Title: Management of financial resources in municipalities - the significance of size and alternative regulatory responses to a financial crisis

Authors: Levi Gårseth-Nesbakk; Frode Kjærland

Addresses: Norwegian University of Science and Technology, Trondheim Business School, NO-7491 Trondheim, Norway; Nord University Business School, 8049 Bodø, Norway ' Norwegian University of Science and Technology, Trondheim Business School, NO-7491 Trondheim, Norway; Nord University Business School, 8049 Bodø, Norway

Abstract: This study examines the management of financial resources (MFR) in Norwegian municipalities in the context of a financial scandal called the Terra scandal. Two research questions are addressed. First: what was the regulatory response to the wrongdoing in the Terra scandal? Second: what preventive measures of financial debacle, similar to the Terra scandal, have Norwegian municipalities taken? The Norwegian regulatory response to the Terra scandal was soft in nature, requiring few changes for the municipalities. The preventive measures in place vary between the examined municipalities. Few measures have been developed after the Terra scandal, suggesting the municipalities have not done much to proactively change their MFR-control systems, however, size matters. Larger municipalities have striven to build competence or improve their internal control system. Some of the smaller municipalities are depending on dispassionate individuals who safeguard them from financial debacle. Although effective in the short run, this leaves the municipalities vulnerable in the long run.

Keywords: financial scandal; financial crisis; financial resources; municipalities; regulatory response; financial resource management; Norway; Terra scandal; preventive measures; internal control systems; financial management.

DOI: 10.1504/IJPSPM.2016.079718

International Journal of Public Sector Performance Management, 2016 Vol.2 No.4, pp.370 - 391

Received: 10 Jun 2016
Accepted: 11 Jun 2016
Published online: 12 Oct 2016 *

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