Abstract
This article proposes a theoretical framework to explain the failure of the compulsory adoption of new practices in the financial management cycle in local governments. The empirical analysis applies the framework to the control systems implementation in Brazilian municipalities. The findings of a qualitative comparative analysis applied to seven local governments show that despite human capabilities and information systems being a necessary condition, they are insufficient to deeply implement such internal control practices. Institutional capital is a condition sine qua non for the adoption of new practices on financial management and control in Brazilian local governments. The adoption of such reforms depends on an active network of powerful actors involved in institutional work supporting the changes.
Keywords:
internal control; municipalities; institutional work; institutional capital; reforms
Thumbnail
Thumbnail
Thumbnail
Thumbnail
Source: Elaborated by the authors.
Source: Elaborated by the authors.
Source: Elaborated by the authors. Notes: (1) The expected institutional logic in the municipalities is opposing to the control. When the mayor and the chief controller are favorable to the logic of control, they are potential institutional entrepreneurs. (2) The ICS is always legitimated by the source that has the same opinion advocated by them. (3) Resources capital refers to assets and competencies of the organization; institutional capital can be considered as a repository of favorable meanings and values that legitimate behaviors and practices.
Source: Elaborated by the authors. Notes: (1) The local government implemented an Integrated Financial Management System (IFMS). (2) The team is not subordinated to the secretary of finances, is organized in their secretary or office connected to the mayor. (3) Chief Controller and technical team are knowledgeable and experienced in accounting or related fields. (4) Direct and electronic access to detailed data. Permission is not needed. (5) Roles and competencies established by municipal law. (6) Identified, for instance, in critical situations if there was broad allowance to investigate irregularities, as well as support with institutional and material resources. The “non-support” does not mean resistance; it can be indifference. (7) It opens doors with the Court of Accounts in case of any doubt, which allows support to the ICS role. (8) Conducted with consistency, method, and planning, verifying the processes of hiring personnel and the legality of acts. (9) Exercise the authority to prevent the release of the government accounts without them being reviewed. The local administration understands and accepts that the ICS can stop the process of accountability to the Courts of Accounts, if it considers that the reports are not adequate or there are irregularities.