Environmental, regulatory and control risks in the financial management of local municipalities – A trap for mice or a trap for cats?

Abstract

Catch me if you can: but who is going to catch who? Is it possible to operate a subtle, multidimensional control system that can detect, identify, and assess the risk factors of a complex municipal environment and set the right direction for the local institutional system? There exist several sensory mechanisms and municipalities have plenty of reaction opportunities. Managing them properly and fine tuning them are indispensable to avoid the cartoon-like set-up of a mousetrap set ever so carefully (or carelessly) ending up trapping the animated character that has set it. Reviewing, analysing and evaluating the control system are classical audit tasks. Its environmental and regulatory risks are particularly important for internal and external audits. Below, I wish to present the characteristics of well-known economic and business environmental analysis models in a municipal context “from the cat's perspective”, relying on the notions of the international and Hungarian audit terminology. Audit systems have had an increasing role in each segment of the economy in the fields of safe operation and risk management. The situation is not any different concerning local municipalities.