Kyslyi D. V.
Kharkiv Institute of Banking UBS NBU, Ukraine
CONDITION OF STATE FINANCIAL CONTROL IN UKRAINE AND WAYS
OF ITS DEVELOPMENT
Annotation. Considered
the main problems and the need to improve the system
of financial control in Ukraine. Researched the activity of the
State Financial Inspection of Ukraine in the field
of financial control, the ways of reforming the financial
control in Ukraine.
Key words. Financial
control, bodies of financial control, State Financial Inspection, regulation.
Entry. State financial
control is an important function of state, by means of which provide normal
conditions for the functioning of the financial system. Difficult economic
processes and consequences of the global financial crisis showed the need to
improve fiscal policy, including financial control. Its underestimation
led to abuses and violations of financial relations. Today recognized,
that there is need to develop a system of state financial control in view of
the objective need for an appropriate counterbalance to existing challenges in
the financial system, including reduction of number of fiscal abuses and crimes,
improve the level of financial discipline in the use of budget
funds; ensure budget revenue taxes, fees and charges; strengthen
accountability of the budget process etc.
Improving the
system of financial control in Ukraine may become surety effective functioning
of public finances, including receipt of such global results as: respect for
economic security, balancing state and local budgets, achieve financial
self-sufficiency of regions, sectors and industries, a noticeable increase in
security of financial and economic interests of citizens and society as a
whole, and as a result - the prosperity of the state, enhancing the prestige of
the world community.
Results. Difficult
economic processes which now occurring in almost all countries, significantly
impeding the development of such an important component of public
administration as financial control. State financial control - is an
integral part of economic entities and processes is to monitor the object in
order to check whether the object desired and required monitoring of the
legislation, recommendations, instructions and other regulations. State
financial control is carried out Parliament, Cabinet Ministers, National Bank,
Ministry of Finance, State Property Fund, the Accounting Chamber, the State Tax
Service and other government agencies in accordance with the law. In turn,
the bodies of internal financial control includes the Financial Inspection of
Ukraine (SFI) and internal institutional control - Control and audit units of
ministries and other central executive bodies.
It is clear that
the current system of state control isn’t without some drawbacks, which
include:
¾ the most control and screening procedures is fiscal in
nature. Practice shows that the most commonly used inspection and
verification. These methods allow only identify financial irregularities,
acknowledge the negative effects, but doesn’t allow to avoid them or learn
their causes;
¾ prevalence of further (next) control measures. Existing procedures
for prior and current control (which is the most effective, based on the
experience of foreign countries) within the current system of financial control
in Ukraine faces rather weak and has unsettled character;
¾ the missing importance of internal financial control in public finance
management and heads of enterprises, institutions and organizations;
¾ low efficiency of the administrative penalties mechanism. The
amount of fine for improper or illegal use of budget funds is much less than
the budget funds that the state loses because of officials’ abuses, and can’t
provide full compensation for such loss;
¾ unregulated activities and functions of financial control subjects’
intersection. In Ukraine, external control in part of the State Budget of
Ukraine centrally perform two authorities: the Accounting Chamber on behalf of
Parliament and the State Financial Inspection on behalf of the Government.
During the period
of independence Ukraine adopted a number of regulations governing the exercise
of financial control (Budget Code, Commercial Code, the Cabinet of Ministers of
Ukraine, state financial control standards, various laws, etc.), but they
haven’t resulted in significant improvement of financial discipline in use
of public funds. This is evidenced by the negative trend on the growth of
financial and economic crimes.
Thus, the results
point to SFI growth rate amounts of identified losses and financial violations
in general. The effectiveness of financial control for cost-effective and
targeted spending of budget funds, as the preservation of state and municipal
property depends on the complexity of its implementation, timeliness and
completeness of measures’ implementation for compensation of state losses,
eliminate the causes that led to financial losses. Most of these functions
is placed on the SFI. However, the activity of SFI bodies faced with several
problems concerning the efficient organization of financial control. This body
of financial control sufficiently funded by the state, but there are some flaws
into the organization of internal financial controls, exercised by that
authority. Generalizing all the above facts, we can distinguish two more
addition defects in the organization of state financial control:
¾ strong tendency to increasing the number of illegal and inappropriate
losses, shortages of money and material values, indicating some cancellation of
financial discipline at the level of budgetary institutions and organizations,
also indicating that the economic management mechanism is imperfect and
contains many weak position that facilitates the commission of such
crimes;
¾ weak interaction of SFI with law enforcement and judicial authorities
(courts delay with cases, unfounded exemptions offenses from liability, constant
failures to inform the SFI bodies on transfer to the executive service
regulations on bringing offenders to administrative proceedings).
There has been a
problem in the absence of systematic control too, ie under the previous,
current and next control. Currently, financial control on the part of SFI
has punitive and educational in nature, but does not have a preventive nature
to prevent the violation of budgetary discipline and abuse in the fiscal
sphere. With this in mind, one of the ways to improve financial control is
to increase the effectiveness of current control by the Treasury, in
coordination with executive agencies and the State Tax Administration. The
effectiveness of preventive, rather than further action cannot be
overemphasized. It is feasible to involve SFI bodies to implement
preliminary control on the stage of formation of estimates of revenues and
expenditures of budgetary institutions, or authorize the financial authorities
and bodies to the State Treasury, except the current, still preliminary control
over the formation of funds of budgetary institutions.
Should pay
attention also to the personnel issues of the SFI, where due to budgetary
savings exists understaffing of revision apparatus. Prospects for
improvement of financial control depend on its quality at all stages and timely
response of adequate financial bodies, managers of major loans and authorities
on the results of further monitoring, ie the findings of inappropriate and
ineffective use of budget funds by taking action to redress unlawful
expenditure, regulation of financing and comply with regulations governing
the budget process. In my opinion, one way to resolve a legal change of
functions and tasks of the State Financial Inspection, increasing the
responsibilities of directors and other officers of entities in the public
sector for violations of financial discipline and abuse. Thus the Concept
and its implementation plan, of course, has many advantages and, if successful
implementation is able to bring our country to world standards and requirements
and facilitate the adaptation of Ukrainian legislation to EU legislation.
Conclusion.
As shown in a result of a study, state financial control
built in Ukraine doesn’t provide an appropriate level
of fiscal discipline in the State in general and in
particular at the regional level. This is due to a number of problems
that create the tendency to increase the number and volume of major
financial irregularities. The main disadvantages are singled out as
follows: mainly fiscal in nature of control and revision procedures,
low efficiency of the mechanism of administrative penalties, weak
interaction of SFI with law enforcement and judicial authorities and so
on.
It should be
noted that the direction of improving the system of internal state control has
become a priority for further active work of experts on the
subject. Regarding improvement of the current system of internal financial
control, I think, have become urgent measures such as: improvement of activity
of state and municipal sectors, improve the quality of public administration,
legislative regulation of the formation of public internal financial control,
the main objective is to ensure the implementation of internal control of
internal audit and their harmonization to ensure good management of resources
of the state based on the principles of legality, efficiency, effectiveness and
transparency of the definition on the basis of scientific justification
structures of public internal financial control procedures regulating its
operation, establish a mechanism for establishing the internal audit in public
and communal sectors, the formation of an effective system of monitoring
financial and business enterprises in the state or municipal ownership, to
improve their profitability and competitiveness, a significant increase in
liability of officers of controlled entities for violations of financial
discipline and abuse. Thus, the output system of internal financial
control in Ukraine to a new level may be one of the most important keys to
effective functioning of public finances.
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