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Section 8. Economics and managementes
https://doi.org/10.29013/ESR-20-11.12-56-59
Khorguashvili Tea, PhD, in Economics, Professor, Gori State Teaching University, Gori, Georgia E-mail: [email protected] Khorguashvili Natia, PhD, in Economics, Professor, European University, Tbilisi, Georgia E-mail: [email protected] Makasarashvili Tamar, PhD in Economics, Professor, Gori State Teaching University, Gori, Georgia E-mail: [email protected] Giguashvili Giuli, PhD, in Economics, Professor, Gori State Teaching University, Gori, Georgia E-mail: [email protected]
IMPACT OF INFORMATION TECHNOLOGY ON THE PUBLIC FINANCIAL MANAGEMENT REFORMS
Abstract. Management of public finances, as a rule, the main component of the government's economic policy, which involves the efficient use of state financial resources, regulation of revenues and expenditures, effective money management, which is reflected in the country's economic growth indicators. Through effective management of public finances, the state should have a positive impact on the production processes in the country, should have a positive impact on solving socio-economic problems of society. This became particularly apparent during the period of the fight against CO-VID-19 in 2020, when states and governments have to make quick decisions and mobilize additional financial resources to fight and prevent the virus, as well as economic recovery and stimulate.
Keywords: public finances, public finance management, Electronic Systems, budgetary process, State treasury.
The scarcity of financial resources had been an the conditions of permanently deficient budget and insurmountable problem in Georgia for years. In non-fulfillment of income parameters, it was com-
pletely impossible to implement an orderly spending policy.
The spread of coronavirus has changed the agenda of both the world and Georgia, and our country has faced medical and economic challenges. Today, when remote communication becomes more important, electronic systems and their integration become especially important.
Financial system for such kind of countries as Georgia is developing concepts in Georgian practice, the sturcture of financial system used to change fundamentally during last 30 years, which is directly related to transformation of current market. The comparative stabilization of the economy, integration of Georgia in the world economy, amendments of the current financial legislation provided transformation of the financial system of Georgia and approximation with the international standards.
The field of public finances includes the units of central and territorial budgets. The main goal ofpublic finances is the formation of a centralized financial resources and the distribution for financing public needs.
Between the reforms implemented in the recent period in Georgia one of the important reform is public administration, which represents the horizontal and multi-sectoral policy and and its implementation is depend on the executive authority decision-makers and high-ranking state officials involvement. The goal of public finances management reform represents provision of effective distribution of finance stability and public finance in accordance with government priorities. Public finance management reform is closely integrated with the modern electronic services and IT technologies. Electronic systems and electrical management in many countries are growing very rapidly. Georgia is trying not to fall behind the global tendency and according to electrical management it occupies one of the leading position in the countries of the region.
IT support of Public Financial Management is implemented by LEPL "Financial Analytical Service" of the Ministry of Finance of Georgia, the
above service provides the development of information resources of the Ministry of Finance and other government agencies, business management and informational security. It is oriented for the creation and delivery of internal and external consumption of electronic products and services. Successfully functioning integrated electronic system of public finance management of the country- PFMS [1]. Within the mentioned reform was implemented electronic systems of budget management (eBudget), state treasury (eTreasury), public debt and investment projects management (eDMS), human resource management (eHRMS).
Electronic system ofpublic finance management serves 4400 internal and half a million external customers. Through the system electronic transfer of all the budgetary salaries of organizations, pensions and other funds collecting of taxes and charges are implemented electronically.
Implementation of electronic systems (eBudget) of budget management contributed to the public finances accounting maximally. Through the mentioned system Georgian central, autonomous republics and functioning of local management and with the performance of their duties acceptable revenues, rendered payments and management of changes in the balance of data are implemented.
One of the important component of reforms within the system of public finance management is implementation of state treasury electronic service system. Through the state treasury electronic service system are implemented accounting, reporting and calculation of revenues, payments and change of balance of state budget, budgets of the state, autonomous republics, local self-government units LEPL and N (N)LE. Until 2015 only budgetary organizations subordinated in the state budget and legal entities and non-profit (non-commercial) legal entities established by them were on the state treasury service.
In the last 10 years many fundamental reforms were implemented in the stated treasury. Since 2006 created a treasury single account (TSA), which
covered all the budget revenue and payments of the state budget. Since 2012, occurred integration with the public finance management system and implemented web- system based on modern technologies, which is always available. This is an online service.
Internal control and integrated web services -As part of the reforms of the Treasury Electronic System Module, the Treasury system was integrated with various systems, ensuring internal control of the expenditure part and simplification of procedures.
• The Treasury Electronic System Module receives information on the "Budget Planning and Management Module" software codes, budget classification codes and budget allocations;
• The PFMS is connected to the e-system of the State Procurement Agency, from which the e-treasury receives information on signed contracts (tender number, contract number and date, identification code and supplier name, total amount and currency, CPV code);
• The system uses the electronic database of the Revenue Service and the Civil Registry to verify the name and identification code of the supplier;
• Identification of individual beneficiaries (payroll, service contracts, etc.) checks the correctness of the civil registry database (observing all rules of personal data privacy).
The positive result of the implemented reforms is the statistics of claims transferred from the electronic system of the state treasury, which in 2014 was 400 thousand units, and today the transfers exceed 2 million units.
State treasury electronic system is tightly integrated with various systems: state budgeting and management system (eBudget), state debt and investment project management (eDMS) system, state electronic purchases system, revenue service (rs) [2] electronic systems, human resources management system (eHRMS), bank payment in real time mode payment (RTGS) [3] and worldwide
interbank financial telecommunication SWIFT-'s system (society for worldwide interbank financial telecommunication). Through the mentioned systems constantly being data exchange. By using of best practices and methodologies of IT process management made it possible to achieve business continuity. Electronic service system of statet-reasury consist of three levels: The spending side (Frontoffice), which gives the opportunity to the organization financed under the budget to manage their own funds. The intermediate layer (Mid-dleoffice), which through the local self-government bodies have the capacity to manage revenues and payments of the district and treasury side (backoffice), which means the control for state treasury and funds, monitoring and instrument assembly required for the implementation of analysis [4].
Electronic service system of state treasury became available and centralized as for all organization being on the services of the treasury, also it is possible to access from any point of the world. Automation of exchange process of information between electronic systems of management public finance for the document processing caused a significant reduction of the time, costs, from both sides of personnel. State treasury offered convenient and transparent form of communication to the organizations. Through this system, disappeared paper documents from the circulation, it became possible to get information in real time mode, reduced operational risks minimize [5].
Conducted reforms and implemented system provided complex, effective and transparent management of the state systems, improvement of service, reduction of expenses, effective management of time and resources. In a short time provided reliable, accurate, complete and consistent collection of information about a financial event. Accounting data produced by the cash operations and accrual method in a common system is integrated. The optimation is implemented and being on the main book of the treasury, which will eventually give us a complete picture of the state of public finances [6].
Conclusion. The reforms carried out and the systems implemented have ensured complex, efficient and transparent management of public systems, improved services, reduced costs, and efficient management of time and resources. Gathering reliable, accurate, complete and consistent information about the financial event in the shortest possible time.
In order to establish a complete public finance management module, it is necessary to introduce an integrated public finance information system - the treasury general ledger, which:
- Provides automated accounting and reporting of economic and financial operations of budget organizations;
- The public sector financial reporting quality and raise the level of transparency.
Accounting system reform - introduction of International Public Sector Accounting Standards (IPSAS) and preparation of financial accounting and reporting methodology in accordance with IPSAS;
- Prepare and publish government consolidated financial statements in accordance with international standards;
- Improving the quality and transparency of public sector financial reporting;
- Access to complete and reliable information for public sector financial management and decision makers.
References:
1. "Public Financial Management Reform Strategy to 2018-2021". - Georgia. [Electronic resource]. URL: https://www.mof.ge/images/File/strategia/2020/PFMRS%202018-2021%20ENG.pdf./ (In English).
2. Standard Pilot Project (AEOI) for the Automatic Exchange of Financial Account Information. [Electronic resource]. URL: https://www.rs.ge/InternationalCooperation-en?cat=2&tab=1. (In English).
3. Public Finance Management (PFM) Reform. [Electronic resource]. URL: http://treasury.ge/4970. (in Georgian).
4. National strategy for the protection of human rights in Georgia 2014-2020. [Electronic resource]. URL: http://gov.ge/files/429_51454_924779_STRATEGYENG.pdf./ (In English).
5. TREASURY COMMUNITY OF PRACTICE. [Electronic resource]. URL: https://www.pempal.org/ sites/pempal/files/event/2020/Trezor%20Doga%C4%91aji/0ct13_Videoconference/files/tcop_ summary_of_october_13_2020_vc_eng_fin.pdf./ (In English).
6. Khorguashvili T. and others, Management of Public Finances Through the Electronic Systems and it's Positive Sides, published in the ", 10th IEEE International Conference on Application of Information and Communication Technologies AICT2016". - Baku, 12-14 Oct. 2016.
