Financial Shared Service Centers in Local Governments : Rationale and Rationality in Three Pioneering Cases

The purpose of this paper is to explore the reasons and implementation of municipal accounting and payroll shared service centres (SSC's) in Finland. Of special interest are the issues of how did the reforms spread from municipality to another, and what rationales were used in legitimating the acceptance of the innovation. After the accruals-based accounting reform of 1995 had been successfully implemented, many Finnish municipalities initiated plans to reorganize their accounting functions. In the name of efficiency, increasing number of local governments have begun to reorganize their accounting functions to financial shared service centres (SSC) each serving two or more local governments. In practise this means that municipal accounting functions were outsourced to service centres which were no longer directly part of the municipal organisation The basis of the current reform is not in jurisdiction but more so in a belief that benefits can be gained from its actualisation. Data for the study was collected via open interviews and archival analysis within the first three SSC cases in Finland. Forming of the accounting SSC's seems to promote the idea of the importance of accounting controls as an esstential characteristic of a modern organisation. The increasing adoption of accounting related concepts (accountingization) in municipal management is seen to promote the idea of service centres as a road to corporatisation and eventual privatisation (Power & Laughlin, 1992). The service centres are often modelled after private sector organisations, up to the point of having the judicial form of a limited company. In these reforms, it seems as if the corporate organisation structure represents an ideal model of the organisation, the complete organisation (Brunsson and Sahlin-Andersson, 2000)