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DOI: 10.15240/ ul/001/2016-4-007
In oduc ion
By way o public budge s is in economically
de eloped coun ies edis ibu ed app oxima ely
one hal o he p oduced GDP. Acco ding o he
EUROSTAT da a (EUROSTAT, 2012), o al
go e nmen expendi u es in he EU coun ies
(EU-27) accoun ed in 2012 o 48.9 % o GDP,
o which expendi u es on he local go e nmen s’
le el accoun ed o 11.5% o GDP. In he Czech
Republic, hese expendi u es s ood in 2012
a 43.9% o GDP, while local go e nmen s’
spending accoun ed o 9.8% o GDP. A mo e
de ailed compa ison o he a io o o al public
expendi u es o GDP and expendi u es o local
go e nmen s o GDP b ings he ollowing able.
Dis ibu ion o public expendi u es be ween
cen al and local go e nmen s depends on
a ype o he model o i scal ede alism adop ed
in indi idual coun ies. Fo mos o he e iewed
coun ies, we may egis e a dec ease in public
expendi u es o local go e nmen s. The cause
could be a ibu ed o a d op in ax e enues due
o he economic c isis. Local go e nmen s, unlike
cen al go e nmen s, do no aim o s abilise he
economy using a i scal policy. Wi h espec o
he signi i can olume o alloca ed esou ces, i
is desi able o possess in o ma ion on how a e
hese incu ed expenses economically ea ed.
The p esen s a e o heo e ical e l ec ion is such
ha examina ion o municipal expendi u es is
usually o ien ed owa ds analysing municipal
expendi u es ela ed o a speci i c a ea, such
as e i ciency in p o ision o municipal se ices
(Pa el & Sičáko á-Bebla á, 2009), in con ac ing
DO THE DATA ON MUNICIPAL
EXPENDITURES IN THE CZECH REPUBLIC
IMPLY INCORRECTNESS IN THEIR
MANAGEMENT?
Milan Půček, Michal Plaček, F an išek Och ana
Coun y
2010 2011 2012
To al
go e nmen
Local
go e nmen
To al
go e nmen
Local
go e nmen
To al
go e nmen
Local
go e nmen
Czech Republic 43.0% 11.3% 42.5% 10.8% 43.8% 9.8%
Slo akia 42.0% 7.3% 40.6% 6.8% 40.2% 6.4%
Slo enia 49.2% 9.8% 49.8% 9.4% 48.1% 9.5%
Hunga y 49.7% 12.6% 49.9% 11.5% 48.7% 9.3%
Poland 45.9% 15.0% 43.9% 14.1% 42.9% 13.3%
Romania 39.6% 9.5% 39.2% 10.3% 36.4% 9.6%
Sou ce: Eu os a (2012)
Tab. 1: Compa ison o o al go e nmen expendi u es o GDP and expendi u es o local
go e nmen s o GDP in selec ed coun ies o Cen al Eu ope
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90 2016, XIX, 4
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public se ices a a local le el (Nemec, Och ana,
& Šumpíko á, 2008), on analysis o municipal
i nances (Peko á, 2011) and hei indeb edness.
In addi ion o hese examina ions, u he ways
a e being sough wi h he aim o s eamline
ou lays o municipal expendi u es wi h
a possibili y o in oducing public adminis a ion
con olling (Š ando á, Mihaliko á, & Mi aťalo á,
2007) o inden i ying sui able ins i u ional o ms
(Bebla ý & Šičáko á-Bebla á, 2006) o o ms
o owne ship in he p o ision o se ices. A he
same ime, i appea s as necessa y o look o
ways o how o de ec possible inco ec ness in
he managemen o municipal expendi u es and
how o imp o e he public expendi u e con ol
sys em. Towa ds one o he possible ways poin s
also his s udy. Using Ben o d‘s es , i aims o
examine expendi u es o he Czech Republic’s
municipali ies eco ded in 2012, analyse
unco e ed esul s and o mula e conclusions
wi h espec o a mo e e ec i e ope a ion o he
con ol sys em o public expendi u es. As a
as ou knowledge based on analysis o expe
li e a u e goes, Ben o d’s es has no ye been
applied wi hin he ealm o con ol o public
expendi u es. The p esen ed s udy a emp s o
ca y ou such an analysis (on he example o
he Czech Republic’s municipal expendi u es
in 2012). The aim o his s udy is o explo e by
way o Ben o d’s es municipal expendi u es o
he Czech Republic ha we e unde aken wi hin
one e e ence yea and based on esul s o he
empi ical esea ch o ca y ou a discussion
on he gi en issue and o o mula e heo e ical
gene alisa ions and p ac ical ecommenda ions
o he domain o a con ol o public expendi u es.
C i e ion Type o con ol Subjec o con ol Moni o ed indica o Moni o ing ques ion
Con en ocus
Con en con ol Con ol o esul s (audi
o esul s, pe o mance audi )
Ag eemen be ween achie ed
esul s and speci i ed expendi u e
a ge s
How a e pe o mance indica o s
being me ? How a e me c i e ia
o economy, e i ciency and
e ec i eness?
Fo mal con ol Con ol o eceip s and legal
e iew o documen s
Compliance wi h he Ac on
Accoun ing and legal compliance
wi h expendi u e documen s
A e accoun s and expendi u e
documen s kep co ec ly om
a o mal aspec ?
Time aspec
P elimina y Ex an e con ol o planned
expendi u e ac i i ies
Choice o he mos app op ia e
alloca ion a ian o public
expendi u es
Has he chosen a ian
been economically he mos
app op ia e one?
Running
Con inuous moni o ing o
achie ed esul s and con ol
o eceip s and documen s
Con inuous moni o ing o mee ing
he p ede e mined indica o s
A e he p ede e mined
indica o s being me a e iew
ime poin s? Do expendi u e
ac i i ies co espond wi h o mal
equi emen s?
Subsequen and
concluding
Concluding con en and o mal
e iew o he unde aken
expendi u e ac i i y
Final con ol o he achie ed esul s
and he deg ee o compliance wi h
accoun ing and legal p ac ices
Do he i nal esul s co espond
wi h he planned objec i e? A e
all he o mal (accoun ing and
documen a ion) p ocedu es in
acco dance wi h he p inciples
o accoun ing and he legal code?
Ins i u ional
In e nal con ol
Con en , o mal, p elimina y,
unning and concluding
con ol by he ins i u ion i sel
Indica o s o he con en and o mal
con ol lis ed abo e, moni o ed by
an in e nal audi
Do he con olled indica o s
co espond wi h he no m
speci i ed by he Ac on Financial
Con ol and o he ele an legal
no ms?
Ex e nal con ol
Con en , o mal, unning and
concluding con ol ca ied
by an ex e nal independen
ins i u ion – in CZE se e ely
limi ed (by he Sup eme Audi
O i ce)
Indica o s o he con en and o mal
con ol as lis ed abo e, moni o ed
by an ex e nal audi
Do he con olled indica o s
co espond wi h he no m
speci i ed by he Ac on Financial
Con ol?
Sou ce: own based on Ac No. 320/2001 Coll., On Financial Con ol in Public Adminis a ion
Tab. 2: Gene al a chi ec u e o he con ol sys em o public expendi u es
(case o he Czech Republic)
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1. Theo e ical Founda ions o he
Resea ch
The s a ing poin o con ol o public
expendi u es is a duly e ec i e con ol sys em
o public spending. The issue o a con ol o
public expendi u es has al eady been s udied
wi hin expe li e a u e o se e al decades.
Au ho s usually de o e in de ail o a pa icula
aspec o a con ol o public expendi u es,
such as e.g. he issue o a i nancial con ol,
audi o public sec o o ganisa ions o p og am
e alua ion and pe o mance measu emen .
Wi hin coun ies o he o me Eas e n bloc
eme ges he issue o a con ol o public
expendi u es app oxima ely o he pas
en yea s (see e.g. Š ango á, Mihaliko á,
& Mi aľo á, 2007). Based on he analysis o
a discussion on he issue o a con ol o public
expendi u es wi hin expe li e a u e and he
exis ing con ol sys em o public expendi u es in
he Czech Republic, he sys em o a con ol o
public expendi u es may be cha ac e ised om
di e en pe spec i es, as shown in Table 2. The
able p o ides a syn hesis o iews on he issue
o a con ol o public expendi u es. As a s a ing
poin i akes he si ua ion as wi hin condi ions
o he Czech Republic speci i ed by he Ac No.
320/2001 Coll., On Financial Con ol in Public
Adminis a ion.
F om he con en pe spec i e, he con ol
sys em o public expendi u es ocuses bo h
on he economic aspec o spending ac i i ies
(moni o ing o he achie ed esul s) as well as
on he o mal (accoun ing and documen a ion)
e i i ca ion o he co ec ness o ca ied
expendi u e ac i i ies. F om he ime aspec ,
we dis inguish be ween p elimina y, unning
and i nal inspec ion. I may be di ec ed bo h
o he a ea o audi ing esul s o implemen ed
spending ac i i ies as well as on a o mal
e i i ca ion o he co ec ness (accoun ing and
documen a y) o he way hose expendi u e
ac i i ies a e eco ded. F om he ins i u ional
poin o iew, he con ol may be ca ied
ei he by he ins i u ion i sel (in e nal con ol)
o by an ex e nal ins i u ion. One p oblema ic
aspec , howe e , ep esen s he ac ha he
con ol sys em o municipal expendi u es
has unde he condi ions o he Czech
Republic i s weaknesses and limi a ions.
Municipal expendi u es (as opposed o cen al
go e nmen expendi u es) can no be checked
by he Sup eme Audi O i ce. On he pa o
he Sup eme Audi O i ce can be checked only
hose expendi u es ha local go e nmen s
de i e om he s a e budge . Wha is missing is
hus one o impo an independen in o ma ion
channels ha would se e a eedback on how
we e municipal expendi u es implemen ed.
Ano he p oblem poses he ac ha in he
p ac ice o con ol ac i i y, he e is es ablished
a ela i e sepa a ion o he con en con ol
om he o mal con ol. The consequence is
ha bo h ypes o con ols in ques ion do no
co-ope a e; espec i ely, hey a e o en
implemen ed sepa a ely (o independen ly).
Expendi u e con ols usually ei he in en ionally
ocus only on checking o economic esul s
ela ed o he unde aken expendi u es, o
concen a e pu ely on a e i i ca ion o he
o mal (accoun ing and documen a ion)
co ec ness o he ca ied ou lays. The ac ha
bo h ypes o con ol emain unlinked means
some aluable in o ma ion ge los o emain
po en ially unused while hey could lead o an
inc ease in e i ciency o he con ol sys em
o public expendi u es, exposu e o o mal
and ma e ial e o s in esou ce alloca ions
o possible auds and machina ions in he
managemen o public esou ces. The e o e, i
is desi able o seek ways o con ibu e o a mo e
e ec i e con ol o public spending and o
u ilise acqui ed in o ma ion in a comp ehensi e
moni o ing o expendi u e ac i i ies. One
o hese ways may ep esen signalling o
accoun ing and eco d-keeping i egula i ies in
expendi u e managemen ac i i ies, acqui ed
h ough a o mal con ol. This in o ma ion may
subsequen ly igge a con en con ol o e iew
he economic a ionali y (economy, e i ciency
and e ec i eness) o he ca ied expendi u es.
One o he ools ha a e ins umen al o acqui e
signalling in o ma ion on possible e o s in he
managemen o public expendi u es is he use
o Ben o d’s es .
Ben o d’s Law builds on he idea o he “ i s
digi law”, o mula ed in 1881 by an Ame ican
as onome Simon Newcomb in he a icle
en i led “No e on he F equency o Use o he
Di e en Digi s in Na u al Numbe s” published
in The Ame ican Jou nal o Ma hema ics. In his
a icle he holds ha he p obabili y o he i s digi
in a numbe being 1 is no 0.111 (1:9 = 0.1111)
as migh be expec ed, bu a he 0.301.
This p oposi ion was edisco e ed by F ank
Ben o d and o mula ed in de ail in he a icle
“The Law o Anomalous Numbe s” (Ben o d,
1938). Ben o d suppo ed his in es iga ion by
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an analysis o mo e han 20,000 da a samples.
Wi hin his analysis, F ank Ben o d sough o
u ilise he wides possible da a sou ces om
andom numbe s, s ee numbe s, lake su ace
a eas, popula ion da a, o s a is ics om he
Ame ican Baske ball League (Nig ini, 2011).
Ma hema ical applica ion o Ben o d’s Law
is deal wi h by Hill (1995a; 1995b; 1998) and
Be ge and Hill (2011). As undamen al may
be conside ed he ollowing heo em, based
on he Cen al Limi Theo em: “P o ided
he chosen dis ibu ion is a andom one and
p o ided om any such a dis ibu ion we pick
a andom sample, signi i can numbe s om
his dis ibu ion con e ge o he loga i hmic
dis ibu ion, alias Ben o d’s dis ibu ion”, as pu
by Hill (1998).
The p obabili y o an occu ence o he i s
digi D1 based on Ben o d’s dis ibu ion is:
(1)
The p obabili y o an occu ence o he
second digi D2 based on Ben o d’s dis ibu ion
is:
(2)
I we ex end ou analysis o he occu ence
o a numbe on he n- h posi ion, we make use
o he ollowing gene al o mula:
(3)
The i s applica ion o Ben o d’s Law in he
i eld o accoun ing was pe o med by Ca slaw
(1988) who claimed ha when he ne income o
a company is jus below a gi en psychological
le el i s manage s will end o ound his income
up. Fo example, i we ha e a ne income o
798,000 and 19.97 million, manage s will y o
ound hese numbe s o he amoun o 800,000
and 20 million, espec i ely. This ac i i y is
unde s andable due o he managemen
incen i e p og ams. Ca slaw claimed ha his
beha iou can be de ec ed using Ben o d’s Law,
i.e. wi hin he da a se he e will be a highe
occu ence o ze os in he second posi ion
and a lowe incidence o he numbe 9 in he
second posi ion when compa ed o Ben o d’s
dis ibu ion.
The esea ch o Ca slaw was ollowed by
Thomas (Nig ini & Mi e maie , 1997) who
examined ounding o ax losses in he USA. His
u he analysis ocused on Ea nings pe Sha e
(EPS), o which he numbe nine occu ed on
he las posi ion less equen ly han expec ed.
This esul ed in a claim ha Ea nings pe Sha e
a e ounded up while losses a e ounded
down. In 1993, Gup a and Ch is ian (Nig ini &
Mi e maie , 1997) analysed da a o axpaye s
epo ed in ax e u ns. The s udy ocused
on axpaye s wi h an income less han USD
100,000. P o ided a axpaye in his ca ego y
educes his income by a ew dolla s, he may
all in o a lowe ax a e b acke . The i ndings
unco e ed an income mis ep esen a ion by
axpaye s who anked on he bo de line o an
inc ease in hei ma ginal ax a e.
A signi i can shi in he heo y o Ben o d’s
Law applica ion in he domain o accoun ing
aud de ec ion is c edi ed o Nig ini (1993;
1996; 2011). Nig ini in his i s s udy (Nig ini,
1993) examined he i s and second digi
in in e es s paid and in e es s c edi ed on
a sample o abou 200,000 ax e u ns om
1985 o 1988. The esul was a bias owa ds
lowe numbe s o in e es s acc ued and highe
numbe s o in e es s paid. This esea ch was
ollowed by p ac ical case s udies o speci i c
companies, such as he es o i s digi s,
second digi s and i s wo digi s o in oices
issued by an oil company in o de o de ec
duplica es in documen s. Ano he applica ion
was an analysis o ounding in numbe s.
Examina ions by Nig ini a e summa ised
by Du shi, Hillison and Pacini in hei s udy
“The E ec i e Use o Ben o d’s Law o Assis in
De ec ing F aud in Accoun ing Da a” (Du schi,
Hillison, & Pacini, 2004) whe e hey also p o ide
a guide o he applica ion o Ben o d’s Law in
o ensic audi . Conclusions om he men ioned
sou ces can be summa ised in o he ollowing
o e iew able (Tab. 3).
Resul s o his gene alisa ion (see Tab. 3)
ela ed o condi ions and ins ances o he use
o Ben o d’s Law wi hin he domain o a o mal
con ol (in his case accoun ing) will be adop ed
as a basis o an empi ical analysis o agg ega e
da a on municipal public expendi u es in he
Czech Republic.
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N . Da a o he use o Ben o d’s Law
should sa is y he ollowing condi ions N . Ben o d’s law can be used o de ec he
ollowing da a manipula ions
1All da a in he da a se mus be eco ded in
he same uni 1
Rounding o economic pe o mance by
manage s, e.g. ounding o p o i om
789,000 o 800,000
2Da a mus no be limi ed by hei maximum
and minimum alue 2Upwa d ounding o ne income and EPS
(ea nings pe sha e)
3
Da a can no be numbe s used o
iden i i ca ion pu poses and hey a e no
gene a ed andomly
3 Downwa d ounding o losses
4 Da a should consis o a he small alues 4 Duplici y o i nancial i gu es, e.g. in oices
5 I is ad isable o ha e la ge da a se s 5 Wiping da a o
6Da a should no be in l uenced by
a psychology, e.g. p icing ending wi h 99 6Rew i ing i gu es
Sou ce: own based on Nig ini and Mi e maie (1997); TPA Ho wa h (2011)
S udy # 1 S udy # 2 S udy # 3
Name o
he s udy
On he Applica ion
o Ben o d’s Law
o In e na ional
Mac oeconomic S a is ics
Ben o d’s Law and
Mac oeconomic Da a
Quali y
Fac and Fic ion in EU
Go e nmen al Economics Da a
Yea o
publica ion
2007 2009 2011
Topic
Tes s o da a on he
de elopmen o GDP
in OECD coun ies and
A ica.
Mac oeconomic da a o 80
coun ies and compa ison
o esul s wi h an al e na i e
me hod o assessmen o
he mac oeconomic da a
quali y – he IMF‘s Da a
Assessmen F amewo k.
Na ional accoun s o he
EU MSs on da a ela ed o
compliance wi h he SGP:
(1) Go e nmen de i ci
and deb , (2) Go e nmen
e enue, expendi u es and
main agg ega es, (3) GDP,
(4) Balance shee , consolida ed
asse s and liabili ies.
Main
conclusions
(1) Mos o he da a
con e ged o Ben o d’s
dis ibu ion.
(2) Ben o d’s es may
se e as an indica o
o poo quali y and
manipula ions wi h da a.
(1) Da a o some coun ies
did no con e ge o Ben o d’s
dis ibu ion despi e he ac
ha hei s a is ical da a
we e on he basis o he IMF
anking ma ked as good
(Japan, Finland).
(2) Non-con o mi y wi h
he es may be caused
e.g. by s uc u al changes
in he economy, seasonal
adjus men s, e c.
(1) The la ges de ia ions om
Ben o d’s dis ibu ion indica ed
da a o G eece and Li huania
while he lowes de ia ion
eco ded da a o he Czech
Republic ( es ed o he i s
ime) and Poland.
(2) Ben o d’s es can be used
as a i s ins ance es ha may
indica e da a manipula ions.
Sou ce: own based on Nye and Moul (2007); Gonzales and Pas o (2009); Rauch e al. (2011)
Tab. 3: Te ms and examples o use o Ben o d’s Law in accoun ing
Tab. 4: Conclusions om he analysis o s udies applying Ben o d’s Law
on he con ol o mac oeconomic da a
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Wi hin he scope o Ben o d’s Law
applica ion on mac oeconomic da a, he e
we e published h ee majo s udies. In he i s
s udy “On he applica ion o Ben o d’s Law
o In e na ional Mac oeconomic S a is ics”
Nye and Moul (2007) ocus on es s o da a
ela ed o he de elopmen o GDP in OECD
membe s a es and A ica. In he second s udy
(“Ben o d’s Law and Mac oeconomic Da a
Quali y”), i s au ho s Gonzales and Pas o
(2009) ocus on es ing o mac oeconomic da a
collec ed om 80 coun ies while he esul s
we e compa ed wi h an al e na i e me hod o
assessmen o he mac oeconomic da a quali y,
he IMF’s Da a Assessmen F amewo k, based
on which a e compiled ankings o coun ies
acco ding o he quali y o s a is ical da a (Da a
Dissemina ion Repo s on he Obse ance
S anda ds and Codes). The las published
s udy (Rauch, Gö sche, B ähle , & Engel, 2011)
examined na ional accoun s o he EU membe
s a es on da a ela ed o he pe o mance o he
S abili y and G ow h Pac . The au ho s o med
a anking o coun ies based on he a e age
de ia ion o x2 es esul s. Compa ison o hese
s udies and hei conclusions a e summa ised
in Table 4.
Au ho s o all h ee s udies ag ee ha he
applica ion o Ben o d‘s es on mac oeconomic
da a may help o iden i y da a wi h a highe
p obabili y o da a manipula ion. A he
same ime, howe e , i is necessa y o ake
in o accoun also he cons ain s ha om
his adop ion a ise. These include p ima ily
e oneous esul s due o s uc u al changes in
he economy, adjus men s o seasonali y and
mac oeconomic ans o ma ions. Conclusions
o hese s udies a e ele an o in e p e ing
esul s o empi ical examina ions ha use
Ben o d’s Law.
In addi ion o he abo e-men ioned adop ion
wi hin he domain o accoun ing, audi ing and
analysis o mac oeconomic da a, applica ion
o Ben o d’s Law was also es ed in analysing
esul s o he elec ions in he USA (Decke ,
Myagko , & O deshook, 2011), in i scal ( ax)
con ol (Wa in, 2008), insu ance (Mahe
& Ake s, 2002) and also in e i ying c edibili y o
eg ession coe i cien s in scien i i c a icles, as
epo ed by Diekmann (2007), Diekmann and
Jann (2010) and Töd e (2009). In he li e a u e,
we we e unable o iden i y any applica ion o
Ben o d’s es on a lowe han mac oeconomic
le el, e.g. wi hin he domain o municipali ies.
This s udy, he e o e, likely s ands o be he i s
examina ion ha audi s municipal expendi u es
using Ben o d’s Law.
2. Resul s o he Empi ical Resea ch
The esea ch ocused on examina ion o da a
om municipali ies in he Czech Republic. To
be speci i c abou he gene al cha ac e is ics o
he objec o in es iga ion, le us obse e ha
as o Decembe 31, 2012, he e we e in o al
6,246 municipali ies in he Czech Republic wi h
10,503,477 inhabi an s, while in municipali ies
o e 2,000 inhabi an s he e li ed in o al
73.2% o he o e all popula ion. Managemen
o municipali ies is in he Czech Republic
go e ned by hei annual budge and he budge
ou look, as speci i ed by he Ac No. 250/2000
Coll., On Budge a y Rules o Regional Budge s.
Wi hin he esea ch, we ha e wo ked along he
lines o he binding classi i ca ion o municipal
budge s – he budge a y s uc u e, speci i ed
by he Regula ion o he Minis y o Finance
o he Czech Republic No. 323/2002 Coll.,
On Budge a y S uc u e. Desc ip ion o public
adminis a ion e o ms in he Czech Republic is
p o ided e.g. in (Špaček & Neshybo á, 2010).
Fo he pu poses o empi ical analysis we e
used agg ega e da a sou ced om he Minis y
o Finance o he Czech Republic. The da a
e e o he yea 2012 and ep esen sums
o public expendi u es in he s uc u e o he
s a emen o budge a y execu ion and con ol o
all municipali ies in he Czech Republic, di ided
in o ca ego ies acco ding o he popula ion (see
Tab. 5). Fo he da a analysis he e we e used
s a is ical me hods, hypo hesis es ing, linea
eg essions and compa isons. The aim was
o examine whe he agg ega e da a on public
expendi u es o municipali ies in he Czech
Republic con e ge o Ben o d’s dis ibu ion.
Fo his pu pose, municipali ies in he Czech
Republic we e di ided in o 12 ca ego ies
acco ding o he size o hei popula ion, as
shown in Table 5.
Agg ega ion o da a using he espec i e
size o municipali ies was chosen o wo
easons. The i s eason is he ac ha wi h
ega d o he o al numbe o municipali ies in he
Czech Republic (6,246 municipali ies), wi hin
his s udy i was no p ac icable o examine all
expendi u es o all municipali ies. The second
eason o op ing o an agg ega ion was he
ac ha size-ca ego ies o municipali ies allow
benchma king and he e o e make i possible o
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compa e he es esul s o a speci i c municipali y
wi h esul s o a pa icula municipali y size-
ca ego y. The aim was o es he hypo hesis
ha agg ega e da a on municipal expendi u es
con e ge o Ben o d‘s dis ibu ion.
Da a o he yea 2012, eques ed om he
Minis y o Finance o he Czech Republic, we e
s uc u ed based on sec ions o he sec o al
b eakdown, whe e each sec ion con ained all
i ems based on class b eakdown ha ha e o e
he pe iod epo ed some mo emen (i.e. a
leas one municipali y included in he espec i e
size-ca ego y has accoun ed o his i em). Un il
2012, epo ing o he public sec o in he Czech
Republic has been based on he so-called
Cash P inciple. This app oach di e s om
he p ac ice in Wes e n coun ies (e.g. Uni ed
Kingdom, Finland, Swi ze land) whe e a e pu
highe demands on he explana o y powe o
accoun ing s a emen s o he public sec o , as
shown by Sine o (2014), Lomb ano and Zanin
(2013) and Be gman (2012). T ansi ion om
cash-based accoun ing o he public sec o
owa ds acc ual accoun ing is one o he co e
ools o public i nancial managemen e o ms
in line wi h he philosophy o he New Public
Managemen (Hood, 1995).
Wi hin he i s pa o he empi ical analysis,
we ha e e i i ed on agg ega e da a whe he he
da a on municipal public expendi u es con e ge
o Ben o d’s dis ibu ion. The es c i e ion is
Mean Absolu e De iance (he eina e MAD),
calcula ed as ollows:
(4)
whe e:
AP – p opo ion o occu ence o indi idual
numbe s in he empi ical dis ibu ion,
EP – p opo ion o occu ence o indi idual
numbe s in Ben o d’s dis ibu ion,
K – numbe o digi s.
The ollowing Table 6 shows c i ical MAD
alues o empi ical da a, based on which we
can decide on he con o mi y wi h Ben o d’s
dis ibu ion – 3 deg ees o con o mance, he
ou h one o noncon o mi y. These alues
N .
Municipal size-ca-
ego y based on
popula ion
Numbe o
municipali-
ies
% numbe
o municipa-
li ies
To al popu-
la ion o he
ca ego y
% popula-
ion
A e age
popula ion
1 0-100 477 7.64% 34,406 0.33% 72
2 101-200 1,001 16.03% 149,812 1.43% 150
3 201-500 2,007 32.13% 656,988 6.25% 327
4 501-1,000 1,362 21.81% 960,870 9.15% 705
5 1,001-2,000 726 11.62% 1,016,461 9.68% 1,400
6 2,001-5,000 400 6.40% 1,215,137 11.57% 3,038
7 5,001-10,000 142 2.27% 971,336 9.25% 6,840
8 1,0001-20,000 68 1.09% 954,676 9.09% 14,039
9 20,001-50,000 42 0.67% 1,217,062 11.59% 28,978
10 50,001-100,000 16 0.26% 1,137,171 10.83% 71,073
11 100,001-1,000,000 4 0.06% 947,894 9.02% 236,974
12 1,000,001+ 1 0.02% 1,241,664 11.82% 1,241,664
To al 6,246 100.00% 10,503,477 100.00% 1,682
Sou ce: Da a on he numbe o municipali ies om he Czech S a is ical O i ce. Table and calcula ions by au ho s.
Tab. 5: Numbe o es ed da a in municipali y-size ca ego ies
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96 2016, XIX, 4
Finance
we e de i ed om empi ical s udies by Nig ini
(2011).
Resul s b oken down by municipal size-
ca ego ies a e lis ed in Table 7.
MAD alues a e also shown in he ollowing
cha . Resea ch esul s gi en in Table 7 and
Figu e 1 indica e ha he da a on public
expendi u es o municipali ies in he Czech
Republic con e ge o Ben o d’s dis ibu ion.
Eigh size-ca ego ies (including he Ci y o
P ague) eco ded he alue o MAD a he le el o
“close con o mi y” and h ee ca ego ies anked
as “accep able con o mi y”. La ge , bu s ill
accep able le el o de ia ion om loga i hmic
dis ibu ion eco ded only da a o he size-
ca ego y o municipali ies wi h a popula ion
om 100,001 o 1,000,000 inhabi an s (“lowe
con o mi y”). This g oup includes ou ci ies.
3. Applica ion o Ben o d’s Tes on
he Da a o Czech Ci ies o 2012
The hi d objec i e o he esea ch was o
conduc an empi ical analysis o municipal
expendi u es in 2012 and o analyse he esul s
/ d aw conclusions applicable o he con ol o
public expendi u es a he le el o municipali ies
o he Czech Republic. The es hypo hesis
was ha based on he analysis o con en and
s uc u e o he s a emen o execu ion and
con ol o ci y budge s, Ben o d’s es should
(mos likely) iden i y s a emen s o ci ies wi h
ypes o da a manipula ions and e o s such
as ew i ing numbe s, duplici ies, ounding o
numbe s, wiping o da a.
Gi en he speci i c na u e o he public sec o
and he cha ac e o epo ed s a emen s i
can be assumed ha Ben o d’s es should be
MAD alue Deg ee o con o mi y wi h Ben o d’s dis ibu ion
0.000-0.006 Close con o mi y
0.006-0.012 Accep able con o mi y
0.012-0.015 Lowe con o mi y
0.015 and mo e Noncon o mi y
Sou ce: Nig ini (2011)
Size-ca ego y based
on popula ion
Numbe o
es ed da a MAD alue O de based
on MAD Assessmen e dic
0-100 1,404 0.006941550 10 Accep able con o mi y
101-200 2,446 0.004812095 5 Close con o mi y
201-500 4,203 0.003228490 1 Close con o mi y
501-1,000 4,679 0.005652321 6 Close con o mi y
1,001-2,000 4,371 0.006520248 9 Accep able con o mi y
2,001-5,000 4,866 0.004004314 3 Close con o mi y
5,001-10,000 4,374 0.003456433 2 Close con o mi y
10,001-20,000 3,870 0.004362737 4 Close con o mi y
20,001-50,000 3,518 0.005951687 7 Close con o mi y
50,001-100,000 2,950 0.007030236 11 Accep able con o mi y
100,001-1,000,000 2,434 0.012114151 12 Lowe con o mi y
1,000,001 and mo e 2,365 0.005994241 8 Close con o mi y
Sou ce: own
Tab. 6: C i ical MAD alues o he i s numbe
Tab. 7: Resul s o Ben o d’s es applied o agg ega e da a on municipal public expen-
di u es in he Czech Republic acco ding o size-ca ego ies based on popula ion
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Finance
able o de ec in en ional shi s o expendi u es
be ween indi idual budge headings. This
ac i i y may be aimed a co e ing e.g.
adminis a i e misconduc s o b eaching he
budge a y discipline. Ano he mo i e may be an
a emp o mo e i ems be ween he ope a ing
and in es men pa s o he budge in an e o
o imp o e ope a ing esul s and hus mee he
e alua ion c i e ia o secu ing a bank loan.
Ano he mo i e may be o a pu ely poli ical
na u e, e.g. an a emp o co e up expenses o
legal and o he consul ing se ices (see i ndings
o he Sup eme Audi O i ce o he pe iod om
Augus o Sep embe 2013). The eason o such
a da a manipula ion is o “p o ec i sel ” om
a nega i e public eac ion owa ds expendi u es
ela ed o ou sou cing o legal and consul ing
se ices by public adminis a ion ins i u ions.
Fo u he es ing we e used da a om
all municipali ies in he Czech Republic wi h
a ci y s a us. In o al, analysed we e public
expendi u es in he s a emen o budge a y
execu ion and con ol o all 602 Czech ci ies o
he yea 2012.
On he empi ical da a was applied he
i s -le el es , i.e. o con e gence owa ds
Ben o d’s dis ibu ion was es ed he i s
numbe . This es is gene ally ega ded as he
mos in o ma i e one (Nig ini, 2011). When
analysing he con e gence o empi ical da a
owa ds Ben o d’s dis ibu ion, we can u ilise
p ima ily es s o goodness o i (Chi-squa e
es , Z- es , Kolmogo o -Smi no es ).
Howe e , hese es s a e a ec ed by he
numbe o da a eco ds (Nig ini, 2011) and a
lowe numbe s o eco ds hei alues may
be dis o ed. To a oid a possible dis o ion
o esul s due o a low numbe o eco ds,
we ha e used as a es c i e ion he alue o
Mean Absolu e De ia ion. The esul s o Mean
Absolu e De ia ion, howe e , co ela e wi h he
esul s o es s o goodness o i .
Based on p e ious i ndings, we ha e applied
Ben o d’s es on s a emen s o budge a y
Fig. 1: MAD alues o indi idual municipal ca ego ies
Sou ce: own
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