This study aims to identify to what extent certain factors perceived by internal decision-makers (politicians
and financial officials) influence the usefulness they consider the information presented in the
financial reports of municipalities has for decision-making purposes.
It follows a quantitative research approach at a first stage, using a questionnaire. At a second and
complementary stage, it uses a qualitative research perspective, with interviews in a small group of
municipalities, which might be seen as case studies, in order to explore and understand the (external and
internal) contextual factors that determine the usefulness of the financial report in decision-making by
internal decision-makers.
The main findings show that the pressure of professional organizations and of a national problem
(external factors), as well as the lack of knowledge and training on the accounting information system
(internal organizational factor) are factors that most influence the usefulness of the financial report for
internal decision-making. Qualitative analysis confirms these results, reinforcing a factor relating to a
work overload.
Two important implications of this study are the following: first, professional bodies and the financial
situation in the country; while stimulating informational needs by internal users in the public sector
they determine the usefulness they offer to financial reporting for decision-making. Second, the lack of
knowledge of the accounting information system, especially by local politicians, is a hindering factor of
the usefulness given to financial reporting for internal decision-making. Nowadays, when many countries
are considering reforms of public sector accounting in line with the International Public Sector Accounting
Standards (IPSAS), supposedly increasing the sophistication, the level of information and usefulness of
financial reporting, such factors must be taken into account.