452 Int. J. Public Sector Performance Management, Vol. 4, No.

4, 2018

Application of the accounting information at higher

education institutions in Slovenia and Croatia –
preparation of public policy framework

Tatjana Jovanović*
Faculty of Administration,
University of Ljubljana,
Gosarjeva 5, Ljubljana, Slovenia
Fax: +38615805505
Email: tatjana.jovanovic@fu.uni-lj.si
*Corresponding author

Martina Dragija
Faculty of Economics and Business,
John Fitzgerald Kennedy 6, 10000, Croatia
Fax: +38512335633
Email: mdragija@efzg.hr

Abstract: Application of accounting reports’ information for managerial

purposes has been commonly denoted as management accounting. The studies
focused on management accounting at higher education institutions confirmed
the lack of high quality information and revealed that existing management
accounting practice is primarily centred on complying with legal requirements
regarding external reporting. Therefore, the main objective of this paper is to
analyse the financial reporting systems at higher education institutions in
relation to management accounting at micro and in relation to public policy
framework at macro level in Slovenia and Croatia. The results revealed that
exiting reporting systems at higher education institutions in observed countries
is partially useful for decision making processes and that there are significant
differences in the main elements of management accounting practice. Research
findings could provide solid groundwork for the preparation of public policies
and operative instructions.

Keywords: accounting reports; higher education institutions; management

accounting; financial management; accounting information; external reports;
decision making process; reform; Slovenia; Croatia.

Reference to this paper should be made as follows: Jovanović, T. and

Dragija, M. (2018) ‘Application of the accounting information at higher
education institutions in Slovenia and Croatia – preparation of public policy
framework’, Int. J. Public Sector Performance Management, Vol. 4, No. 4,
pp.452–466.

Biographical notes: Tatjana Jovanović continued her career at the University

of Ljubljana, Faculty of Administration after working eight years in practice as
a tax consultant. She finished her PhD thesis titled ‘Measuring the impact of tax
avoidance rules in EU on the taxation of international business’ in February
2013. She is an Assistant Professor in of Economics and Management in Public
Administration. Throughout her work, she has been involved in various

Copyright © 2018 Inderscience Enterprises Ltd.

 Application of the accounting information at higher education institutions 453

projects and research work and collaborates in a number of research groups

concerning this field of expertise. Her research interests include taxation, public
finance and public sector accounting, etc.

Martina Dragija works at the Faculty of Economics and Business University of

Zagreb where she completed her PhD in 2014. Her doctoral thesis studied the
reporting systems at higher education institutions with special focus on internal
reporting. From March 2016, she works as an Assistant Professor and teaches
accounting, managerial accounting, tax accounting and accounting of
non-profit organisations. She also works as a Guest Lecturer at the Alpen-Adria
Universität in Klagenfurt on the course Cases in Cost Accounting at Master
level International Management. She collaborated on several scientific projects.
Her research interests include public sector accounting and tax accounting.

This paper is a revised and expanded version of a paper entitled ‘Usefulness of

the accounting reports for financial management at higher education
institutions – case of Slovenia and Croatia’ presented at Instruc21st EBES
Conference, Budapest, 12–14 January 2017.

1 Introduction

Financial reports are kind of snapshots of an organisation’s health, provided to

shareholders or potential investors, but also diagnostic tools for financial management in
a wider sense. They should provide financial information related to the performance
objectives of the institution. An important prerequisite for that is a well developed
accounting information system, which can be defined as a service industry, which aims to
provide accounting data for micro and macro-economic level.
The increasing number of students entering the higher education system all over the
world has forced the governments in many countries to cope with the challenge of higher
education institutions’ efficiency, which means the manner that enables existing
resources to meet increasing demand for education (Abbott and Doucouliagos, 2003).
The phenomenon of massive expansion of higher education has been called the
marketisation (Molesworth et al., 2010). In transition countries that have gone through
process of massive privatisation and downsizing of state-owned enterprise, there has
often been a mismatch between market demand and skills available in the workforce.
Consequently, the workforce needed intensive training and retraining in skills that have
been in demand, which influenced the higher education systems of Eastern countries
intensively (Ramadani and Dana, 2013). Besides the massive expansion in higher
education, there are also other factors, which have influenced higher education and
demand new resources, etc. Most common, those are the inability of the state to finance
this massive expansion, cost-sharing with parents and students, public call for
accountability and value for money, but also the need for adjustment in state funding of
higher education institutions, etc. The majority of the sector belongs to the not-for-profit
(public) sector; only a part of it is doing business by making profit. All of the
above-mentioned factors put public higher education institutions under great pressure of
reforms focusing on the main objective of efficient and effective service delivery.
Moreover, this objective can be reached with high quality financial management, which
is the result of accurately determined public policy (Sanyal and Martin, 2009). Although
454 T. Jovanović and M. Dragija

higher education institutions have accounting systems for tracking finance according to
the accounting rules required by auditors, those systems do not enable interested
stakeholders the desired information. Instead, accounting systems do not transparently
present the different revenue sources on which universities rely, the true costs of core
functions such as teaching and research, the cross-subsidies of some functions by others,
administrative growth or shrinkage, and differences among disciplines. All of the
above-mentioned data prevents managers from making wise decisions (Capaldi and
Craig, 2011).
While universities are supposed to play a central role in the economic and social
development process, they have to be accountable to their stakeholders and clearly
communicate the spending of resources. As professors of accounting at two different
universities in two different countries, we were very motivated to research the field of
usefulness of accounting information in financial reports focusing mainly on the research
question “how useful and applicable are the financial reports at higher education
institutions for management and in which areas of decision-making can management use
this information?” Both questions were tested in Slovenian and Croatian higher education
institutions. The research methodology is based on a survey, returned by heads of
accounting departments and higher education institution management in Slovenia and
Croatia.
The paper is divided into six sections. After a brief introduction, the literature review
is presented, followed by financial reports systems in Slovenia and Croatia. In the
empirical part of the paper, the results of our two countries institutions are presented.
After the discussion part in Section 5, the conclusion is presented.

2 Literature review

The financial reports are considered as “a communication exercise between entities and
external users.” The objective of these is to provide information on the financial positions
and performance, cash flows, useful and necessary to users for taking decisions
(Ciuhureanu, 2016). The classical accounting system was almost exclusively
concentrated on financial transactions, events and conditions, focusing primarily on
preparation of financial reports for external users. For a long time, this was the primary
role of accounting, especially in public sector accounting. The financial reports’ role in
the management process of decision-making was of secondary meaning, considered
incidental and peripheral (Nagendrakumar, 2006; Manes-Rossi et al., 2016).
Higher education institutions carry out education through teaching and research
activities. The objectives of colleges and universities, especially public ones, differ from
those of commercial enterprises. Universities should provide educational services within
the existing levels of revenue available. Nevertheless, management should apply a wide
range of managerial techniques and methods. Financial management improvement in the
public sector is possible only if management skills and their capacity for usage of
accounting and non-accounting information are trained. Some of the most significant
financial risks and challenges that higher education institutions must address are lack of
understanding of financial operations by key stakeholders, lack of transparency in
financial reporting of operations, and lack of understanding of return on costs in
academic and administrative programs (KPMG, 2010).
 Application of the accounting information at higher education institutions 455

Leaning on the ‘new public management’ concept, universities are not considered
only as social institutions. Consequently, certain logic and rules typical for managerial
culture in the private sector should be applied, like well-known principles of efficiency,
effectiveness, and accountability. The efficiency can manifest itself in productivity,
profitability, social significance, effectiveness, innovation activity, etc. While considering
the efficiency of higher education institutions, it is important to take into account the
social, cultural, scientific, educational aspect and not only the economic aspect of
efficiency (Bobyleva and Sidorova, 2015). Nevertheless, the policy of marketisation has
transformed the public universities managerial models in a business manner. The old
fashion academic rituals and practices have turned into modern techniques. Advocates of
marketisation believe that those changes will turn higher education into more flexible and
efficient institutions providing better value for money and ensure higher efficiency and
responsiveness to needs of society, the economy, students, etc. (Molesworth et al., 2010).
According to Christiaens and Rommel (2008) and Becker et al. (2014), the
accounting reforms were often the first phase of reforming governments, governmental
management, organisation and other parts of the public sector (Sordo et al., 2012). The
majority of reform measures for modernisation of management processes in higher
education institutions are oriented towards making financial reports more comprehensive
and accountable. Financial reports have to provide useful information for management,
while management decisions depend on accounting information. Accounting and
financial reports are of great importance for management and are indispensable in:
• allocation, financing, use, and recovery of funds
• control of implications of implemented decisions
• determining rights, obligations, responsibility, and incentives from development
activity and property management (Puican, 2015).
Recently, there have been a few studies (Jukan-Kokorivić and Babajić, 2016; İbicioğlu
et al., 2010; Hodžić, 2014; Mihăilă, 2014; Ciuhureanu, 2016) discussing the usage of
financial reports in management purpose in the private sector. The topic of management
accounting is poorly discussed in the public sector. There are only a few (Sordo et al.,
2012; Mamontova and Novak, 2015) isolated cases of papers dealing with higher
education institutions’ management accounting and the usefulness of financial reports in
managements’ decision-making processes. The financial reports analysis is the process of
converting data from financial reports into usable information for business quality
measurement by different analytical techniques (Zager and Zager, 2006). Sordo et al.
(2012) researching the topic of higher education institutions in Italy revealed that at the
present the cost accounting system and cost accounting techniques of universities do not
allow users to have all the information for rational decision-making. It turned out that the
current delegation process of economic responsibility is in line with the possible
implementation of different kinds of accounting systems. The introduction of marketing
principles in the academic environment caused the acquisition of competitive advantages
that influence availability of information provided by the accounting system and better
cost accounting techniques.
There were not any studies done about the usefulness of information from financial
reports for Slovenia and Croatia. Because of the poorly researched topic in scientific
literature, the paper reveals the theoretical and empirical points of view on the usefulness
456 T. Jovanović and M. Dragija

of information from the financial reports for managers in public universities, which is
also politically a very interesting topic.

3 Financial reporting in higher education

Financial reporting at higher education institutions is primarily focused on external

financial reports that are prescribed by the normative framework of every country and
depends on the type of higher education institution. Higher education institutions can be
registered as budgetary users, non-profit organisations, or companies, and according to
that they are obliged to prepare different normative frameworks. Due to the
aforementioned, further in the paper we will analyse the normative framework at higher
education institutions in Slovenia and Croatia.
Table 1 Normative framework of higher education institutions in Slovenia and set of external
financial reports

Budgetary users (public HEIs) Non-profit organisations (private HEIs)

Regulation on the compilation of annual Instruction for submission of annual reports by
reports for the budget, budget and other non-profit organisations – legal entities
entities governed by public law (Official governed by private law (Official Gazette,
Gazette, 2002) 2016)
External financial reports: External financial reports:
• Balance sheet (mandatory annexes are • Balance sheet
review of the status and trends of intangible
• Statement on revenues and expenses
and tangible fixed assets, review of the
status and trends of long-term equity • Notes to financial statements
investments and loans and other explanatory
notes)
• Statement on revenue and expenses
(mandatory annexes are statement of the
account of financial receivables and
investments, statement of the financial
account and statement of other explanatory
notes, the statement of revenue and
expenditure by type of activity, the
statement of revenues and expenses on cash
basis, the statement of account of financial
receivables and investments by cash basis,
the testimony of financing the cash basis)
• Notes to financial statements
Accrual and cash basis Accrual basis
Source: Own

3.1 Financial reporting at higher education institutions in Slovenia

In Slovenia, the Ministry of Education, Science and Sport keeps records of higher
education institutions in Slovenia. There are four public universities, which consist of
50 faculties and art academies, 48 private faculties. The accounting system for both types
 Application of the accounting information at higher education institutions 457

of institution (public and private faculties) is regulated by the Accounting Act (Official
Gazette, 1999) but there are some differences as far as the operative part of the
accounting system is concerned. The public faculties as budgetary users apply a special
chart of accounts for the public sector (‘the single chart of accounts’), while the private
faculties use a chart of accounts for non-profit organisations in the private sector
according to Slovenian accounting standards. Consequently, the public faculties apply
accounting for budgetary users, which is cash principle oriented and additionally keep
books also on the accrual principle while the private faculties (non-profit organisations in
the private sector) book keep on the accrual principle or companies. Table 1 presents the
legal framework for financial reporting of higher education institutions in Slovenia, the
consistency of external financial statements, and the accounting basis.
The differences between the external financial reports of public and private HEIs are
specially concentrated on the scope of reporting and the structure of the reports. While
private HEIs report using just basic financial reports (balance sheet, statement on revenue
and expenses and notes to financial statements), public HEIs’ external reports include
several mandatory annexes. As mentioned before, public HEIs report on cash and accrual
basis, while private HEIs report only on accrual basis. Consequently, the external
financial reports of both groups of HEIs include information on costs of depreciation and
costs of other important categories, which are useful to get information about full costs.

3.2 Financial reporting at higher education institutions in Croatia

According to the actual date of the Croatian Agency for Science and Higher Education, in
Croatia, currently there are 119 higher education institutions in Croatia, namely: eight
public universities, two private universities, 68 faculties and art academies and one
university centre at public universities, four private polytechnics, 11 public polytechnics,
22 private colleges, and three public colleges. While public higher education institutions
apply accounting for budgetary users, private higher education institutions use accounting
for non-profit organisations or companies. In Table 2, it can be seen the legal framework
for financial reporting of higher education institutions in Croatia as well as the set of
external financial reports that they prepare and the accounting basis.
Through analysis of external financial reports of different HEIs in Croatia, we have
detected major differences in the form and the content of financial reports of HEIs that
primarily result from the applied legal framework. Public HEIs apply a modified accrual
basis of accounting and because of that have narrow elements of basic financial reports
because revenue is expressed on a cash basis while expenses on an accrual basis
(Vašiček, 2007; Roje et al., 2012).
Moreover, there is no information about costs of depreciation because all costs
regarding tangible and intangible assets are recognised immediately as an expense in the
period when they are put into use. Because of that it is not possible to get information
about full costs (Dragija, 2014). On the other hand private HEIs, that are registered like
non-profit organisations or companies, are using full accrual basis in accounting that
assures full and comprehensive information for external users. It is important to highlight
that HEIs in Croatia are dominantly public institutions and that means they are budgetary
users. Because of that empirical research regarding use of financial reports for decision
making is conducted just for public HEIs.
458 T. Jovanović and M. Dragija

Table 2 Normative framework of higher education institutions in Croatia and set of external
financial reports

Type of higher education institutions in Croatia

Budgetary users (public HEIs)
Regulation on financial
reporting in budgetary
accounting (Official Gazette,
2015a)
External financial reports:
• Balance sheet
• Statement on revenue and
expenses, receipts and
expenditures
• Statement about changes in
values and volumes of assets
and liabilities
• Notes to financial statements
Modified accrual basis
Source: Own
Non-profit organisations
(private HEIs)
Regulation on reporting in
non-profit accounting and
register of non-profit
organisations (Official
Gazette, 2015b)
External financial reports:
• Balance sheet
• Statement on revenue and
expenses
• Notes to financial
statements
Accrual basis
Companies (private HEIs)
Accounting Act (Official
Gazette, 2015c)
External financial reports:
• Statement of financial
position (balance sheet)
• Income statement
• Statement of
comprehensive income
• Statement of cash flows
• Statement of changes in
equity
• Notes to the financial
statements
Accrual basis

4 Empirical research of the usage of financial reports at higher education

institutions in Slovenia and Croatia

Research methodology and data

Our paper employs research methodology based on the survey conducted. In order to
investigate usefulness of financial reports at higher education institutions in Slovenia and
Croatia, we have chosen the quantitative statistical analysis – survey research. The
selection of research method has been adapted to the particularities of the research
problem (Rossi et al., 1998). The individual perception and attitudes as well as
organisational policies and practice can be assessed by the survey questionnaires (Baruch
and Holton, 2008).
While there are few significant differences between surveys as marketing tools or
political polls, etc. and survey research, let us introduce three major distinct
characteristics. The purpose as first characteristic of the research-oriented surveys is to
produce quantitative descriptions of some aspects of the study population, where the
subject might be individuals, groups, organisations, but also projects, applications, etc.
Secondly, the structured and predefined questions are a basic way of collecting
information, while their answers constitute the data to be analysed. Finally, data is
generally collected on the sample of study population in a way to be able to generalise the
findings to the population (Pinsonneault and Kraemer, 1993). But, our research has taken
 Application of the accounting information at higher education institutions 459

into consideration the whole population instead of the sample due to population size in
both countries. Considering the complete number of public higher education institutions
in both countries, the sample of respondents included all public higher education
institutions in Croatia (104) and in Slovenia (50). Given the fact that the paper is part of
the project1, the survey was conducted among public universities and faculties. The
questionnaires were sent by e-mail in online form for Slovenia and by post for Croatia in
2016. In both countries, the survey research subjects were the heads of accounting in
public HEIs.
The purpose of the questionnaire was to analyse and evaluate accounting information
systems at public HEIs and it was divided into the following parts:
a General information about the higher education institution.
b Assessment of usefulness and quality of external financial reporting.
c The development of internal accounting and internal reporting.
Relying on the A and B questionnaire parts, our primary goal was to provide answers on
two main research questions:
1 How useful are the financial reports at higher education institutions for management?
2 In which areas of decision-making can management use this information?
To obtain the highest possible comprehensibility of the questions, a few pilot interviews
were carried out. The suggestions and comments of HEIs’ accounting experts asked to
help in the pilot phase have been an enormous contribution to the quality of the research.
The electronic survey form in Slovenia required additional technical tests to avoid
complications. The purpose and objectives of the research were explained at the
beginning of the questionnaire, ensuring respondents anonymity and confidentiality of
the information obtained.
The questionnaire was mostly structured from closed type of questions. The purpose
of the first analysed question was to evaluate the usefulness of the financial reporting
system considering the structure of the financial reporting forms and information
provided for decision-making and management of your institution. The offered questions
were:
a it is largely useful
b partly useful
c usefulness is small
d no usefulness
e I cannot assess.
The second question has been used to assess the purpose of the financial reports’ usage.
There were several possible purposes of usage offered, spreading from purely formal
(compliance with legal requirements, execution of financial plan) to management
oriented (like source of information for decision making processes, comparison with
other higher education institutions, informing broader public and for promotion of the
institution, etc.). The respondents were assessed on the Likert scale (from 1 – the least
important to 5 – the most important, 0 – no usage).
460 T. Jovanović and M. Dragija

In the third question, respondents were asked to evaluate the usage level of financial
reports’ information in decision-making. The possible usages were ranked on the Likert
scale (1 = not used at all, 2 = mainly not used, 3 = neither used nor not used, 4 = mainly
used, 5 = completely used). The answers offered spread from decisions for budget
allocation or individual program implementation, to calculation of the cost price,
planning, calculation, and control of costs, decision-making about employment, etc.

4.1 Research results and discussion

The response rate for the questionnaire in Croatia was 33.65% (35 out of total 104 public
HEIs) and 46% (23 out of 50 public HEIs) in Slovenia. Using SPSS 19.0 tool, the
statistical analysis of descriptive statistics and Mann Whitney test was prepared.
The first question was addressed in order to evaluate the usefulness of existing
financial (accounting) reporting systems for the purpose of decision-making and
management. The analysis results are presented in Figure 1.

Figure 1 Usefulness of existing reporting system (see online version for colours)

According to Figure 1, it is evident that 35% of respondents at Slovenian higher

education institutions assess the existing reporting system as largely useful while 61%
evaluate the system as partially useful. On the other hand, in Croatia only 22% of
respondents assess the reporting system largely useful for the purpose of decision-making
and management and 47% of respondents as partially useful. It is obvious that
respondents in Slovenia assess the existing reporting system as more useful than in
Croatia, even though in both countries most respondents evaluated the system as partially
useful.
To research the areas of decision-making for which management in both countries use
the accounting information, the descriptive statistics of the results have been calculated.
While several differences in areas of decision-making between countries have appeared,
we decided to carry out the additional test of statistical significance. The first step in this
manner, the tests of normality was conducted. Kolmogorov-Smirnov’s test revealed that
the distribution of variables is non-normal, therefore the Mann-Whitney test was
conducted in order to determine whether the differences in usage of financial reports at
higher education institutions that appear between the Slovenian and Croatian accountants
are statistically significant.
 Table 3

Mann-Whitney test
N min max M SD Skewness Kurtosis
U Sig.
As an important source of information for SLO 23 1 5 3.74 1.096 –0.790 0.320
decision making processes and management 307.0 0.283
CRO 32 1 5 3.34 1.335 –0.336 –0.903
For compliance with legal requirements SLO 22 3 5 4.82 0.501 –2.911 8.432
regarding reporting 326.0 0.187
CRO 35 1 5 4.54 0.886 –2.425 6.751
To monitor the execution of financial plan SLO 22 2 5 4.14 0.889 –0.734 –0.179
289.0 0.099
CRO 35 1 5 3.63 1.140 –0.716 –0.097
For comparison with other higher education SLO 21 1 5 3.10 1.136 0.249 –0.667
institutions 305.0 0.547
CRO 32 1 5 2.88 0.907 0.259 0.992
reports for different purposes between countries

For informing broader public and for promotion SLO 21 1 5 2.76 1.179 0.915 –0.248
of the institution 300.0 0.392
CRO 33 1 5 2.94 1.144 –0.008 –0.552
For the purpose of external and internal audit SLO 23 2 5 4.17 1.029 –0.926 –0.377
and control 359.5 0.721
CRO 33 1 5 4.12 0.960 –1.156 1.763
Source: Authors’ calculations
Application of the accounting information at higher education institutions

Descriptive statistics and Mann-Whitney test for differences in usage of financial

461
 462

Table 4

Mann-Whitney test
N min max M SD Skewness Kurtosis
U Sig.
For allocation of resource from the budget SLO 23 1 5 3.57 1.376 –0.722 –0.587
389.0 0.825
CRO 35 1 5 3.54 1.221 –0.465 –0.769
between countries

For the approval of the implementation of SLO 23 1 5 3.70 1.259 –0.711 –0.159
individual programs 387.0 0.797
CRO 35 1 5 3.69 0.963 –0.774 0.634
For determination of prices for provided services SLO 22 1 5 3.14 1.320 –0.410 –0.835
T. Jovanović and M. Dragija

297.0 0.183
CRO 34 1 5 2.74 1.109 0.139 –0.510
For asset procurement SLO 24 2 5 3.88 0.900 –0.128 –1.001
419. 0.987
CRO 35 1 5 3.80 1.079 –0.768 –0.007
For planning, calculation and control of costs SLO 24 3 5 4.29 0.624 –0.280 –0.485
373.0 0.428
CRO 35 1 5 4.00 1.029 –1.203 1.223
For decision making about employment SLO 24 1 5 3.33 1.049 –0.255 –0.312
300.5 0.057
CRO 35 1 5 2.69 1.231 –0.055 –1.330
For performance measurement SLO 24 1 5 3.17 1.090 –0.138 0.001
401.0 0.760
CRO 35 1 5 3.03 1.175 –0.289 –0.627
To monitor the effectiveness of the services SLO 24 1 5 3.29 0.999 –0.080 0.139
provided and fiscal responsibility 244.5 0.005
CRO 35 2 5 4.06 0.968 –0.738 –0.400
Source: Authors’ calculations
Descriptive statistics and the Mann-Whitney test for differences in usage level of
information from financial accounting and financial reporting for different decisions
 Application of the accounting information at higher education institutions 463

As seen from Table 3, the Slovenian respondents more commonly use the financial
reports, than Croatian respondents, for decision-making processes and management, for
compliance with legal requirements regarding reporting, to monitor the execution of
financial plans, for comparison with other higher education institutions, and for the
purpose of external and internal audit and control. The Croatian respondents more
commonly than the Slovenian use financial reports for informing the broader public and
for the promotion of the institution. In both countries the highest average grade (Slovenia
4.82, Croatia 4.54) is given for compliance with legal requirements regarding reporting.
Such results were expected since higher education institutions are, generally, mainly
focused on reports that are prescribed by the normative framework. On the other hand,
the lowest average grade in both countries was given for the purpose of comparison with
other higher education institutions and for informing the broader public and for the
promotion of the institution. The Mann-Whitney test has showed that the differences in
usage purposes are not statistically significant (p > 0.05).
The third addressed question focused on specific management decisions which might
be supported by information from financial accounting and financial reports. The
descriptive statistics of respondents’ assessments about the level of usage of information
from accounting systems and financial reports are presented in Table 4. The highest
average grade in both countries was given to decisions for planning, calculation and
control of costs (Slovenia 4.29, Croatia 4.00). All other decisions were estimated with
much lower grade. Furthermore, it can be seen from Table 4 that there are differences in
grades between countries, what led us to decision to test the significance of differences.
The tests of normality were conducted before the analysis of differences in usage
between countries. Kolmogorov-Smirnov’s test revealed that the distribution of variables
is non-normal, therefore, the Mann-Whitney test was conducted in order to determine
whether the differences in usage of information from financial accounting and financial
reporting for different decisions between countries are statistically significant. The
average values presented in Table 4 suggest some differences between Slovenian and
Croatian respondents, but according to the Mann-Whitney test those differences are not
statistically significant. The differences in assessment between the Croatian respondents
and Slovenian respondents have turned out to be statistically significant (p < 0.01) when
estimating the usage level of financial accounting and financial reports for monitoring the
effectiveness of the services provided and fiscal responsibility.

5 Discussion

From the above presented research results, it can be concluded that existing reporting
systems of higher education institutions in Slovenia and Croatia are only partially useful
for management decision-making processes. When focusing on the areas of management
decision-making for which accounting information can be used, the highest average grade
in both countries was given to planning, calculation and control of costs, while the
financial reports are most commonly used for compliance with legal requirements
regarding reporting. Notwithstanding, the statistical analysis revealed that correspondents
from Slovenia graded all categories higher than the Croatian correspondents. The highest
average grades in Slovenia may arise from various reasons, such as accrual based
accounting for revenues and costs, more stable public sector accounting system, etc. In
464 T. Jovanović and M. Dragija

the paper, the authors have highlighted the main purposes of financial reports usage
according to the heads of accounting opinion and assessments. This assessment should be
used to create and implement the public policy for accounting in higher education sector,
which deserves much more systematic and thorough approach because of the specifics of
the service offered and long-term meaning for the society (economic, socio-political
aspect, etc.). This policy should focus on systematic framework for accounting at higher
education institutions, the methods and purposes of usage, targets and indicators for
monitoring the whole process and the results. The current status of accounting at higher
education institutions in both countries is not target oriented, while the main target of
accounting service is to offer the useful information for management and all other users
that might need such information (like policy makers). There is no consistent operational
framework, the financial reports usage is left to individuals, only few experts research
this topic, etc.

6 Conclusions

While the accounting reports should provide an applicable platform for institutional
leadership to conduct efficient management processes, our research has focused on
analysing the usefulness of those in management processes in two countries. It turned out
that in both countries the majority of respondents assessed the reports as partly useful,
while the compliance with legal requirements was listed as the most important purpose of
the external financial reports. Nevertheless, there were some differences in the evaluation
grade for that purpose between countries. As far as the usage of information from
financial accounting in decision-making processes is concerned, there were some major
differences. In Croatia, the highest average grade was given for monitoring the
effectiveness of the services provided and fiscal responsibility, while in Slovenia
planning, calculation, and control of costs were assessed as most important. It is possible
to assume that those differences result from the fact that the Croatian HEI reports are
based on modified accrual accounting principles, in which revenue is expressed on a cash
basis, while the expenses are expressed on an accrual basis. On the other hand, Slovenian
HEI reports are based on both principles, where accrual based external reporting is
intended for internal purposes, while cash flow based reporting is important for the
founder (usually the Ministry of Education, Science and Sport). Nevertheless, regardless
of the accounting principle used, the accounting function in the case of HEIs is
perceptibly underestimated, since it is mainly being used for administrative reporting
purposes. The accounting reports should be used as a powerful managerial tool,
especially for internal business analytics, long-term planning, and future projections.

References
Abbott, M. and Doucouliagos, C. (2003) ‘The efficiency of Australian universities: a data
envelopment analysis’, Economics of Education Review, Vol. 22, No. 1, pp.89–97.
Baruch, Y. and Holton, B.C. (2008) ‘Survey response rate levels and trends in organizational
research’, Human Relations, Vol. 61, No. 8, pp.1139–1160.
Becker, D., Jagalla, T. and Skaerbaek, P. (2014) ‘The translation of accrual accounting and
budgeting and the reconfiguration of public sector accountants’ identities’ Critical
Perspectives on Accounting, Vol. 25, No. 45, pp.324–338.
 Application of the accounting information at higher education institutions 465

Bobyleva, A. and Sidorova, A. (2015) ‘Crisis management in higher education in Russia,

perspectives of innovations’, Economics and Business, Vol. 15, No. 4, pp.156–158.
Capaldi, E.D. and Craig, W.A. (2011) ‘Performance and costs in higher education: a proposal for
better data’, Change, The Magazine of Higher Learning.
Christiaens, J. and Rommel, J. (2008) ‘Accrual accounting reforms: only for business-like parts of
governments’, Financial Accountability and Management, Vol. 24, No. 1, pp.59–75.
Ciuhureanu, A. (2016) ‘Study on the perception of annual financial statements as an information
source in the company’s management’, Revista Economica, Vol. 68, No. 2, pp.144–160.
Dragija, M. (2014) Interno Izvještavanje U Funkciji Upravljanja Na Visokim Učilištima,
Unpublished PhD thesis, The Faculty of Economics in Zagreb, Zagreb, Croatia.
Hodžić, N. (2014) ‘Analysis of the balance sheet–activity management accounting’, Business
Consultant, Vol. 6, No. 39, pp.60–72.
İbicioğlu, H., Kocabiyik, T. and DalĞar, H. (2010) ‘Financial statement utilization during decision
making process in SMSs: a comparative study on European and Turkish managers’, Marmara
University Journal of the Faculty of Economic & Administrative Sciences, Vol. 28, No. 1,
pp.209–226.
Jukan-Kokorivić, M. and Babajić, A. (2016) ‘Financial statement analysis in business practice of
enterprises in Bosnia and Herzegovina’, Poslovni Konsultant, Vol. 8, No. 54, pp.9–16.
KPMG (2010) Strategic Financial Analysis for Higher Education: Identifying, Measuring &
Reporting Financial Risks, Prager, Sealy and Co, LLC and Attain [online]
http://www.prager.com/FinancialAdvisory/StrategicFinancialAnalysis/ (accessed 15 January
2017).
Mamontova, N.A. and Novak, A.F. (2015) ‘Management accounting of higher education
institutions: implementation stages and realization features’, Economics, Entrepreneurship,
Management, Vol. 2, No. 2, pp.39–44.
Manes-Rossi, F., Allini, A., SpanÁ, R. and Dainelli, F. (2016) ‘Changing performance
measurement towards enhanced accountability: insights from the British Museum’, Int. J.
Public Sector Performance Management, Vol. 2, No. 4, pp.331–347.
Mihăilă, M. (2014) ‘Managerial accounting and decision making, in energy industry’, Procedia –
Social and Behavioral Sciences, Vol. 109, No. 1, pp.1199–1202.
Molesworth, M., Scullion, R. and Nixon, E. (2010) The Marketization of Higher Education,
Routledge, London.
Nagendrakumar, N. (2006) ‘The time gap of financial communication at divisional secretarias in
Trincomalee district’, Mentor – The Journal of Business Studies, Vol. 1, No. 4, pp.21–38.
Official Gazette (2016) Instruction for Submission of Annual Reports by Non-Profit Organisations
– Legal Entities Governed by Private Law, No. 7/08, No. 8/09, No. 109/10 & No. 86/16.
Official Gazette (1999) Accounting Act, Number 23/99, 30/02, 114/06).
Official Gazette (2002) Rules on the Compilation of Annual Reports for the Budget, Budget and
Other Entities Governed, Number 115/02-124/08.
Official Gazette (2011a) Public Finance Act, Number 11/11, 14/13, 101/13, 55/15, 96/15.
Official Gazette (2011b) Regulation on Financial Reporting in Budgetary Accounting, Zagreb,
Number 32/2011.
Official Gazette (2015a) Regulation on Financial Reporting in Budgetary Accounting, Zagreb,
Number 3/2015, 93/2015, 135/2015.
Official Gazette (2015b) Regulation on Reporting in Non-profit Accounting and Register of
Non-profit Organisations, Zagreb, Number 31/2015.
Official Gazette (2015c) Accounting Act, Zagreb, Number 78/2015.
Pinsonneault, A. and Kraemer, K. (1993) ‘Survey research methodology in management
information systems: an assessment’, Journal of Management Information, Vol. 10, No. 2,
pp.75–105.
466 T. Jovanović and M. Dragija

Puican, L. (2015) ‘Utility of annual financial statements in the management process’, Annals of
Constantin Brancusi University of Targu-Jiu’, Economic Series, Vol. 3, No. 4, pp.164–169.
Ramadani, V. and Dana, L.P. (2013) ‘The state of entrepreneurship in the Balkans: evidence from
selected countries’, in Ramadani, V. and Schneider, R.C. (Eds.): Entrepreneurship in the
Balkans, Berlin and Heidelberg, pp.217–250, Springer, Berlin and Heidelberg.
Roje, G., Vašiček, V. and Hladika, M. (2012) ‘The perspectives of IPSASs introduction in Croatian
public sector’, Int. J. Public Sector Performance Management, Vol. 2, No. 1, pp.25–43.
Rossi, P, Wright, J.D. and Anderson, A.B. (1998) Handbook of Survey Research, Academic Press,
London.
Sanyal, B. and Martin, M. (2009) ‘Financing higher education: international perspectives’,
World 68, Vol. 110, No. 731, pp.23–24.
Sordo, C., Orelli, R.L. and Padovani, E. (2012) ‘Accounting practices in Italian higher education
system’, Economic Research, Vol. 25, No. 3, pp.825–845.
Vašiček, D. (2007) Državno Računovodstvo U Funkciji Odlučivanja Javnog Menadžmenta,
Unpublished PhD thesis, The Faculty of Economics in Zagreb, Zagreb, Croatia.
Zager, K. and Zager, L. (2006) ‘The role of financial information in decision–making process’,
Innovative Marketing, Vol. 2, No. 3, pp.35–40.

Note
1 This paper is a result of the Croatian Science Foundation’s funding of the project 8509
Accounting and financial reporting reform as a means for strengthening the development of
efficient public sector financial management in Croatia. Any opinions, findings, and
conclusions or recommendations expressed in this material are those of the authors and do not
necessarily reflect the views of the Croatian Science Foundation.