Local governments in the Czech Republic have an advisory role to their municipalities. A ministry of finance defined a set of financial indicators (SIMU system) which could be used for financial health evaluation, but only two of them are obligatory. The SIMU system includes four main groups of indicators, when only two of them are monitored by Ministry of Finance (a share of liabilities to total assets in %, and the current ratio. Indisputable advantage is its standard form of financial evaluation for all municipalities and relatively simple method of calculation based on delivered data. Main disadvantage can be seen in the fact that the municipality receives feedback only for two indicators, which have a recommended value.