Purpose – The purpose of this paper is to consider the impact of a major initiative (the National Competition Policy) and pieces of legislation (the Local Government Act and the Local Government Finance Standards) on the internal practices of a large Australian local authority.Design/methodology/approach – A theoretical framework is developed using new public management (NPM) and neo‐institutional theory literatures to explain the findings. A case study approach was applied to collect the data for the research.Findings – The findings reveal that the National Competition Policy 1993, the Local Government Act 1993 and the Local Government Finance Standards 1994 mainly have brought about significant changes to the organisation's internal management control processes, such as financial reporting, budgeting and performance appraisal. The changes brought in appeared to be coincidentally similar to NPM ideals. Furthermore, senior managers (such as the chief executive and divisional heads) played a major role in ...