New municipal financial management

The term New Municipal Financial Management (NKF) in North Rhine-Westphalia, New Municipal Accounting and Control System (NKRS) in Hesse or New Municipal Accounting (NKR) in Lower Saxony summarizes all efforts that have so far been carried out according to the principle of cameralistics in the municipalities (Counties, cities and municipalities) to convert to the principle of double entry (double bookkeeping in accounts). The NKF / NKRS / NKR is the financial part of the new control model .

A mapping of resource consumption and volume takes place. The municipal assets are proven. The aim of the reform is to change the control of the municipalities from the so-called input (orientation of control on the use of resources) to output orientation (orientation of administrative control on the result of administrative activity). Business management elements such as contract management , budgeting or controlling are used.

In contrast to municipal cameralistics, the mapping of resource consumption is firmly prescribed for all areas within the framework of the NKF. While this was also possible within the framework of municipal cameralistics, it was only required by law where the consumption of resources was directly or partially refinanced by the citizens via fees (cost-accounting facilities such as water supply, sewage disposal or cemetery management).

As part of the municipal cameralistics, the input and output were documented in the budget. In the process of drawing up the budget, the municipal council first decided on the output (should the gym be built, yes or no?), In a second step they had to agree on the input (how much money should be spent on it?)

In some areas, this new control model has points of contact with New Public Management (NPM), which aims to adopt private management techniques.

elements

In the NKF, a distinction is made between standardized and non-standardized budgeting:

The normalized budgetary system contains components financial statement , income statement and balance sheet . It is used for better comparability and results orientation and is mandatory. As part of the financial accounting , all incoming and outgoing payments for a period are recorded; the profit and loss account contains all income and expenses . Planning precedes both the financial statement and the income statement.

This is different in municipal cameralistics. Everything is shown there in an evaluation (the individual plans). The inpayments and payments are posted in the actual, the expenses and income are documented in the budget in the individual plans.

The non-standardized budget system allows additional components to be added individually, such as cost accounting or controlling , in order to take special needs into account.

Furthermore, the previous separation of the "group assets" into the core area on the one hand and the shares z. B. to private companies and special funds on the other hand.

A central element for reporting on the “Group Commune” in the communal or communal budget ordinances is the communal overall financial statements . The community, its independent areas of responsibility and its holdings are viewed as an economic unit. The main goal is, based on the "unified theoretical" concept of group accounting, to arrive at an overall view of the municipality's asset, financial and earnings position that corresponds to the actual circumstances.

In the context of municipal cameralistics, municipalities are involved in special-purpose associations, inter-municipal industrial areas, etc. Only "rudimentary" can be seen in the core budget.

Equalization reserve

In addition to the so-called general reserve, the equalization reserve is part of the equity capital shown in the balance sheet. If the final balance for a year shows a negative balance, the equalization reserve can be reduced by the deficit and the budget is legally considered to be balanced. If the balance is positive, the equalization reserve can be increased accordingly. In particular, it serves to cushion fluctuations in trade tax income so that the municipalities do not have to adjust their expenses and income annually to the sometimes strong economic fluctuations and have greater planning security.

Household security

If the equalization reserve is used up, a deficit in the final balance sheet is taken from the general reserve. In this case, the budget must be submitted to the district government for approval. If the general reserve is reduced by more than 25 percent within one year or by more than 5 percent in two consecutive years, the municipality must draw up a budget security concept in order to reorganize the budget.

Future municipal accounting

The Standing Conference of Interior Ministers of the countries (IMK) has 2003 in Jena decide on an option model which allows the countries, both the cameral and the accrual accounting as accounting style to use. The IMK has specifically recommended in this context drafts a "Community financial regulation, and a double-entry budgeting and accounting" (double-entry) and a "Community Financial Regulation for the extended public finance accounting" (Advanced Kameralistik) for implementation. This package also includes a communal product framework with associated explanations and a recommendation for the accounting framework for double accounting (double accounting = double bookkeeping in accounts).

According to the declared will of the IMK , through the reform of the municipal budget law

the municipal budget and accounting system changed from the previously payment-oriented form of representation to a resource-oriented representation and

the control of the local government should be made possible by the specification of targets for the communal services (output control) instead of the conventional provision of expenditure authorizations (input control).

The IMK assumes that “the reform of local budget law will bring about a fundamental change in local budget management and local government”.

First experiences are now available. In its 2011 municipal report on pages 45–72, the Rhineland-Palatinate Court of Audit comes to the conclusion that the municipal double-entry system has not yet been used. Hagen Treber comes in his essays: Doppik - more frustration than pleasure (KKZ 06/2009, p. 131 ff) and Doppik - laborious, expensive, useless (KKZ 09/2009, p. 201ff) and Herbert Morgenthal in Doppik - a reform ruin to sobering results.

The option resolution by Jena has led to very different developments in accounting in Germany. There are currently 3 variants of the reform:

the mandatory introduction of double billing as the sole billing style on a key date (e.g. North Rhine-Westphalia, Rhineland-Palatinate, Lower Saxony, Saarland, Baden-Württemberg);

a right to choose between double and extended cameralistics (in Hesse this right to choose is already anchored in the municipal code)

a right to choose between double and previous classic cameralistics, which is partially supplemented by ancillary calculations (Bavaria, Thuringia).

In North Rhine-Westphalia, Hesse, Saarland and Rhineland-Palatinate, the amendments to the municipal ordinances have been completed and passed. Other federal states are preparing legislative initiatives to reorganize the local budget or are already in the legal consultation phase.

Bavaria will continue to allow the municipalities to keep the previous cameralistics in order to avoid financial claims by the municipalities based on the principle of connectivity.

rating

The NKF is intended to make statements about effectiveness and economic efficiency more possible and, in particular, to provide politicians with control-relevant data from a commercial point of view. In particular, the systematic recording of assets and debts in a balance sheet is intended to improve the mapping of the interests of future generations. The central point is the development of equity (assets minus debts). If it is possible to prevent the erosion of equity, this is an important contribution to strengthening the sustainability of public action.

The cameralistics of the municipalities is also based on the principle of economic efficiency. It means that as many tasks as possible should be completed with the available resources and that the individual task should be carried out as cost-effectively as possible. The annually published black book of the Federation of Taxpayers shows that economic activity is not a question of the accounting system. In the countries in which double entries are already made, there is tax wastage just as it was and is the case in the other countries.

From a cameralist point of view, the focus is not on equity, but on the solvency of the municipalities. The municipalities must at all times be able to use their "current income" to pay for the regular repayment of the loans taken out in addition to the "current expenses".

The importance of equity is of secondary importance. Its amount is very much influenced by whether you do certain voluntary tasks or not. Example: The current generation operates an outdoor pool, future generations do not want this. The amount of equity is also largely determined by whether the state will continue to grant allocations in the same amount in the future, as was the case in the past. In the past, the state often granted grants of 60–80%, without which smaller municipalities in particular would not have been able to make investments.

In cameralistics, on the other hand, the actual and planned income and expenses are listed according to type, for example expenses for the construction of a new day-care center. The development of equity is not shown directly. In the double, these income and expenses are recorded in the same amount as a payment in the financial statement and, after being broken down into profit or loss, as expenses and income. This makes the annual burdens on the public budget - which not only include cash payments - clearer. At the same time, the asset, its consumption and, if necessary, its financing via outside capital is shown in the accounting. Statements of this kind could only be mapped within the framework of the cameralistics using additional asset and debt calculations or other additional calculations. In order to also show plan figures, the double must be supplemented by a planning calculation.

The public budget is mostly shaped by statutory tasks such as youth welfare and social benefits. Achieving profitability or making profits in these areas cannot be the primary goal of public action. However, this criticism fails to recognize that, also and especially in the case of mandatory tasks, special attention must be paid to the completion of economic tasks, even if the financial volume is not so significant. In particular, decisions about the public budget should be based on the most complete information possible. To deliver this - and that cannot be disputed - the cameralistics alone is not in a position. The Doppik provides a benchmark for determining economic efficiency, since at least inter-municipal comparisons are possible.

One can counter that the state did not demand this in the past. If one had done a full wealth calculation, then this would also have been possible camerally. It is also disputed that the information obtained can always be used for local politics.

criticism

The sense of the NKF is occasionally disputed:

The complete wealth calculation, which is often associated with the double, sometimes collects more figures than are required. Many decisions can already be adequately supported by decision-related profitability calculations and measurement figures for organization (capacity and workload). A cost and performance accounting runs without knowledge of meaningful application and limitation of the risk of permanently generating figures without the need for decision-making.

The Doppik reveals figures on municipal debt, so that the political room for maneuver can be narrowed. However, the cameralistics also reveal these figures. The legislator makes a debt overview mandatory. This shows the debt level at the beginning and at the end of the year.

The concept of double-entry also means that certain decision-making powers are to be transferred from politics to administration. This raises the question of whether politicians will tolerate being treated like a shareholder who is only presented with global figures and no decisions and information on individual measures or - by bringing some competencies back to the Council - the opportunity will be used to to inform the public comprehensively about the financial situation of the municipality.

The cameralistics is to be characterized today as a plan calculation. A double that takes the place of the cameralistics should also be interpreted as a plan calculation ( financial plan , asset plan and budgeted cost calculation ) in order to be able to fulfill the same purpose as the cameralistics. Such a changeover turns out to be costly and time-consuming, even if essential procedures and software from the proven system of commercial double-entry bookkeeping can be adopted with some adjustments.

However, it is criticized that the communal double-entry system is too complex and that it is difficult to understand by the voluntary councilors. For example, the municipality of Niederwerrn was the first municipality in Lower Franconia / Bavaria to return from double-entry to cameralistics.

Individual evidence

^ Minutes of resolution on the 173rd meeting of the Standing Conference of Interior Ministers and Senators of the Länder on November 21, 2003 in Jena (PDF; 14 kB)
^ Herbert Morgenthal: Doppik - a reform ruin

literature

Holger Mühlenkamp: On the steering effects of the new public budget and accounting system and its acceptance. (= Speyer workbook. No. 203). Speyer 2011. ( online , PDF; 183 kB)
Dennis Hilgers, Andreas Burth: The added value of the municipal double in Germany from the point of view of treasurers and budget politicians - results of two nationwide surveys -. Internet publication 2012: http://www.doppik-studie.de/
Klaus Lüder: New Public Budgeting and Accounting - Requirements, Concept, Perspectives . Ed. Sigma, Berlin 2001, ISBN 3-89404-738-0 .
New municipal financial management. Business basics for the double budget law - model project “Double municipal budget in NRW”. 2nd Edition. Haufe, Freiburg (Breisgau) 2002, ISBN 3-448-04975-1 .
Armin König: Doppik or cameralistics in the municipal core administration? To discuss the reform of the public budget and accounting system . Edition Kerpen, Illingen 2007, ISBN 978-3-928817-22-6 .
Armin König: The end of cameralistics for the municipal core administration? On the practicality of the new municipal accounting. Saar-Lor-Lux Public Management, Illingen 2007, ISBN 978-3-8370-1798-4 .
Heinz Bolsenkötter: Integrated public accounting. Conception of a reorganization of the accounting and accounting of public local authorities. Frankfurt am Main 2001, ISBN 3-934803-01-6 .
Walter Lutz: If it didn't exist, it would have to be invented! A comparison of Doppik and Kameralistik- from the point of view of a municipal council. mbverlag, Rheinfelden 2008, ISBN 978-3-940411-09-9 .
Stefan Metzing: The municipal balance sheet - meaning, function and special features compared to HGB / IFRS. VDM-Verlag, ISBN 3-639-07884-5 .
Klaus Dieter Sielof, Ruprecht Gläser and Friederike Maier: Municipal Doppik - an evaluation. Verlag BoD-Books on Demand, Norderstedt, ISBN 978-3-7322-0748-0 .