The legal and professional regulation of the financial control of local governments in some EU member states

Abstract

In Europe the concept of local government is interpreted much more widely than it is generally understood among financial auditors. In Hungary this definition is mostly associated with the local and nationality governments and only rarely extends to the idea that non-governmental agencies, chambers and non-profit organisations also operate on the basis of the principle of local government. This study focuses only on local governments. It does not aim to describe the development of the current situation in Hungary or to analyse or criticise the effective legislation or the existing audit practices. Here we shall describe the legal regulations applicable to the audit of local governments in some European countries. The selection is not representative. We shall not describe the solutions of Southern European countries (Spain, Portugal, Italy and Greece) and France or Belgium which operate with court type audit offices. Those Member States have also been left out from the study, the financial audit experiences of which can only be studied indirectly through an intermediary language (Visegrád countries, Baltic States, Scandinavian countries, Balkan States). Experience shows that due to the differences in the professional terminology of the latter countries, misunderstandings occur frequently even if there is no need for an intermediary language for understanding. Of the 'remaining' European countries, we have focused our attention on Austria and Germany because of our common roots and historic relations as well as the United Kingdom in relation to the SAO-NAO twinning co-operation. The selected countries have different public administration structures and different professional traditions. The culture of their public life has a hundred years of advantage compared to Hungary. The need of the population and taxpayers for accountability, transparency and democratic requirements of publicity differs from the Hungarian needs. This is because we have not managed to eliminate the disadvantages caused by the socialist diversion of forty years since the systemic change. (It is not an exaggeration to talk about further decline.) The author understands that there are no automatic recipes. However, we always must, may and should learn from others.