The effects of poor financial information systems on the long term sustainability of local public services. Empirical evidence from the Catalan Municipalities

In this paper we describe the existence of financial illusion in public accountingand we comment on its effects for the future sustainability of local publicservices. We relate these features to the lack of incentives amongst publicmanagers for improving the financial reporting and thus management of publicassets. Financial illusion pays off for politicians and managers since it allowsfor larger public expenditure increases and managerial slack, these beingarguments in their utility functions. This preference is strengthen by the shorttime perspective of politically appointed public managers. Both factors runagainst public accountability. This hypothesis is tested for Spain by using anunique sample. We take data from around forty Catalan local authorities withpopulation above 20,000 for the financial years 1993-98. We build this databasis from the Catalan Auditing Office Reports in a way that it can be linkedto some other local social and economic variables in order to test ourassumptions. The results confirm that there is a statistical relationship between the financialillusion index (FI as constructed in the paper) and higher current expenditure.This reflects on important overruns and increases of the delay in payingsuppliers, as well as on a higher difficulties to face capital finance. Mechanismsfor FI creation have to do among other factors, with delays in paying suppliers(and thereafter higher future financial costs per unit of service), no adequateprovision for bad debts and lack of appropriate capital funding either forreposition or for new equipments. For this, it is crucial to monitor the way inwhich capital transfers are accounted in local public sheet balances. As a result,for most of the Municipalities we analyse, the funds for guaranteeing continuityand sustainability of public services provision are today at risk.Given managerial incentives at present in public institutions, we conclude thatpublic regulation recently enforced for assuring better information systems inlocal public management may not be enough to change the current state of affairs.

Department of Human Services agreed upon procedures engagement for the year ended June 30, 2006

Department of Human Services agreed upon procedures engagement for the year ended June 30, 2006

Combined audit report on the eight Judicial District Departments of Correctional Services for the year ended June 30, 2006

Combined audit report on the eight Judicial District Departments of Correctional Services for the year ended June 30, 2006

Agreed upon procedures report for evaluating compliance with provisions of IowaCare (Project No 11-W-00189/7) within the Iowa Department of Human Services for the year ended June 30, 2006

Agreed upon procedures report for evaluating compliance with provisions of IowaCare (Project No 11-W-00189/7) within the Iowa Department of Human Services for the year ended June 30, 2006

Combined audit report on the institutions under the control of the Iowa Department of Human Services including findings and recommendations and average cost per resident/patient information for the five years ended June 30, 2006

Combined audit report on the institutions under the control of the Iowa Department of Human Services including findings and recommendations and average cost per resident/patient information for the five years ended June 30, 2006

Annual Report for the Iowa Department of Administrative Services, Fiscal Year 2008

Annual Report for the Iowa Department of Administrative Services, Fiscal Years 2004-2006

Nutrition Services Fact Sheet (SFY 2006)

Nutrition services provide meals in community settings and to homebound individuals, and provide nutrition education and counseling.

IUP Social Services Collective Bargaining Agreement, July 2007

This agreement made and entered in to this 1st day of July 2007, at Des Moines, Iowa pursuant to the provisions of Chapter 20 of the Iowa code, by and between the State of Iowa (hereinafter referred to as the Employer) and UE Local 893/Iowa United Professionals, and it's appropriate affiliated locals, as representatives of employees employed by the State of Iowa, as set forth specifically in appendix A (hereinafter referred to as the Union).

Audit report on the North Iowa Juvenile Detention Services Commission for the year ended June 30, 2007

Audit report on the North Iowa Juvenile Detention Services Commission for the year ended June 30, 2007

Report on the Iowa Department of Administrative Services for the year ended June 30, 2006

Report on the Iowa Department of Administrative Services for the year ended June 30, 2006

Iowa Department of Administrative Services Customer Council Archives, 2003

Archive of meeting agendas and minutes for 2003 for the DAS-General Services Enterprise Customer Council.

Iowa Department of Administrative Services Customer Council Archives, 2004

Archive of meeting agendas and minutes for 2004 for the DAS-General Services Enterprise Customer Council.