The Interpretation of Public Administration Controlling From an Economic Perspective

Abstract

Objective: The primary objective of this study is to assess the adherence of state/municipal economic companies to the requirements outlined in Government Decree 339/2019 (XII. 23.) concerning the use of budgetary funds. Furthermore, the study aims to evaluate the effectiveness of internal and external control systems and propose measures to enhance the efficiency and transparency of these companies' financial management. Theoretical Framework: The research builds on the principles of public sector governance, focusing on the role of internal control systems and external monitoring in ensuring the proper use of public funds. Government Decree 339/2019 serves as the regulatory basis for evaluating performance, while theories on financial control, transparency, and accountability in public administration are employed to interpret the findings. Method: A qualitative approach was employed, including an audit of selected state/municipal companies. The study utilized data from the ÁSZ (State Audit Office) reports, internal control mechanisms, and management reviews. Performance evaluations were conducted in light of the companies' compliance with regulatory requirements, with a focus on identifying systemic shortcomings and proposing improvements. Results and Discussion: The audit revealed that while the companies generally complied with Government Decree 339/2019, several shortcomings were noted, particularly in the areas of internal control and economic management. External monitoring by the ÁSZ and existing internal control systems contribute to ensuring the proper use of budgetary funds. However, there is a need to strengthen these systems further to address the observed issues. The study suggests the implementation of a management-oriented controlling system, which would emphasize economic decision-making and improve overall performance and transparency. Research Implications: The findings have significant implications for state and municipal economic companies. By adopting a more economically focused internal control system, these entities can enhance their financial management practices, optimize the use of public funds, and foster greater transparency and efficiency in their operations. This approach would not only benefit public administration but also improve service delivery to the general public. Originality/Value: This study contributes to the existing literature by highlighting the importance of a management-oriented controlling system based on economic principles in the public sector. It provides practical recommendations for enhancing the internal control and audit processes of state/municipal companies, offering valuable insights for policymakers and public administration professionals striving for greater fiscal responsibility and transparency.