Administrative and budgeting reforms performed at present are destined to increase the management efficiency of budgetary resources, require active participation of all governmental authorities, especially those, who perform planning, organization of execution and control over the budget directly. Among these organs there are Federal Treasury, which is responsible for the direct cash execution of the budget and the ongoing monitoring over the intended expenditure of budgetary resources. It is possible to raise the effectiveness of budgetary resources management in the executive bodies by binding the method and finance management tools only, which are used in the public and private sector. Among them there is project management, risk-audit, investment analysis, management accounting, and analysis, total quality management, controlling, key performance indicators. However, the use of such methods should not disguise the main objective of public sector existence, which is the satisfaction of individual needs and the distribution of public services in accordance with the requirements of social justice and cost effectiveness.

Conception of budget restructuring, conception of the administrative reform, the reform of budget classification and budgetary accounting, the results of based management, the results-oriented budgeting, special-purpose program of budget planning, Federal Treasury, project management, risk-audit, investment analysis, management accounting, and analysis, total quality management, controlling, key performance indicators, public sector, social justice, cost effectiveness.

 

In recent years all activity of state organs of power have been under the effect of a budgetary reform, the main directions of which are reflected in the Conception of budget restructuring in the Russian Federation during the years 2004-2006. It was approved by the order of Government decree of the Russian Federation No 249, dated May 22, 2004 «On the Measures of the Efficiency Increase of Budgetary Expenditures», and the conception of the administrative reform in the Russian Federation in the years 2006-2010, approved by the Government Executive Order of the Russian Federation No 1789-r, dated October 25,2005.

 

The necessity of fundamental restructuring is determined by the absence of mechanisms embedded into the budgetary system, and which provide the opportunity of forward planning and effective use of budgetary resources, which was detected in:

— the development of short-term financial plan for every budget cycle separately, which period does not exceed one year, which would not allow to implement the strategic objectives of state development to the full;

— the provision of budgetary means not by the analysis of their result efficiency, but on the basis of allocation indexation for the past years without any clear criteria selection of sponsored programs and activity, which has resulted in the absence of encouragement of state funded organizations to the efficient and economical use of budget funds;

— the absence of precise objective wording and performance of controllers and fund receivers, which would also not allow to evaluate the efficiency of budget resources use;

— insufficient theoretic and practical elaboration of the used methods of the program-goal-oriented planning;

— limitation of the authority and responsibility of controllers and recipients of taxpayer funds;

— predominance of the outside control over the compliance of the actual data to the planned one in the absence of control procedures for the validity of planning and the outcome of budgetary means execution;

— inconvenience of the examination procedure of draft by the budget legislative body etc.

 

Thus, taking into account the existing traditions of budgeting and favorable prerequisites into the above-mentioned conception created as a result of implementation of the initial stage of the budget reform, the following objectives of budget restructuring and administrative reform were set:

— arrangement of conditions for the maximally efficient administration of state finances in accordance with the priority of state policy;

— improvement of quality and availability of public services;

— enhancement of efficiency of the executive authority activity (pic.1)

 

In an infant state of the budget reform a number of Federal laws was adopted, the implementation of which would allow to bring the liability of governmental authorities and municipal government in accordance with their financial possibilities, and to carry out the methodological and organization renovation of the budget implementation system, which secures the efficient control over the budget implementation by means of:

— delimitation of expenditure obligations and cancellation of «uncovered mandates», the total volume of which exceeded the budget system potential in 1.6 times;

— creation of Stabilization fund, securing the stand-by funds in case of reduction of export price for oil and the increase of price level;

— stable assignment of profitable sources to the budget of different levels and introduction of objective standards for the distribution of inter-budget transfers;

— development of Federal Treasury body system, which secures cash servicing of budget implementation in accordance with common standards and procedures [1].

 

Picture 1 — The Conception of Budget Restructuring in the Russian Federation [1,2]

 

The essence of reforming was the shift of accents from «Budgeting Management» to the «Result Oriented Management» by means of increase of responsibility and independence of budgetary process participants within the medium-dated guideposts.

 

The basis of a new organization of budgeting is a model of «result-oriented budgeting within the medium-dated budgeting». It provides the distribution of budgetary resources among the managers of budgetary funds with account of or in direct correlation with the actual results achieved in compliance with the medium-dated priorities of social and economic policies and within the projected volume of budgetary resources for long-term perspective.

 

It is obvious that the public sector needs the rise of its real, acceptable efficiency in order to fortify confidence and boost the satisfaction of citizens, thus enlisting their support.

 

One of the ways to improve public sector performance is to use the same tools, which are used by private sector for the effectivization of work of their businesses. Many foreign and native government agencies and noncommercial associations approve the following working methods of private business:

— total quality management;

— orientation on the consumers;

— self-ruling commands;

— business process re-engineering;

— performance measurement;

— remunerative incentives and payment by results;

— assessment of benefits/expenses and expenses/efficiency;

— outsourcing;

— electronic data;

— lean production etc.

 

It has vital differences how far this approach may go because of difference in operations in state and business sectors:

— state organizations often appear to be monopolist, but profit organizations run on competitive markets;

— the state serves to the interests of citizens, business tends to get maximum investor profit;

— citizens belong to interest groups, which are various in quantity, influence, and authority; companies get benefits at the expense of lobby members and politicians directly;

— government institutions often poorly understand their authority, field of activity, their functions are performed unsystematic and duplicate each other; profit organizations have special subdivision for accomplishment of production and organizational activity etc.

 

We confirm, that these distinctions are often exaggerated and serve as defence of inefficiency and unproductive work of social sector or groundless use of resources in the social sector or the groundless use of resources.

 

The changes are inevitable. Government agencies, as well as private companies cannot be guaranteed a certain level of financing. Similar to private companies, they should study the driving forces and technologies of changes, think strategically, learn new ways of effective works, perform innovation, know how to demonstrate their dignity to population in the whole and a specific group, which is to say those people, who pay taxes or membership fees, or watch the activity of government agencies.

 

A perfect example of the use of advanced experience of financial management is Federal Treasury. It is a state body, which is responsible for current utilization of a budget and control over the purposeful and efficient expenditure of budgetary resources.

 

Being guided by main trends of the budget reform, it is supposed to complete the process of creation and implementation of effective system of financial information within the system of Federal Treasury body, which provides timely provision of necessary data in the form, convenient for the employees of state-financed organizations ; create an efficient system of internal audit, able to become the main tool, which prevents violation and efficiency enhancement of cost management by means of accent shift from the compliance verification of designated purpose of budgeting funds, reliability of financial accounting and carrying-out of requirements of normative legal acts for the assessment of efficiency of budget expenses etc.

 

As practically all budgetary state resources are accumulated within the system of Federal Treasury, and since the year 2009 all extra budgetary funds has been under the jurisdiction of treasury. The treasury should accept the responsibility of budget manager, which controls not only the purposeful budgetary resources, but also estimates efficiency this use. 

 

Thus, modern transformations, conducted in Federal Treasury of the Russian Federation, reflect the pronounced tendency to use market evaluation of instruments and the efficiency enhancement of management in the present organization:

— within the conception of performance budgeting process, at which the function of treasury is the efficiency of estimation of the execution of government orders, where it is said about the necessity to use the process modeling, that is the system of project management and is used by profit companies;

— the implementation of budget audit mechanism in respect of the managers of budgetary expenditures and territorial bodies suggest the efficiency assessment of budgetary resource expenditure, the usage of risk-audit tool. They are traditional methods for the analysis of investment projects of profit organizations;

– transformation of approaches to the implementation of internal controls: from a rather rarely used complex follow-up control to the regular self-check and regular desk audit, from the documented control to technological and administrative one using software hardware etc. It is evident, that modern forecasting and scheduling technique, developed for major profit organizations, should be used for this);

– the shift of special accents for the control activity: delegation of power of the Agency of internal controls and audit of Federal Treasury, which correspond to subdivisions of territorial bodies (where the Agency keeps its main positions in conduction of regular complex checks, at least once at three years; creation of methodology and control activity technique; conduction of corresponding analytical work; education and training of the staff etc). The present procedure also lies in the tideway of current trends of authority delegation, which are found in large profit organizations with the multi divisional structure;

– the increasing degree of efficacy and transparency of inspection test, which is obtained at the expense of expansion of subject control (for example, by inclusion of accomplishment of key indicators of performance budgeting in their analysis – the indicators of efficiency estimation of objective fulfillment), and on the account of public consideration of checking results on a specially created Council of Russian Treasury;

— and also the most vivid thing here is the system implementation of cost and management accounting on chapter 100 «Federal Treasury», which supposes active use of tools of management accounting for the enhancement of efficiency of treasury work.

 

Thus, the use of modern tools of financial management in the nonprofit sector of economics is destined for the essential effectiveness raise of the budgetary resources management in public sector. However, such decision of the problem seems to be quite disputable by virtue of essential differences in the use of financial resources in commercial and public sectors of the economy, which have already been described in the article. The project management, investment analysis, management accounting should be accompanies by the evaluation and analysis of the degree of satisfaction of citizen’s needs, compliance of public services to the requirements of social justice and cost effectiveness, which requires a further development of  unique specific techniques.

 

List of References

 

1. The Conception of Budgeting restructuring in the Russian Federation in the years 2004-2006, approved by the Executive Order the Russian Federation No 249, dated May 22, 2004  «On the Measures on performance enhancement of budget expenses»

 

2. Conceptions of the administrative reform in the Russian Federation in the years в 2006-2010, approved by the Government Executive Order of the Russian Federation No 1789-r, dated October 25,2005. (as amended by the  Government Executive Order of the Russian Federation No 157-r, dated February 09, 2008, Executive Orders of the Russian Federation dated March 28, 2008 No 221, dated March 10, 2009 No 219)