Proceedings of the 5th International Conference on New Ideas in Management, Economics and Accounting
The Balanced Scorecard for public-sector organizations: a practical approach for measuring a public entity performance using financial ratios
Tadeo Roberto Baeza Beltrán , Guillermo de los Santos Torres
To keep public finances healthy in the long term, the operation of public entities requires effective performance of financial resources. The Balanced Scorecard (BSC) is a management tool for senior management born in the business world, which is also used in non-profit organizations, such as public entities. With the purpose to present financial performance in a visual way that gets attention of the viewer and can be quickly understood in one glance to those interested, this paper focuses on the application of the BSC in the public sector: the general balance sheet of a public entity was analyzed and financial ratios were applied to it, concluding with the development of a BSC using a web application, converting the results of the financial ratios into gauge charts, where colors indicate the severity status for each financial ratio. The interpretation of these colors is what you should expect: green indicates an acceptable status, yellow indicate a warning status, and red indicates a severe status. The proposed BSC can be used by auditors or the public entity´s administrators to define the area which must be improved to achieve financial goals.