Lasse Oulasvirta

Performance auditing in local government: an exploratory study of perceived efficiency of municipal value for money auditing in Finland and Norway

Performance auditing, or value for money (VFM) auditing, has been a long-standing component of accountability in public administration. During the 1980s and 1990s performance auditing has allegedly been increasingly adopted in the new public management. While there has been much research on public management and performance auditing in central government, local government has been relatively neglected in the literature. Municipalities and counties in local government have an important role in public sector service production in most European countries, and especially in the Nordic countries. It is therefore surprising that performance auditing in this context has received so little scholarly attention. This study is aimed at filling some of this gap. The purpose of this comparative study is, therefore, to explore how performance auditing practices, including performance measurement, are used to assess and verify value for money in local government and to enhance the accountability of municipalities and counties. This study analyses how informants from both auditors and auditees in Finland and Norway perceived the efficiency of conducting performance audits in local government. Despite some problems related to the quality of the performance audit reports, the informants perceived performance audit to function as a useful, rational public management tool.

Real and perceived effects of changing the grant system from specific to general grants

The paper is based on a study of the 1993 Finnish grant reform, changing from a system with earmarked matching grants to a system with general, non-matching grants. The analysis of cross-sectional data confirms the “fly-paper effect” and also that matching grants have a stronger stimulating effect than non-matching grants on local expenditure. The fly-paper effect is then modified to take account of the distribution of power inside local government. The change to general grants without central government supervision might mean more power to the central management in the local government and a diminished power for sector officers and groups dependent on the sector services. Perceptions of principal actors in the local government budget process were that the reform changed the distribution of power, in some municipalities to the disadvantage of locally small weak groups that could benefit under the old system of earmarked matching grants.

Financial autonomy and consistency of central government policy towards local governments

Traditionally, empirical assessment of local government financial autonomy has concentrated on the different income sources available to local governments. In this article we extend such evaluation to the expenditure autonomy side and combine these two dimensions of autonomy into a comprehensive evaluation of local government financial autonomy. The operationalization of financial autonomy offers a basis for an evaluation of the consistency of central government policy towards local governments. Our approach is then used for a comparison of two countries — Finland and Poland. Points for practitioners Key implications in our approach are the systematic evaluation of both income and expenditure autonomy of local governments, and combining these two dimensions of autonomy into a comprehensive evaluation of local government financial autonomy. The measurement of financial autonomy which is developed can be used as a management tool in central government policy towards local governments.

Steering and Monitoring Model of State-Owned Enterprises

The aim of this study is to systematize the heterogeneous field of stated-owned enterprises (SOEs) especially for steering and monitoring purposes. Based on the existent literature and the heterogeneous field of the Finnish state’s share portfolio, we create a model for steering and monitoring purposes. In our model, the SOEs are grouped into categories according to how much the state as an owner is concerned with the social service assignment principle, strategic interests, or purely shareholder value interests. Consistency in the basis, extent, and listing status of SOEs for steering and reporting creates good preconditions for ownership policy decision-making and ultimately improves the outcomes of ownership policy and steering.

Adoption of comprehensive risk management in local government

ABSTRACT In the aftermath of large company failures in the early 2000s, there emerged a new wave of efforts to enhance risk management (RM) and control in enterprises. The normative RM model has been promoted widely to all organisations, including public sector organisations. Using survey data, this article describes and explains the diffusion and adoption of RM innovation in local government in Finland. Our survey results support the argument that if comprehensive RM is not obligatory, it is not widely used in local government. Our analysis reveals that financial constraints explain to some extent the existence of comprehensive RM in municipalities, while structural factors such as the size of municipalities do not, even though RM is slightly more advanced in larger rather than smaller local governments. Slow adoption indicates that comprehensive RM as a managerial innovation lacks immediate benefit when assessed against the efforts and costs of its introduction and maintenance.

Evolution of EU public sector financial accounting standardisation: critical events that opened the window for attempted policy change

Abstract This paper analyses agenda-setting for EU policy change in respect to public sector accounting harmonisation, adopting the garbage can model for its theoretical framework. It utilises qualitative research methods to determine what caused the window of opportunity to open, why it led to a proposal for compulsory public sector accounting standardisation for member states and why the International Public Sector Accounting Standards were not adopted by the EU. It concludes that harmonised accrual accounting is likely to be only a minor instrument of EU fiscal governance and its Excessive Deficit Procedure aiming to prevent governments running structurally unbalanced public finances.

Public Sector Accounting and Auditing in Finland

Finnish public administration is organized on two levels: national central government and local governments (as of 1 January 2014, 336 municipalities, 320 on the mainland and 16 in the Aland autonomous region). Local government also includes around 200 joint municipal authorities that have been established for those public services that need a wide population base, such as special health care and vocational education.