№ 7/2016

Fìnansi Ukr. 2016 (7): 82–

ACCOUNTING AND AUDIT

KOROL Volodymyr ¹, CHUMAKOVA Iryna ²

¹Ministry of Finance of Ukraine
²SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0003-3432-3177

IMPLEMENTATION OF INTERNAL CONTROL IN UKRAINE: ISSUES AND DIRECTIONS OF THEIR SOLUTION

In accordance with international standards the internal control should be integrated into the public funds management process and be a part of the delegation of authority, managerial responsibility and accountability of the head of the body for achieving certain objectives in accordance with the allocated budget and available resources. The head of the body is obliged to comply with and be accountable not only for the efficient and effective usage of all resources received from public sources, but also for the development and improvement of the internal control system in subdivisions of the body and other controlled entities. Internal audit should provide the head with the support for efficient and effective performance of duties by constructing and improving the internal control system, procedures and management processes in general and risk management in particular. In practice the internal control system as it is interpreted by European countries (including risk management) is only at the stage of implementation in the majority of domestic public sector bodies. Therefore, internal auditors in accordance with standards, should apply their own judgment of the risks. Today there is a problem concerning the gap in expectations of senior managers from the internal auditors as to their participation in the development and formalization of the internal control system and risk management, as well as lack of experience, low level of skills and competences of internal auditors. The paper assesses the implementation process of the internal control system according to the European model and methodological support based on the analysis of current researchers, updated Ukrainian legislation and present structure of management control in the Ministry of Finance of Ukraine. It is proposed to amend and supplement the existing legislation and regulations on the internal control system as well as the organization of risk management activities in accordance with the responsibilities of the Ministry of Finance of Ukraine and powers of the internal audit division.

Keywords:management control, the system of internal control, internal audit, risk management, managerial responsibility and accountability, Ministry of Finance of Ukraine.

JEL: H11, H83, M42, M48.

KOROL V. . IMPLEMENTATION OF INTERNAL CONTROL IN UKRAINE: ISSUES AND DIRECTIONS OF THEIR SOLUTION / V. . KOROL, I. . CHUMAKOVA // Фінанси України. - 2016. - № 7. - C. 82-.

Article original in Ukrainian (pp. 82 - 104)

Download

Downloads :813

1. Ukraine, the European Union. (2014). Association Agreement between Ukraine, on one hand, and the European Union, the European Atomic Energy Community and their Member States, on the other hand (Agreement, June 27). Retrieved from www.kmu.gov.ua/kmu/docs/EA/00_Ukraine-EU_Association_Agreement_(body).pdf.
2. Cabinet of Ministers of Ukraine. (2011). Some questions of formation of structural units of internal audit and conduct such audit in ministries and other central executive authorities and their territorial bodies and budgetary institutions belonging to the management of ministries and other central executive authorities (Decree № 1001, September 28). Retrieved from zakon2.rada.gov.ua/laws/show/1001-2011-%D0%B [in Ukrainian].
3. Ministry of Finance of Ukraine. (2011). Internal Audit Standards (Order № 1247, October 4). Retieved from zakon2.rada.gov.ua/laws/show/z1219-11 [in Ukrainian].
4. de Koning, R. P. J. (2007). Public Internal Financial Control. Slovenia [in Russian].
5. Cabinet of Ministers of Ukraine. (2005). On approval of the concept of public internal financial control until 2017 (Decree № 158-р, May 24). Retrieved from zakon3.rada.gov.ua/laws/show/158-2005-р [in Ukrainian].
6. State Financial Inspection of Ukraine. (2016). Report on the state of the public internal financial control in Ukraine by 2015. Retrieved from dkrs.kmu.gov.ua/kru/doccatalog/document?id=122171 [in Ukrainian].
7. Verkhovna Rada of Ukraine. (2010). Budget Code of Ukraine (Law № 2456-VI, July 8). Retrieved from zakon1.rada.gov.ua/laws/show/2456-17 [in Ukrainian].
8. Ministry of Finance of Ukraine. (2012). On Approval of recommendations of internal control spending units in their schools and to subordinate budget institutions (Order № 995, September 14). Retrieved from ftp://webmfu/nakazy/nakazy/ [in Ukrainian].
9. Ministry of Finance of Ukraine. (2015). On approval of the structure and strength of structural subdivisions of the Ministry of Finance of Ukraine (Order № 1098, November 27). Retrieved from ftp://webmfu/nakazy/nakazy [in Ukrainian].
10. State Financial Inspection of Ukraine. (2014). Protocol to enforce decisions taken at a meeting in the Ministry of Finance (Letter № 21-14/442, July 11). Retrieved from search.ligazakon.ua/l_doc2.nsf/link1/FN004729.html [in Ukrainian].
11. Yefy`menko, T. І., Zhuk, V. M., Lovіns`ka, L. H. (2015). The information in crisis management: the global dimension of standardization of accounting and financial reporting. Ky`yiv: Akademіya fіnansovoho upravlіnnya [in Ukrainian].
12. Bary`nіna, M. (2009). Internal financial control of American or which explains the efficiency of the inspectors general offices. Financial control, 5, 57–58 [in Ukrainian].
13. Іvakhnenkov, S. V. (2010). Information technology audit and internal control in the context of global integration. Zhy`tomy`r: Ruta [in Ukrainian].
14. Kamens`ka, T. O. (2010). Internal audit. Modern look. Ky`yiv: Іnformacіjno-analіty`chne ahentstvo [in Ukrainian].
15. Rudnіc`ka, R. (2013). Features of the public internal financial control in Ukraine. The efficiency of public administration, 34, 216. Retrieved from www.lvivacademy.com/download_3/Zbirnyk_34.pdf.
16. Internal Control Systems in Candidate Countries. (2004). PIFC Expert Group — Working Group on Audit Manuals. Retrieved from www.eca.europa.eu/Lists/ECADocuments/COOP_PUBLI006/COOP_PUBLI006_EN.PD.
17. The Institute of Internal Auditors. (2012). International Standards for the Professional Practice of Internal Auditing (Standards).
18. COSO. (n. d.). Internal Control — Integrated Framework: The Committee of Sponsoring Organizations of the Treadway Commission (COSO). Retrieved from www.coso.org/.
19. Pickett, K. H. S. (1997). The internal auditing handbook. (2nd ed.). UK: John Wiley. Retrieved from samples.sainsburysebooks.co.uk/9780470666340_sample_409068.pdf.
20. Cabinet of Ministers of Ukraine. (2014). Regulations of the Ministry of Finance of Ukraine (Decree № 375, Augugst 20). Retrieved from zakon3.rada.gov.ua/laws/show/375-2014-п [in Ukrainian].