CC BY
25IMPROVEMENT OF THE INTERNAL AUDIT AND PERFORMANCE OF EXPENDITURES TO
BUDGET ORGANIZATIONS
Kadirov A.,
Doctor of Economics, Professor Departments Tashkent State Technical Islam Karimov University
Rejapov Kh.
Doctor of Philosophy (PhD) in Economics senior lecturer at the department of Macroeconomics National
University of Uzbekistan named after Mirzo Ulugbek
Niyazov M.,
Senior lecturer of the department of Regional economics and management of the National University of
Uzbekistan named after Mirzo Ulugbek
Doniyorova Sh.
Economic faculty 2-year master's degree, National University of Uzbekistan named after Mirzo Ulugbek Abstract
The article examines the scientific views on internal audit and auditing in budget organizations. It also highlights the importance and urgency of conducting internal audits of budget organizations to ensure the targeted use of budget resources. The control over the expenditure of budget funds by the supervisory authorities was analyzed and proposals were developed to address the identified problems.
Keywords: Budget, budget organization, audit, internal audit, control
In the context of modernization of the economy, it is aimed at radically reconsidering public financial control aimed at preventing and preventing violations of budget legislation through budget financing, ensuring and improving the transparency of budget organizations' accounting and reporting mechanisms, as well as information technology and internationally recognized financial control standards. Therefore, in order to ensure the goals and objectives of the internal audit service in budget organizations, it is necessary to analyze the current state of the internal audit service and conduct research on it.
Adoption of Resolutions of the President of the Republic of Uzbekistan dated September 19, 2018 under No. RP-3946 "On measures to further develop auditing in the Republic of Uzbekistan" and February 24, 2020 under No. RP-4611 "On additional measures to transition to international financial reporting standards" as well as other regulations in this area, today play an important role in the targeted use of funds in budget organizations and conduct of internal audits.
Exercising budget control plays a special role in ensuring the targeted and addressed expenditure of budget funds on a regular basis. Optimization of budget control measures, reduction of control inspections, organization of remote and preventive control are among the urgent issues in implementation of budgets of the budget system. In turn, during the implementation of budget control, fulfillment of preventive inspections in budget-funded organizations and the organization of internal audit services in them serves to ensure the effectiveness of budget control.
As a result of insufficient implementation of the system of internal financial control in budgetary organizations, there are different approaches to accounting and errors are made. Development of formalization of results of internal audit in budget organizations can ensure, firstly quality achievement of thoroughly forwarded assignments, detection of possible errors and timely elimination without adversely affecting the sense and results.
According to the leading scientist of the country S.Mekhmonov, internal audit in budget organizations is described as - activity directed to control over preparation and implementation of estimates by the organization, control and monitoring of compliance with the legislation, ensuring reliability of financial statements, compliance with budget and budget discipline, targeted and reasonable expenditure[1, p 8.]. Another economist, B.A.Khasanov, in his research work has mentioned that "identified and fully recommended issues of internal audit; identify the main tasks needed to achieve the set goals; combining homogeneous tasks in groups and on their basis the emergence of structural divisions of the department specializing in the performance of these tasks; development of mutual tariffs, definition of tasks, rights and responsibilities for each structural unit, drawing with documents in the instructions of the rules on the group of this internal audit department; determination of the internal audit department, its organizational status, definition of the functions of structural units in accordance with a certain set of objectives, development of regulations on the internal audit department and drawing up documents; coordination of the internal audit department with other links in the management structure of the enterprise; development of internal audit standards and a code of ethics as the main stages in the establishment of internal audit in enterprises of the country" [2].
The tutorial "Audit" of foreign economists Arens and Lobbeck (2001) reminds that -"Internal audit is a service established by an enterprise to examine and evaluate its performance"[3, p. 560] as mentioned in Documents of International Institute of Internal Auditors.
According to A. Guseev, a Russian economist, "internal audit ensures the continuous tasks of organization, adoption of sound management decisions in the face of uncertainty, effectiveness of organization's performance and risks in changing the economic potential of the organization[4].
Process of changing internal audit trends has also had an impact on the content of their activities. To date, there are several international organizations and institutions dealing with internal auditing in the world, led by the International Institute of Internal Auditors. This organization directly studies and analyzes the process of organizing the internal audit of enterprises and organizations on the basis of international experience.
Internal audit [5, global.theiia.org] is an independent, objective audit and consulting activity designed to improve the performance of an organization and increase its value. It helps organizations achieve their goals by introducing a systematic and disciplined approach to evaluating their performance, and improving the effectiveness of the risk management process, control, and corporate governance.
In addition, the Model Law on Internal Audit in Public Sector Organizations, approved by the Interparliamentary Assembly of the CIS Member States on April 16, 2015, defines internal audit as follows. "Internal audit is an independent and objective activity aimed at ensuring that public sector organizations comply with the law, achieve efficiency and results in their activities through inspection, evaluation and consulting"^, 2015]. Function of the internal audit activity should include a quality assurance process and be based on professional standards. According to the assessment conducted in 2012 in this country under this program, the internal audit status was assessed at the level of "D +" [7, pefa.org]. This means that the measured feature is below the basic level of efficiency or that the information is not sufficient to evaluate (score) this measure.
According to the researcher B. Jumamuratov[8, p 80.], the Internal Audit and Financial Control Service has identified in-depth analysis of the causes of errors and omissions, as well as the implementation of recommendations to prevent the occurrence of such errors and omissions. stressed the need for designation. The results of the study recognized the need to pay special attention to the independence of the organization of internal audit and financial control, which is one of the generally recognized principles of audit. In order to ensure the independence of the staff of the Internal Audit
and Financial Control Service, it is necessary to regulate the subordination of employees of the internal audit and financial control service in the territorial divisions of ministries and departments only to the head of the internal audit and financial control department.
In the 1st quarter of 2019, there were carried out 1.993 control events by the General Directorate of State Financial Control and its territorial departments on the basis of assignments of the Working Plan, Government and Law-enforcement authorities. As a result of control events there were revealed violations of budget discipline and other illegal expenditures totaling 70.2 billion UZS. It should be noted that in the 1st quarter of 2019, effectiveness of control events increased by 2 times compared to the corresponding period of 2018 (in the 1st quarter of 2018 it was 30 billion UZS). A main part of control events (68.1%) was carried out on compliance with budget discipline and the targeted use of funds, there was achieved the restoration to budget of 19 bln UZS (81.2%) (67.4% in 2018) out of 23.4 bln UZS of expenses related to violation of budget discipline, deficiency of money and commodities, non-targeted and groundless use of funds defined during the control events[9, openbudjet.uz].
As it is seen from information given in the Table 1, the monitoring conducted by the Main Department of State Financial Control of the Ministry of Finance of the Republic of Uzbekistan in the 1st quarter of 2019 inspected 1189 facilities, during which there were revealed total of 23403.9 million UZS of deficiency and misappropriation of funds and assets, misappropriation, illegal costs and overpayments. In the first half of 2020, there were monitored 1632 for a total of 81675.4 million UZS. In general, the Ministry of Higher Education, the Ministry of Employment and Labor Relations, the Ministry of Agriculture and Water Resources, and local self-government bodies were short of funds and material resources, misappropriation, illegal spending, and overpayments. The Ministry of Public Education, the Ministry of Health, the General Directorate of Capital Construction of the Mayor's Administration and other areas have noted an increase in the deficiency of funds and material resources, misappropriation, illegal spending and overpayments.
Table -1
Information on control events carried out by the Main Department of State Financial Control of the Ministry of Finance of the Republic of Uzbekistan on targeted use of budget funds[10, mf.uz]
_(in mln UZS)_
№ Ministries and sectors 2019 hhïï 1nopa 1st quarter of 1st half of 2020 The difference
Amount sum Amount sum Amount sum
A 1 2 3 4 5 6 7
1 Ministry of Higher Education 7 661,3 10,0 475,1 3,0 -186,2
2 The Ministry of Public Education 205 3696,4 235,0 21462,2 30,0 17765,8
3 Center for Secondary Special Vocational Education 197 5 532,0 80,0 835,1 -117,0 -4 696,9
4 Ministry of Health 94 1536,0 205,0 14139,4 111,0 12603,5
5 Ministry of Culture 17 1046,5 162,0 2596,6 145,0 1550,1
6 Ministry of Employment and labor Relations 35 402,6 19,0 272,3 -16,0 -130,3
7 Ministry of Agriculture and Water Resources Authorities 49 780,5 34,0 719,4 -15,0 -61,1
8 Authorities 27 712,5 51,0 868,6 24,0 156,1
9 Ministry of Defense 2 14,71 4,00 164,00 2,0 149,3
10 Authority Capital Construction General Directorate 112 1713,3 78,0 3984,5 -34,0 2271,2
11 Self-governing bodies 260 799,2 289,0 492,8 29,0 -306,4
12 Ministry of Preschool Education 77 1 467,5 119,0 6973,8 42,0 5506,3
13 Others 107 5041,4 346,0 28691,5 239,0 23650,0
Total 1189 23403,9 1632,0 81675,4 443,0 58271,5
Today, a principle purpose of the internal audit of budget organizations is to participate in the development of ways to achieve the results (objectives) that organizations should achieve and provide advice on their timely elimination by identifying in advance the risks that may arise in this process. That is, internal audit of the budget organization should serve not to ensure proper use of resources in the organization or their use in the manner prescribed by law, but primarily to achieve the objectives set (or established) for the organization.
In our opinion, with consideration of the transfer of internal audit of budget organizations to international financial reporting standards, we agree with Ostanakulov's opinion that it is necessary to appoint specialists with "Certified Public Accountant (SRA)" or "Diploma in International Financial Reporting (Di-pIFR)" in the appointment of internal auditors.
In our opinion, we consider it necessary to improve the regulations on the registration of the results of audits of budget organizations, taking disciplinary action to address identified systemic deficiencies. We also consider it necessary to improve the skills of specialists in the monitoring of the planned measures to be implemented based on the results of internal audits of budget organizations, based on international standards.
Based on the views of economists and experts, in our opinion, the internal audit service in budget organizations to ensure the accounting of budgetary and extra-budgetary funds, prevention of misappropriation and embezzlement of budget funds in the following ways, monitoring contracts, unreasonable receivables
and avoiding creditor indebtedness serves to strengthen budgetary discipline.
In conclusion, it should be noted that the organization of the internal audit service in budget organizations serves the purposeful and effective use of budgetary and extra-budgetary funds by organizations as a result of preventive control over budgetary control, timely registration of existing errors and shortcomings. We consider it expedient to make the following proposals to improve the internal audit service in budget organizations: to adopt by-laws, that is to develop and implement the Regulation on the Internal Audit Service of Budget Organizations, as in the private sector. Through this, regular work of internal auditors of budget organizations, study of innovations in regulations, exchange of experience with experts in other fields, a main thing is that certified specialists will work as the internal auditors.
REFERENCES:
1. S.U. Mekhmonov. Issues on improvisation of internal audit activity in budget organizations. Scientific electronic journal "International financial accounting". No.6, December, 2017, pg.8.
2. Khasanov B.A., Aliboev Z.A., Zokirova M.Sh., Basis for automatization of internal audit. - T.: "Fan", 2003 y.
3. Arens E.A., Lobbeck J.K., Audit, translation from English (Series on accounting and audit) - M.: Finances and Statistics, 2001. - pg.560.
4. Guseev A., "Regulation about internal financial control" Journal: "Power ministries and departments: accounting and taxation» No. 1/ 2017.www.taxpravo.ru/analitika/statya.
5. https://global.theiia.org/Pages/globaliiaHome.
aspx
6. Article 5 of Exemplary Law "On internal audit in organization of the public sector" adopted by Interparliamentary Assembly of CIS counties on April 16, 2015.
7. https://www.pefa.org/
8. Jumamuratov B.J. "Issues of improving internal audit in budget organizations." // Finance and banking. Electronic scientific journal. 2/2019, 80 p.
9. Website of the Ministry of Finance of the Republic of Uzbekistan. www.openbudjet.uz //mol_nazorat_ 1chorak_2019_kirilcha
10. Website of the Ministry of Finance of the Republic of Uzbekistan https://www.mf.uz/uz/?option=com_content&view=ar ticle&id=224.; https://openbudget.uz/#/pages/145, Address on 26.10.2020.
INTERNATIONAL EXPERIENCE OF LOCAL BUDGET MANAGEMENT AND ITS DIRECTIONS
FOR APPLICATION IN THE COUNTRY
Rejapov Kh.,
Phd,
National University of Uzbekistan named after Mirzo Ulugbek, Senior lecturer at the Department of Macroeconomics at the Faculty of Economics. Uzbekistan.
Turgunov T., Phd,
Andijan Mechanical Engineering Institute, dean of the faculty of mechanical engineering technologies
Rakhmanov B.
National University of Uzbekistan named after Mirzo Ulugbek, Lecturer at the Department of
Macroeconomics at the Faculty of Economics
Thie article analyzes the budgetary systems of developed countries, interbudgetary relations and the development of local budgets. Analyzing inter-subject relations in developed countries, scientific and practical proposals for the development of budgetary relations in the country have been developed.
Keywords: budget system, budget, local budget, state budget.
The state budget system of Uzbekistan is being implemented with high transparency in its openness and targeted use. President of the Republic of Uzbekistan Sh. Mirziyoyev in his address to the Oliy Majlis said that "the distribution of additional income from local budgets, fair selection of pensioners and assessment of the work of heads of executive bodies will be based on an analysis of appeals to the People's Reception Office. The initiatives of the head of our state, the adoption of various important decisions and decrees by them are attracting more and more attention of foreign developed countries, and they are establishing multilateral cooperation with our country.
Budget reforms are also very important in other countries and are an integral part of their economies. In particular, the budget system of developed countries such as the United States and Russia has developed over the centuries and gone through several stages. During the 1980s and 1990s, fiscal reforms developed in the United States and other countries, and the
Scandinavian countries of Sweden, Denmark, and Norway are working to further improve their fiscal policies. The US budget system is based on results. In the United States, the results-based budget was first introduced in 1949 and was used primarily for military purposes. Performance budget by the commission, which is called the budget of action, is considered a system that reflects not only costs but also revenues.In 1950, Congress adopted a reform on the budget and determined the need for local budgets to report to the administration of the US President.
To date, the state budget deficit has reached $ 1 trillion by 2019 after the failure of President Donald trump's fiscal policies in the United States. The reason for this was the large budget allocations for US military operations in the middle East in recent years, after which the US Congress decided to address the problem of a shortage of 50-year bonds. In 2019, $ 4 trillion was spent from the US state budget, and the deficit was $ 1109 trillion (see picture 1).
