To study users' information preferences and the effect of format and basis of accounting on information adequacy and decision accuracy, subjects from the three user groups identified by the Government Accounting Standards Board (1987, p. 12)-citizens, investor/creditors, and legislative/oversight officials-were given the financial reports of two, similar-size, Connecticut cities in either the fund-by-fund format (as published, but with names disguised) or the consolidated format using accural accounting. Subjects were asked to: (a) rank the two cities in terms of financial condition, and (b) rate the usefulness and the adequacy of information on compliance, viability, performance, and cost of services. Finally, a mean usefulness score was calculated for each format. Legislative/oversight subjects felt that the consolidated format with accrual provided more adequate information on cost of services and was significantly more useful in assessing overall financial condition. Format did not affect the accuracy in ranking the cities by financial condition for any user group. Comments indicate that each group wants different changes in municipal reporting. Citizens prefer information in easy-to-understand written form; investor/creditors want additional information (e.g., five-year trends); legislative/oversight officials favor additional information and the consolidated format with accrual accounting. © 1991.
