Ex-post accounting in incremental budgeting: A study of norwegian municipalities

The paper examines management control and control systems in Norwegian municipalities, using the machine metaphor (Morgan, B., Images of Organizations, Sage. Beverly Hills, 1986) and the model of incremental budgeting (Wildavsky, A., Budgeting -- A Comparative Theory of Budgetary Processes, Little Brown, Boston, MA, 1975) as the theoretical point of departure. An analysis of data from all Norwegian municipalities covering the period 1983-1986, a period of economic prosperity and steady growth, shows that budgets in Norwegian municipalities are well integrated over time. The observed behaviour can be explained by reference to Wildavsky of incremental budgeting. Ex-post accounts in Norwegian municipalities are also well integrated over time but only loosely integrated with budgets, despite the fact that 94% of all Norwegian municipalities in 1986 showed a negative budget variance on gross operating expenditure. The findings lead to the conclusion that ex-post accounting plays only a modest role in incremental budgeting when a country is experiencing growing wealth and the predictability of future expenditures and revenues is high.