Developing an integrated model of financial management for public sector organizations in Estonia

DOI: 10.5176/2251-1997_AF14.10

Authors: Juta Tikk

Abstract:

According to financial management analysis of the sector, the financial management system for Estonian public sector organizations is not functioning as an integrated system. The gap between budgeting and financial accounting systems in public sector organizations is based on the historical background of financial management for public sector organizations. Therefore, there exists a need for integrated financial management model for public sector organizations in terms of providing accurate and detailed information for strategic decisions that would be in accordance with the concept of performance management.
The object of this research is the financial management system for public sector organizations and its sub- systems: budgeting and financial accounting.
The term „Public sector organization” refers to all not-for-profit organizations providing public goods and services.
The research problem is a creation of integrated financial management model for public sector organizations that meets the „management-by-objectives” requirements and enables performance management through utilizing resource efficiency.
The general method used for this research is the constructive research that is grounded in contingency approach of the situation theory, the Lüder financial management reform model, the Deming management model (PDCA circle), the new public sector financial management (NPFM) reform strategies and the Kaplan&Cooper four-stage model of cost systems design as the theoretical bases of the research. The output of this constructive research is the integrated model of financial management for Estonian public sector organizations, which would be tested using the explanatory case-study method.
With the purpose of arriving at as multifaceted treatment as possible, methodological triangulation is used: structured questionnaire is followed by in-depth case study in addition to qualitative research methods – unstructured interviews, analysis of documents and earlier research.

Keywords: public sector organizations, financial management, integration of the budgeting and accounting systems.