of the public sector, budget formulation and execution, 
accounting and financial reporting reforms, and challenges in further devel-
opment, but did not discuss the usefulness of the reports presented. One of 
the rare works that analyzed the usefulness of reports in selected countries 
of Southeastern Europe is the work by Poljašević et al. (2021). The authors 
conducted empirical research on the perceived usefulness of accounting in-

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formation for public managers at local levels in Croatia and the Republic of 
Srpska. The research results showed that in both countries both budget and 
financial reports are considered very useful when making decisions, while 
their experience and education were not related to the perception of useful-
ness. Moreover, Rogošić (2021) conducted an empirical study to assess the 
level of use and usefulness of accounting information among public manag-
ers and governing politicians, but from the perspective of the accountants. 
The results of that study, conducted in the Republic of Croatia, show that 
public managers use more accounting information in decision-making than 
governing politicians. Pajković et al. (2023) investigated the extent to which 
politicians use financial statements and the perception of the usefulness of 
the statements. The results showed that politicians in Croatia use financial 
statements, but their perception of the usefulness of these statements is 
greater than their actual use. The main reasons for non-use were that they 
do not need the reports, that they are not in their area of interest, and that 
they contain too many technical terms. Research of Pajković (2023) was to 
determine the usefulness of financial statements prepared on a modified ac-
crual basis from the perspective of public managers and accountants in the 
public sector of the Republic of Croatia. The research showed that financial 
statements do not fully meet the needs of public managers and reforms in 
public sector accounting are expected in the near future.
2.3	 Theoretical	F ramew ork	–	Upper	E chelons	Theor y
Most previous conducted and mentioned studies in this area have used ques-
tionnaires or interviews as the methodology, while very few previous studies 
have used any other observational methods. The analysis of previous litera-
ture on the use of PSFRs shows that a descriptive approach to the research 
problem is generally adopted, while theoretical arguments generally do not 
play an important role (Van Helden, 2016). Jethon and Reichard (2022) con-
clude that the use of public sector financial reports differs between politi-
cians in the executive branch and public managers, due to different roles 
that those subjects hold, their different level of formal education and the 
experience they have as a council member. Jorge et al. (2016) conclude that 
a distinction between politicians and public managers in terms of their roles, 
work positions and scope of their responsibilities have explanatory power, 
as the public managers’ and politicians’ roles seem to be critical in the use of 
financial reports. However, more recent research (Faber and Budding, 2022) 
used the Upper Echelons Theory (Hambrick and Mason,1984, as cited in Faber 
and Budding, 2022) as a theoretical framework, which originates from the 
private sector research. Faber and Budding’s (2022) study focused on the ex-
tent to which the political role and the personal characteristics of users influ-
ence their use of information. Faber and Budding (2022) analysed the use 
of accounting information as well as other information during political de-
bates. Although political role and personal characteristics influence the use, 
the differences in absolute numbers due to those characteristics were small. 
Their study has shown that politicians in parliament use less accounting in-

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formation and other information compared to politicians in government. In 
addition, their study finds that representatives of the parties in the governing 
coalition use more accounting information than representatives of the op-
position. Looking at the personal characteristics of the respondents, younger 
representatives use accounting data and other information more than their 
older colleagues, while more experienced representatives use less account-
ing data than representatives who have just started their political career.
3	 Dev elopments	of	the	Research	Problem
Despite efforts to bring accounting information closer to citizens through var-
ious reporting tools, it is reported that citizens are still a group of users who 
make limited or infrequent use of accounting information (Van Helden and 
Reichard, 2019). In a democratic society elected politicians represent citizens 
and are recognized as the main user group of accounting information (Van 
Helden and Reichard, 2019), including financial reports. This is due to their in-
volvement in decision-making and their responsibilities for public sector pro-
grams and projects. Some authors believe that managers are the main users 
of financial reports, not the politicians, because they need the reports to also 
make decisions as well as hold politicians accountable (Brusca, 1997). How-
ever, previous studies have also shown that the use of reports by politicians 
and public managers is limited (Gomes et al., 2023; Jorge et al., 2019; Pajković 
et al., 2023; Yamamoto, 2008). Van Helden and Reichard (2019) define use 
as actual consultation, i.e. reading and analysing information in the reports 
by public sector entities in decision-making and accountability processes. Al-
though an increasing number of empirical studies on the use of accounting 
information have been conducted, there is still a need for further empirical 
studies in this area. Previous studies have shown that there is a strong need to 
link different variables to the level of financial reporting use. Moreover, previ-
ous studies have mainly focused on one group of users. The aim of this study 
is therefore to examine the use of financial reports by two different groups of 
information users, namely politicians and managers, in one and the same envi-
ronment to determine their specific use of the reports. In addition, this study 
also investigates the differences in use amongst these two different groups 
and what the reasons for their different use of the reports are. Furthermore, 
this paper aims to examine whether Upper Echelons theory can be applied to 
the public sector, specifically exploring whether the role and responsibilities 
of the information user affects the use of reports.
Therefore, based on previous research, research questions in this study are:
1. Do public managers and politicians use PSFRs, i.e. can we consider them 
actual users or only recipients of financial reports?
2. Are there differences in the use of PSFRs between public managers and 
politicians?
3. What are the reasons for using PSFRs and what influences their use and any 
differences in their use?

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This study was conducted in the Republic of Croatia. The analysis of the exist-
ing reporting system by public sector entities in the Republic of Croatia re-
vealed that there are two reporting systems currently in use in Croatian public 
sector. Budget execution reports are required, which are prepared semi-an-
nually and annually. Additionally, financial reports are required to assess the 
financial position and performance. Regarding public sector reporting at the 
European Union level, the transition to accrual accounting is recommended, 
though there is currently no legal obligation for all member states to fully 
implement accrual accounting. Therefore, the Republic of Croatia as an EU 
member currently does not apply accrual accounting in their public sector. 
Public sector reports are instead prepared on a modified accrual basis. Croa-
tia has shown in the last thirty years’ significant progress in public sector ac-
counting reforms, where there has been a significant shift from a full cash 
accounting basis to a current form of modified accrual accounting basis.
4	 Research	Approach	and	Research	Results
4.1	 Research	Approach
To address the defined research questions, a telephone survey was conduct-
ed with two groups identified as recipients of information. To obtain a sam-
ple, the population was determined. For this study, we decided to include two 
groups of respondents. The first group consisted of politicians, members of 
representative bodies, while the second group consisted of public managers. 
In the sample of politicians included members of parliament and councilors of 
the county council, city council and local council. In the sample of public man-
agers were included members of the Croatian Government, county prefects 
and their deputies, mayors of cities and their deputies, mayors of municipali-
ties and their deputies, heads of public sector entities. The research was con-
ducted on the territory of Croatia in the period from February to April 2022. 
Initially, databases were created based on publicly available data (websites 
of the Croatian Parliament, counties and local and regional self-government 
units, data from the State Electoral Commission, websites of the Croatian 
Government, websites of counties, cities and municipalities, and the Register 
of Budgetary and Extra-Budgetary Users of the Ministry of Finance) and 7,828 
politicians and 3,942 public managers were identified. The aim was to achieve 
a quota sample of 500 respondents. Ultimately, 505 responses from politi-
cians and 511 responses from public managers were collected through ran-
dom selection. Unlike previous research that did not make a clear distinction 
between politicians and public managers (Jorge et al., 2019), in this paper 
we look at these two groups of respondents separately. Although they are 
sometimes equated, politicians are primarily members of the legislative and 
representative branches of government, while public managers are part of 
the executive branch with managerial responsibilities. Due to the differences 
in their roles and levels of responsibility, we believe it is justified to analyze 
them as separate categories.

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For this research, a new measurement tool was created, namely a question-
naire containing mainly closed-ended questions and questions on a Likert-type 
scale from 1 to 5, with 5 indicating the highest level of agreement and 1 the 
lowest level of agreement. The questions for the questionnaire were based 
on a review of the previous research (e.g. Brusca and Montesinos, 2013, Caru-
ana and Faruggia, 2018; Gomes et al., 2023; Guarini, 2016; Jorge et al., 2016; 
Jorge et al., 2019, Poljašević et al., 2021). Moreover, in creating questions an 
overview of the Croatian legal framework in relation to public sector account-
ing was observed too, as well as the structure and content of the required fi-
nancial reports. The questionnaire was extensive and only selected questions 
were used for the purposes of this work. The remaining questions are a basis 
for other studies and the results of the remaining questions are or will be 
reported in other studies. As this was a new measurement instrument, it was 
necessary to determine the reliability and validity of the scales used. Reliabil-
ity was measured using Cronbach’s alpha coefficient, while validity was meas-
ured using a combination of exploratory and confirmatory factor analysis on a 
number of items relating to the use of financial reports and budget execution 
reports. The questions that were found in the factor analysis to be a valid and 
reliable measure of the use of the mandatory financial reports were averaged 
into a new variable. Appropriate statistical methods, including descriptive and 
inferential statistical analysis were used in processing and interpreting the 
primary data collected. The chi-square test was used to test the difference in 
the proportion of public managers and politicians using financial reports and 
the reasons given for their use, while the Welch t-test was used to test the 
difference in the frequency of use of financial reports and budget execution 
reports in relation to the respondent’s role.
4.2	 Sample	Analysis
Personal characteristics of the respondents are presented in the Table 1 from 
which it is evident that the sample of politicians is dominantly male, while 
opposite is the situation with the sample of public managers, who were pre-
dominately female. Regarding education, among politicians, the highest per-
centage of politicians in the sample completed high school. In the sample of 
public sector managers, almost all respondents have completed higher levels 
of education, very small percentage have completed high school. In terms of 
educational background, most public managers in the sample hold degrees in 
the social sciences, while only a small portion have an educational background 
in economics. In the sample of politicians, most respondents have had educa-
tion in other scientific fields unrelated to economics (such as technical sci-
ences, construction, agribusiness, healthcare, IT sciences, tourism and various 
other professions). Respondents were also asked about years of experience 
in their current position. In contrast to the politicians in the sample, most of 
whom have held their current position for less than a year, only a small num-
ber of public managers are similarly new to their roles, suggesting that public 
managers generally have more experience in their positions.

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Table 1. Personal characteristics of the respondents
Gender Politicians Public managers
Female 33% 61%
Male 67% 39%
Level	of	education
Elementary education 1% 0%
Secondary education 37% 6%
Bachelor's degree 17% 8%
Master's degree 36% 66%
Postgraduate education 9% 20%
Field	of	education
Economics 21% 11%
Social sciences 21% 62%
Other field of sciences 58% 27%
Experience	on	the	position
Less than 1 year 47% 13%
1 – 5 years 26% 34%
6 – 10 years 15% 25%
11 – 15 years 6% 11%
More than 15 years 6% 17%
Source: Authors’ elaboration
4.3	 Research	Results	–	The	Use	of	Financial	Reports
At the start of the survey, the respondents were asked whether they use PS-
FRs. Figure 1 shows that the majority of respondents in the sample use finan-
cial reports, while a smaller proportion do not. However, when examining the 
samples of politicians and public managers separately, it becomes clear that 
public managers make more frequent use of financial reports than politicians, 
as anticipated. Respondents who in both samples stated that they do not use 
financial reports were excluded from further survey.

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Figure 1. Use of PSFRs
 
75%
96%
85%
25%
4%
15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Politicians Public managers All respondents
Use financial reports Do not use financial reports
Source: Authors’ elaboration
Figure 2 shows that, in the overall sample, nearly half of the respondents 
sometimes use financial reports, while the remaining respondents use them 
regularly. In the sample of politicians, a larger proportion of respondents use 
financial reports occasionally, while among public managers, a greater num-
ber of respondents use them regularly Furthermore, additional tests using 
the chi-square test were conducted to determine whether there are differ-
ences in the use of financial reports. The results of the chi-square test (χ2 = 
120.88; df = 2) as well as the p-value (p<0.01) provide evidence that there is a 
difference in the frequency of using financial reports.
Figure 2. Frequency of use of PSFRs
 
60%
40%
49%
40%
60%
51%
0%
10%
20%
30%
40%
50%
60%
70%
Politicians Public managers All respondents
Sometimes use financial reports Often use financial reports
Source: Authors’ elaboration
To further validate the results showing differences in usage between politi-
cians and public managers, a dependent variable was defined. Since this was 
a new measurement instrument, it was essential to test the reliability and 

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Ivana Barbieri, Martina Dragija Kostić, Nives Botica Redmayne
validity of the scales used in the questionnaire. The reliability of the scales 
was tested using the Cronbach’s alpha coefficient, and scales with a coeffi-
cient greater than 0.7 are considered reliable. Validity was tested by a combi-
nation of exploratory and confirmatory factor analysis on the particles used 
to measure the use and usefulness of the report. The split-half method was 
used. Exploratory factor analysis was conducted for half of the sample to de-
termine construct and content validity, and the results of the exploratory fac-
tor analysis were further analysed for the other half of the sample to confirm 
the construct and convergent validity of the instrument used. If the average 
variance extracted (AVE) of the factor is greater than 0.5 and all factor sat-
urations are significantly different from 0, convergent validity is confirmed 
(Fornell and Larcker, 1981). The sample was randomly divided into two parts. 
A factor analysis was conducted using the maximum likelihood method with 
oblique torsion. The first group of items asked about the use of financial re-
ports and budget execution reports, while the second group of items related 
to the usefulness of financial reports and budget execution reports. Prior to 
factorization, the strength and significance of the associations between the 
items were tested. Bartlett’s test for sphericity showed that the correlation 
matrix of the particles was not equal to the identity matrix (Pett et al., 2003). 
The Kaiser-Meyer-Olkin Measure of Sampling Adequacy or KMO value was 
0.85, which was high enough to justify the application of factor analysis to the 
observed set of particles (Hair et al., 1998).
The number of factors was determined by a combination of parallel analy-
sis and inspection of the particle content. The results of the parallel analysis 
showed that the observed particles were grouped into five factors, which ex-
plained 71% of the variability of the particles. Of the five factors extracted, 
one (the fifth) was determined by a single particle, so the number of factors 
was reduced to four and such a solution was analysed. In this way, the high 
percentage of variability in particles (66%) is still explained and the inter-
pretability of the obtained factor structure is facilitated. Factor 1 consisted 
of particles examining the frequency of use of mandatory financial reports, 
therefore Factor 1 was named Frequency of use of financial reports. In this 
paper, the results for two factors are presented and the other factors are 
not addressed. Factor 2 consisted of particles that examined the frequency 
of use of budget execution reports, so Factor 2 was called Frequency of use 
of budget execution reports. The factorial solution obtained was tested on 
the second half of the sample. Confirmatory factor analysis confirmed the 
factor structure obtained through exploratory factor analysis. Adjustment 
measures showed that the proposed factor structure was not statistically dif-
ferent from the observed factor structure. The results of the confirmatory 
factor analysis are presented in Table 2. According to the table, the factor 
saturations of all particles are significantly different from zero and the AVE 
value, i.e. the value of the average variance extracted, is greater than 0.50 
for factor 1 (0.54) and factor 2 (0.89), which according to Fornell and Larcker 
(1981) is evidence of the convergent validity of the measurement instrument. 
The Cronbach’s alpha coefficient was 0.89 for factor 1 and 0.95 for factor 2, 
which confirms the reliability of the measurement instrument.

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The Use of Public Sector Financial Reports: A Comparative Analysis Between Different 
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Table 2. Results of factor analysis
Factor	1 Factor	2
Factor 1 – Frequency of use of financial reports 1
Factor 2 – Frequency of use of budget execution reports 0.62 1
Cronbach α 0.89 0.95
AVE 0.54 0.89
Mean 3.57 4.01
Standard deviation 0.82 0.92
Source: Authors’ elaboration
To test the difference, dependent variable was defined: The frequency of 
use of all financial reports, which was measured as the arithmetic mean of 
the responses to the questions on the frequency of use of each financial re-
port on a five-point Likert scale. To test the difference in arithmetic means 
between two groups of users, Welch’s t-test (for independent samples) was 
used, as differences in arithmetic mean are compared between two inde-
pendent groups of subjects (Delacre et al., 2017). The results show that the 
two groups differ significantly in their use of financial reports. In the case of 
Factor 1 – Frequency of using financial reports, the t-test value was 8.48 (df= 
780.11). This was confirmed at a significance level of 1%, where the p-value 
was less than 0.01. As can be seen in Figure 3, respondents in the sample of 
public managers reported using financial reports (factor 1) significantly more 
often, as the mean is 3.78 and the standard deviation is 0.78. For politicians, 
the arithmetic mean is lower and is 3.31, while the standard deviation is 0.79. 
A difference was also found for Factor 2 – Frequency of use of budget ex-
ecution reports. The t-test value is 4.11 (df=747.76) and the p-value was less 
than 0.05. As can be seen in Figure 3, the same direction of difference was 
observed in the use of the budget execution report. Namely, from the figure 
below it can be confirmed that public managers use the budget execution 
reports more frequently then politicians.
The analysis results indicate that both groups of respondents frequently use 
financial reports and budget execution reports. This finding provides support 
for the first research question regarding whether managers and politicians uti-
lize financial reports. These results are not in line with previous studies that 
have shown that financial reports are only used to a limited extent by poli-
ticians (Caruana and Faruggia, 2018; Jorge et al., 2019; Yamamoto, 2008). In 
addition, results in this study show that there is a difference in use between 
the two groups of respondents. Public managers use financial reports more 
frequently than politicians. These findings are in line with previous studies that 
have shown that there is a difference in the use of reports depending on the 
role of the respondents. That is politicians in leadership positions, and public 
managers in leadership positions who tend to use financial reports more fre-

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Ivana Barbieri, Martina Dragija Kostić, Nives Botica Redmayne
quently than for example, councilors (Faber and Budding, 2022; Jethon and 
Reichard, 2022; Rogošić, 2021). This results also provide evidence to support 
the Upper Echelons Theory. The findings are consistent with the assumptions 
of the Upper Echelons Theory, that the role of the respondents matters for the 
use of the reports. The findings confirm that the role of the respondents is one 
of the important characteristics when it comes to the use of financial reports.
Figure 3. The difference in the frequency of use of prescribled reports  
among different information users
 
 
3.78
3.31
1
2
3
4
5
Public managers                     Politicians
Factor 1 – Frequency of use of financial 
reports
4.13
3.87
1
2
3
4
5
Factor 2 – Frequency of use of budget execution 
repors
Public managers                     Politicians
Source: Authors’ elaboration
4.4	 What	are	the	Reasons	f or	Using	PSRFs?
Questions about the reasons for use were asked in such a way that the re-
spondents were offered 16 possible answers and they had to select the 3 
most common reasons for using the PSFRs. The most common reason for us-
ing financial reports, cited by just over a quarter of respondents, was “to sup-
port financial decision-making.” A similar proportion of respondents indicated 
that they use financial reports to “compare achieved results with previous pe-
riods,” while others noted that they rely on them to “estimate the surplus/
deficit of operations/activities.” About one in five respondents mentioned 
using financial reports for purposes such as “cash flow analysis,” “budget 
approval decisions,” and “financial performance analysis.” “In contrast, the 
least frequently cited reasons for using financial reports were “to determine 
changes in the value and volume of assets, liabilities, and own resources” and 
“to determine the responsibility of the individuals who compile financial re-
ports,” which were selected in only a small number of cases. The correlation 
between the reasons given for using the prescribed financial reports was also 
tested, but none of the correlation coefficients exceeded the value of r=-0.17, 
so these results are not presented in this paper. In other words, the reasons 
given were not grouped together, and the selection of individual respond-
ents’ choices depended largely on the individual respondent themselves.
We also examined the differences in the frequency of use of financial reports, 
with emphasis on the reasons for the use of financial reports by public manag-

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The Use of Public Sector Financial Reports: A Comparative Analysis Between Different 
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ers and politicians. A series of chi-squares to analyse those differences were 
used and they are shown in Table 3. These results show that public managers 
use financial reports more than politicians in order “to estimate the surplus/
deficit of operations” as well as “to analyse the cash flows of public sector 
entities”. Public managers are more likely to use financial reports “to analyse 
the financial position of public sector entities” and “to analyse the financial 
performance of public sector entities”. Public managers use financial reports 
more than politicians “as a support when making financial decisions”.
The responses also show that politicians tend to use financial reports more 
“to determine the cost of “a particular program, project or activity”. Politi-
cians use financial reports “to determine the responsibility of the heads of 
public sector entities”. Politicians are more likely than managers to use finan-
cial reports “to compare results achieved with other public sector entities” or 
“to compare actual financial results with the adopted budget”. Politicians use 
financial reports more than public managers “when making decisions about 
budget approval and budget expenditure”. No differences were found for 
the other reasons.
As part of the question about the reasons for using the PSFRs, respondents 
were also asked an open question to indicate whether there are other reasons 
for using the financial reports that were not included in the list of answers 
offered. In the case of politicians, some of the additional reasons given are: 
“analysing revenues and expenditures compared to prior periods”, “analysing 
the financial reports for proposing amendments”, i.e., “using the financial re-
ports during debates and council meetings” and “for the purposes of budget 
realignment”. Furthermore, politicians emphasize the use of financial reports 
to control and for establishing the legality of the public money spending as 
well as for transparency. The politicians explain that the financial reports are 
useful for preparing meetings and for applying for EU funds as well as for 
planning future projects. Some respondents from the public managers group 
pointed out that they use the financial reports for “revenue analysis and fi-
nancial analysis and planning”. While some respondents highlighted that they 
use the financial reports for expenditure control and when “planning a new 
budget for the next year, planning future investments and investing in new 
projects”. Public managers pointed out that they use financial reports to mon-
itor financial flows and compare realization, i.e. actual expenditure against 
planned expenditure. Like politicians, public managers also indicated that 
they use the financial reports for the control and evaluation of expenditure 
and for numerous analyses. Some public managers also gave the answer for 
the use of financial report as: “Legal obligation”. These results answer the 
third research question as to what are the reasons for using financial reports.

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Ivana Barbieri, Martina Dragija Kostić, Nives Botica Redmayne
Table 3. Differences in the reasons of using financial reports
Reasons	for	use χ
2
p
To estimate the surplus / deficit of 
operations / activities 19.32 **
1
Public managers > Politicians
For the analysis of cash flows 14.13 ** Public managers > Politicians
To analyse the financial position 9.77 ** Public managers > Politicians
To analyse the financial 
performance 9.95 ** Public managers > Politicians
As support when making financial 
decisions 7.14 ** Public managers > Politicians
In assessing the economy, efficiency 
and the effectiveness of operations 3.54
Not 
significant Equally
To determine the changes in the 
value and volume of assets, liabilities 
and own resources 0
Not 
significant Equally
To determine the costs of provided 
public services 0.75
Not 
significant Equally
To assess the sources of funds, use 
and balance of current financial 
resources 1.3
Not 
significant Equally
To compare the achieved results 
with previous periods 2.47
Not 
significant Equally
To determine the responsibility 
of persons who compile financial 
reports 3.29
Not 
significant Equally
To determine the costs of activity, 
project or particular program 5.69 ** Politicians > Public managers
To determine the responsibility 
of the heads of the public sector 
entities 5.89 ** Politicians > Public managers
To compare the actual financial 
results with the adopted budget 21.29 ** Politicians > Public managers
To compare the achieved results 
with other public sector entities 26.57 ** Politicians > Public managers
To make decision on approving the 
budget and budget expenditure 38.67 ** Politicians > Public managers
Source: Authors’ elaboration
1 Significant.

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The Use of Public Sector Financial Reports: A Comparative Analysis Between Different 
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The results of this study also suggest that the personal characteristics of the 
respondents influence the use of reports. These findings are in line with pre-
vious studies (Faber and Budding, 2022; Yamamoto, 2008). In general terms, 
public managers need timely and complete information for efficient decision-
making, which is why they are likely to use financial reports for other pur-
poses than politicians. This result of this study, unlike previous studies that 
have not distinguished between politicians and managers when it comes to 
the use of financial reports (Caruana and Faruggia, 2018; Yamamoto, 2008), 
provides evidence on the difference between politicians and public managers 
use. Their roles and responsibilities are not the same, and therefore the use 
of financial reports is also not likely to be the same.
5	 C onclusion	and	Discussion
The results of this study demonstrate that managers and politicians are not 
only recipients of PSFRs but also active users of them. In fact, the findings 
show a high level of commitment to financial reports, with most respondents 
in the sample using the prescribed reports. The results of this study, however, 
confirm differences in the frequency of use of the prescribed financial re-
ports. Politicians in the sample generally use financial reports less, and more 
than half of the respondents in this study answered that they only sometimes 
use financial reports. In the contrast, public managers responded that they 
use financial reports more frequently.
The results on the reasons for use also show a similar result. That is, PSFRs 
fulfil their basic purpose, as the most common reason for their use is “to assist 
in financial decision-making”. However, the study also shows that there are 
differences in the reasons for use between politicians and managers. While fi-
nancial reports are primarily important to politicians for budgeting and budg-
et execution and to determine costs and expenditures, they are important to 
public managers for analyzing financial performance and evaluating results as 
well as comparing results with previous periods. These results also indirectly 
lead to the conclusion that the budget is an expression of political priorities. 
This study also provides evidence to support the Upper Echelons Theory as 
the results confirmed that the role of the respondents is one of the important 
characteristics when it comes to the use of PSFRs.
Given that this research focused on politicians and managers—two groups 
that differ significantly in institutional context, goals, and accountability 
mechanisms—it is important to recognize that individual respondent char-
acteristics may manifest differently across these roles and influence report 
usage. Since this study did not incorporate demographic indicators as factors 
affecting report use, the findings should be interpreted with caution. Future 
research could benefit from including such individual characteristics to offer 
deeper insights into the acceptance or rejection of Upper Echelons Theory.
The findings of this study lead to the significant conclusion that is relevant 
not only for Croatia but also contributes to the international academic and 

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Ivana Barbieri, Martina Dragija Kostić, Nives Botica Redmayne
practical discourse. These results highlight the fundamental purpose of PS-
FRs and the factors that influence their utilization or lack thereof. Specifi-
cally, the results suggest that to enhance the management of public sector 
entities, it is essential to strike a balance between considering the preferenc-
es of PSFR users and ensuring the provision of accurate and high-quality data 
in reporting. Merely changing the accounting basis or implementing other 
reform processes does not guarantee that the information in these reports 
will be used more frequently.
This research also has several limitations. Firstly, the results of the study refer 
only to a specific country, namely the Republic of Croatia, which may limit 
generalizability. Furthermore, the use of a questionnaire as the only way to 
capture all the variables also represents a limitation of this work. One of the 
main disadvantages of using questionnaires is that respondents are implicitly 
assumed to have some knowledge of accounting information and financial 
reports (Van Helden and Reichard, 2019). In addition, surveys can lead to the 
encouragement of desirable behavior, i.e. respondents tend to give socially 
desirable answers (Van Helden, 2016).
To overcome these limitations, future research is recommended. While the 
study conducted in Croatia serves as a valuable case study for other coun-
tries, further comparative studies involving additional nations would yield 
even more insightful results. Specifically, countries with similar characteris-
tics, particularly within the Southeast European region, could offer effective 
platforms for comparison.
Additionally, this study could be expanded by exploring the perspectives of 
other users of financial reports beyond politicians and public managers. Con-
ducting interviews to gain further insights into how various users utilize finan-
cial reports and the extent to which these reports meet their specific needs 
would also be beneficial. Such research could lead to new conclusions about 
the complex dynamics of financial report usage and the various factors influ-
encing that usage.

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Categories of Information Users
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