Financial management in Finnish municipalities

Demands for reforming public management have created pressures on local government budgeting and accounting systems. The aim of this article is to compare the actual state of budgeting and accounting to the normative model of performance-budgeting and efficient accounting. Local governments have adopted a frame budgeting model with quite widespread net budgeting, but we cannot speak of genuine performance-budgeting because of deficiencies in performance-measuring and performance-auditing and because of lack of suitable reward systems and organizational structures. The average local government is also quite far away from the ideal accounting model. Budget and accounting reforms will press local governments to develop further their budgeting, accounting and performance-auditing systems. In spite of tis, it can be argued that the ideal model will not be reached in most local governments.Non peer reviewe