Focus - Transforming Local Governments

Internal Controls in Local Governments

Mária Benedek
Supervisory Manager, State Audit Office of Hungary

Klára Tubak Szenténé
Senior Auditor Counsellor, State Audit Office of Hungary

Dániel Béres
Analyst-Economist

Published in: Public Finance Quarterly 2014/3 (p. 296-309.)


Summary: The State Audit Office of Hungary has audited 100 local governments in 2012 and 2013 as for the development of internal controls - the aim of this study is to highlight the main deficiencies. According to the findings, the content of the organizational and operational rule is not properly specified in the 84% of the audited local governments. Besides, the lack of, or inadequate content of other control environment elements typifies almost 20% of the examined local governments. Therefore, the complex control elements such as risk management and monitoring that are based on the basic control components (control environment) are functioning inappropriately (more than 80% of the cases). Satisfactory functioning of internal controls of local governments should be enhanced by identifying and distributing the best practices.

Keywords: local governments, municipalities, internal control, control element, control model

Journal of Economic Literature (JEL) kód: H11, H40, H70, H83, M48


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