Activities for establishment of financial management and control

Financial Management and Control on central level

  2009 2010 2011 2012 2013 2014 2015

 2016

jan. 2017 april 2017 may 2017 octob. 2017
1. Number of institutions that established Financial Affairs Unit 14 32 39 46 66 66 71 78 78 79 79 79
2. Number of appointed Heads of Financial Affairs Unis 0 20 30 36 42 45 53 56 56 58 58 58
3. Number of Institutions that adopted Decision for internal distribution of the total approved budget 0 0 0 49 65 73 53 70 63 71 71 71
4. Number of institutions that adopted Decisions for general authorization 0 0 0 29 51 47 31 44 39 44 44 45
5. Number of institutions that appointed Iregularities Persons 31 44 56 59 61 64 76 81 81 81 81 81
6. Number of institutions that  adopted annual plans for the develepoment of financial  management and control 0 0 0 0 0 0 44 42 1 15 20 20
7 .Number of institutions that adopted  Risk  management strategy 0 0 0 0 0 0 42 63 63 63 63 63
8. Number of institutions that prepared Risk register 0 0 0 0 0 0 36 48 49 50 50 50
9. Number of institutions that adopted a Rulebook internal act/procedure/ rules for the implementation of FMC 0 0 0 0 0 0 31 40 40 41 42 42

 Financial Management and Control on local level

  2009 2010 2011 2012  2013  2014 2015

2016

jan. 2017 april 2017 may 2017 octob. 2017
1. Number of institutions that established Financial Affairs Unit 1 14 27 39 40 46 58 62 62 62 62 62
2. Number of appointed Heads of Financial Affairs Unis 0 10 22 33 35 38 44 45 45 45 45 45
3. Number of Institutions that adopted Decision for internal distribution of the total approved budget 0 0 0 55 63 65 53 56 43 55 57 57
4. Number of institutions that adopted Decisions for general authorization 0 0 0 19 32 32 33 37 31 35 35 35
5. Number of institutions that appointed Iregularities Persons 34 49 55 58 58 59 66 66 66 66 66 66
6. Number of institutions that  adopted annual plans for the develepoment of financial  management and control 0 0 0 0 0 0 38 31 3 5 10 10
7 .Number of institutions that adopted  Risk  management strategy 0 0 0 0 0 0 22 32 32 32 34 34
8. Number of institutions that prepared Risk register 0 0 0 0 0 0 16 26 26 26 28 28
9. Number of institutions that adopted a Rulebook internal act/procedure/ rules for the implementation of FMC 0 0 0 0 0 0 20 25 25 25 25 25

 

The process of strengthening financial control in Macedonia started and is conducted through the development and application of the principles of decentralized management responsibility and the establishment of functionally independent internal audit and development of all three components of public internal financial control (financial management and control, internal audit and their harmonization). The aim of this process is building a system that will ensure reasonable use of public funds.

Financial management and control is a system of policies, procedures and actions established by the head of entity, to provide reasonable assurance that the objectives of the subject are achieved. Financial management and control also presents sum of responsibilities of the head of the entity to establish and implement procedures to achieve full control in operations based on the principle of sound financial management and control.

Sound financial management and control is transparent, regular, economical, efficient and effective use of available resources

Financial management and control includes the processes of:

  • Planning
  • Execution
  • Monitoring
  • Reporting for
    • collection of revenue defined by the budget
    • management and control of execution of the expenditures approved by the budget
    • protection of assets and liabilities whose value is recorded in the balance sheet

Financial management and control should be implemented in all organizational units and at all levels of the subject and it covers all assets of the entity including funds from European Union and other sources.

Objective of financial management and control is to achieve the following general goals

  • Performing correct, ethical, economical, effective and efficient manner
  • Compliance of operations with laws, other regulations, established policies, plans and procedures
  • Protection of property and other resources from losses caused by mismanagement, unjustified spending and utilization, as well as irregularities and abuses
  • Strengthening accountability for the successful accomplishment of tasks
  • Proper recording of financial transactions and
  • Timely financial reporting and monitoring the results of operations.

The head of the entity is responsible and accountable for:

  • Preparation, execution and reporting on the budget of the entity that he manages.
  • Financial management and control and internal audit in all organizational structures, programs, operations and processes managed by him
  • Control of management the accounting, incur and execution of payments, collection of revenues and protection of assets and liabilities
  • Continues assessment of the system of financial management and control
  • Setting and achieving the objectives of the entity and the preparation and implementation of strategic and other plans and programs to achieve general and specific objectives of the entity
  • Establishing an organizational structure and work procedures that will ensure functionality, monitoring and development of sustainable financial management and control
  • Establish a line of reporting in accordance with the delegated powers and responsibilities
  • Competence of all employees to perform tasks in accordance with financial management and control
  • Managing the risk and implementing appropriates and effective internal controls

The head of the entity is accountable for achieving the objectives of the subject of public sector through the management of public funds, by legal, economic, efficient and effective manner.

Activities for establishment of financial management and control

All budgetary beneficiaries, regardless of size, amount of assets they own or the number of employees are obliged to establish a system for financial management and control (FMC). They are obliged to provide work rules and procedures, and to take measures to obtain reasonable assurance that budget funds are legally and properly but also cost-effectively and efficiently. Establishing a system of financial management and control is long and complex process because there are no uniform organizational solutions which would be applicable to all budget users. They depend on the size and specificity of budget users, processes, organizational risks and other elements.

Establishment of financial management and control should undertake the following actions:

  • Appointment of head of financial management and control
  • Making decision for the need for appointing a coordinator for financial management and control
  • Establishment of working group which deals with the issues of establishment financial management and control
  • Adoption of the plan for establishment of financial management and control
  • Developing a mission Statement, vision and key objectives of the budget owner
  • Description of main work processes (sub processes) and determination of activities
  • Development of written procedures, description of work processes, preparing the diagram of flows, determining the risk level of activities, their evolution and ranking, decision making to respond to the risk-establishment of control
  • Drafting paper (map) – an inventory and description of all work processes that provide a full picture of the work manners of the organization
  • Assessment of components of internal control (questionnaire for self assessment)
  • Making the review of established controls
  • Analyzing of existing and required controls, and deciding of the necessary ex-ante controls and ex-post financial controllers
  • Adoption of Action Plan to eliminate the weakness of internal controls
  • Monitoring of plan achievements and
  • Preparation of Annual Report for established FMC

Establishment of Unit for Financial Affairs

The head of the entity separates special organizational unit on financial issues such as sector or department, whose head directly corresponds to the head of the subject and top management civil servant. The unit for Financial Affairs is responsible for conducting the affairs of the financial management and control.

Responsibility of the Head of Unit for Financial Affairs

Head of Financial Affairs unit conducts surveillance and advices the management of the entity, especially for:

  • Budget control (control of preparations and budget execution)
  • Ex-ante financial controls
  • Control of execution of established policies and operational management (oversight of entire process of internal management and control)
  • Accounting and
  • Budgetary and financial reporting

Head of Unit for Financial Affairs 

  • He coordinates the process of drafting and amendments of the budget and strategic plan of the subject
  • Coordinates the process of developing, establishing, implementing and maintaining financial management and control
  • Coordinate the process of accounting records for budget execution and preparation of annual accounts and annual financial report under Article 47 of the law
  • Necessarily gives opinion on draft documents made by other units in the entity and draft documents of other entities that have or may have financial implications for the budget of the entity
  • Implements ex-ante and ex-post financial controls
  • Implements the protection of assets and liabilities whose value is recorded in the balance sheet