The submitted Diploma Thesis deals with the comprehensive overview of the Controlling and basic Controlling principles in the public administration. The primary goal of the Diploma Thesis is to ascertain the potential of application of the Controlling principles in the public administration environment and propose recommendations to streamline the Financial Management in the selected territorial self-government using the Controlling methodologies and tools. To achieve our goal we will use the sub-goals consisting of applying the acquired theoretical knowledge from the Controlling and public administration in identifying the decisive application fields of the Controlling principles in the Financial Management of the analysed territorial self-governments. The Diploma thesis uses the method of economic analysis in public administration, the questionnaire method, and the method of cost calculations. The proposal part of the Thesis is devoted to the registration of costs based in allocation of the costs to particular performance and proposals for costs planning using the method of determining costs from the capacity point of view using a reporting map in the Financial Management in the selected territorial self-government entity. The draft proposals are based on the absence of the cost accounting in the selected entity and from result of questionnaire. The importance of the Diploma Thesis lies in identification of the decisive fields of the use of the Controlling in the public administration environment, in the selected territorial self-government to streamline the Financial Management of the costs applying the costs Controlling and Reporting.