Management of financial resources in municipalities - the significance of size and alternative regulatory responses to a financial crisis
by Levi Gårseth-Nesbakk; Frode Kjærland
International Journal of Public Sector Performance Management (IJPSPM), Vol. 2, No. 4, 2016

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.

Online publication date: Wed, 12-Oct-2016

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