Conference Agenda

The German grant system knows hundreds of government to private as well as government to government grants and is regarded as being highly complex (PD and DST, 2021). Over the course of the years, reforms tried to target the issue from different angles, for example by downscaling the requirements for the common proof of use, by bundling of similar programmes, by the shift to lump sums instead of actual cost grants or – quite recently – by the implementation of budgets which recipients can freely allocate within a specific field. With a focus on government to government grants, this development not only leads to the question of consequences for the intergovernmental financial architecture (Scharpf 1976 and 1985). Furthermore, it sparks a discussion about accountability and an increasing demand for control versus state and local government autonomy.

In our contribution, we outline the structure and most recent reform developments in the German grant system. We exemplify the latter by three case studies covering a) the bundling of similar programs on the federal level, b) the approach of social grant budgets in the German state of Saxony and c) the realization of simplified proof of use procedures within a specific urban development programme in North Rhine-Westphalia.

We embed the general phenomenon into the broader theory of fiscal federalism (e.g. Oates, 1999) and conceptualize the complexities and reform approaches with the help of well-described implementation challenges such as control deficits, information asymmetries or lack of administrative capacity of recipients (May, 2013; Knill and Tosun, 2015). We use these challenges as well as the set of discussed solutions, which comprises measures such as a precise definition of requirements regarding the recipients‘ project management, impact evaluation or proof of use, to define criteria for the case studies. This framework allows us to address the above-mentioned questions of accountability and oversight in a systematic manner.

In our contribution, we additionally discuss the relevance of the two accounting systems cameralistics and double-entry accounting (both applied at various federal levels in Germany) for the outlined grant reforms (e.g. Niebur 2019). We also strive to highlight the cross-country relevance of these changing vertical fiscal interactions by taking a cursory look at similar discussions abroad (Gloazzo, 2020; GAO, 2023; Bundesrechnungshof, 2021). The article will conclude with policy recommendations regarding the future reform path for the German grant system.

Objective: The Republic of Croatia has made significant progress in the development

of public sector accounting but still applies a modified accounting basis. The

accounting and reporting system is standardized for all public sector entities, and it is

regulated by a set of laws, decrees and rules. As local politicians play a unique role in

their local units and hold responsibility for decision-making, their understanding of

financial information and financial reports is important.

The aim of this paper is thus to explore whether local politicians in the Republic of

Croatia use financial reports and budget execution reports. This paper also aims to

address how local politicians assess the usefulness of these reports. In a nutshell, the

paper discusses whether financial reports of local government entities provide

information that is relevant for decision-making by local politicians.

Design/methodology: The study was conducted from February to April 2022. The

survey was conducted by a specialized market research institute. Respondents were

contacted by telephone. The sample included city councillors, municipal councillors,

mayors, deputy mayors, and municipality heads. A database of respondents was

created based on publicly available data. The respondents were randomly selected

from the created database and 538 responses were collected. In processing the data,

descriptive statistics and Pearson's r coefficient were used to determine the correlation.

Preliminary findings: The results show that respondents perceive the information in

financial reports as well structured and useful for decision making and financial reports

as being made electronically and publicly available in the timeliest manner. Yet, budget

execution reports are still preferred, and financial reports are used only to a limited

extent. In addition, in determining whether there is a correlation between the use of the

reports and personal characteristics of the respondents, the results show that job

position, years of experience, gender, and level of education influenced the use of the

reports. Furthermore, this study shows that mayors and municipality heads use reports

more than city councillors and municipal councillors do. This suggests that job position

and area of responsibility are key to the use of financial reports. This also suggests

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Corresponding and presenting author

that politicians, i.e., local councillors, are more inclined to use budget execution reports

as budget execution falls in their area of responsibility.

Expected contribution: The findings of this study contribute to the ongoing debate on

the fundamental purpose and usefulness of public sector financial reports at the local

government level. The findings of this study on factors impacting the use and

usefulness of reports and the information they contain might be useful to governments

that are undertaking or considering reforms of public sector accounting to gain more

sophisticated information and increase the usefulness of financial reports