The three characteristics that distinguish public sector organizations from private entities and emphasize the need for accountability are purpose, ownership, and funding. A private company can measure its success by the profits it makes, since this is its main objective. This may be qualified by the report of the achievement of secondary objectives, such as retaining a certain percentage of a quality market, employing people, reducing pollution, or earning export dollars.

The public sector has different primary objectives than the private sector. These are a mixture of social, political and macroeconomic objectives. Issues such as employment, interest rates, exchange rates, inflation, social property and public opinion may have a primary claim on the attention of the government of the day. At the operational level, organizations are concerned with the quality, frequency, quantity, and value for money of the service provided.

Of these operational goals, only value for money can be measured in dollar terms, but it cannot be measured at all if the other dimensions of the service are not known. For example, was the service what was required, was it good enough, did it meet all targets? Simply reporting the cost of a service does not convey information about the service itself.

Accountability in the public sector is therefore a more complicated business than simply reporting final earnings. Every goal needs a means to describe it and a method to show if it has been achieved. Such performance measures will differ from service to service: for example, what will measure the effectiveness of sewage disposal is obviously not appropriate for reporting the performance of diplomatic harvests. These measures are reported to public sector stakeholders through annual plans and service performance statements. The need for nonfinancial performance measures does not apply so much to profit-seeking parts of the public sector.

In the private sector, most companies are owned by people who have chosen to adapt to this role and who will demand access to information about their investments. In the public sector, ownership is involuntary: everyone owns the public sector, whether they like it or not, and cannot sell their property individually. This global, unselected ownership creates a greater need for accountability.

In the private sector, expenses are incurred in order to generate income. For example, marketing expenses and storage costs are incurred to generate revenue. In contrast, the source of public sector revenue is largely unrelated to expenditures. Most of the taxes and fees collected are not specific, they are not intended to pay for particular services. Other sources of income, such as rentals, sales, fees and partial charges, may be related to the service provided.

Due to the nature of the services provided, receipt of public sector services may be invisible, reluctant, or paid for by someone else, or even another generation. For example, the tax can be used to prevent air pollution (which the taxpayer may be unaware of), it can be used for defense, or it can be spent on hospitals (however the taxpayer can always be healthy).