LAW ON STATE FINANCIAL CONTROL NECESSARY?

Every year the public budget of Azerbaijan increases and gains weight. The best example is the 2006 public budget, which was adopted with a growth: revenues - 67% and expenses 64%. However, as the treasury is weighty, the care of it should be stronger. It increases the actuality of the rapid reforming of the sate financial control and adoption of relevant law.

The Ministry of Finances headed by Avez Alekperov deeply believes in the adoption of the bill on state financial control till summer vocation. Alekperov says that it would be possible in case of submitting the draft law to the parliament in 1 or 2 months. Meanwhile, the deadline for the adoption of the bill can be autumn 2006, he assures.

At present the document is under examination of the Justice Ministry. The Minister also noted that shortly it is planned to receive a final conclusion of the World Bank on the draft law, which he expects to be positive.

The necessity for adoption of the law is explained in two ways. Firstly, it will enable to increase transparency in the forecasting and execution of the public budget, as well as strengthening of a control over he public budget expenses. Secondly, it defines state financial regulation, as well as indicates the exact distribution of authorities among the authorized bodies in the state financial control.

So, the first factor necessitating the adoption of the law on state financial control is the growing public budget, which accumulates big funds for further use on public tasks. Thus, this year the public budget revenues can be increased at the expense of remittances by the Ministry of Taxes, State Customs Committee and privatization. The public budget revenues from rise in oil prices will comprise over 80m manats. In 2007 it is planned to increase the public budget forecasts by 40-50%. In 2009-2010 the public budget revenues and incomes will exceed $10bn. Besides, the Ministry of Finances expects the non-deficit budget in 2009.

In this case the improvement of the state financial control in the country, which will enable to use efficiently and purposefully the public finance resources, and monitoring of the capital flow from addressee to beneficiary assume special.

The financial control in Azerbaijan can be divided into internal and external ones. The Counting Chamber will control the state companies and concerns and the Ministry of Finances will be committed to control district and city budget organizations, higher educational institutions, diplomatic missions of Azerbaijan abroad and etc.

The key task in this stage is to increase the efficiency of their activities in the sphere of financial control and avoiding unnecessary dubbing of the financial-control activities.

Taking into consideration this fact the Ministry of Finances designed a draft State Program in rational use of budget resources in compliance with the presidential decree dated 31 January 2006. the program envisages he development of new standard documents, injection of changes t the legal base and increase of responsibility in the relevant budgetary organizations.

В"We prefer joint activities however, the Counting Chamber has its own schedule for auditing. Besides the staff engaged in the control and inspection activities is small and the staff number is to be enlarged, however, their selection will be held thoroughly and by attesting them as their professional level must be high, Alekperov thinks.

In 2005 the Ministry of Finances held 63 complex revisions, including 40 in compliance with the schedule confirmed by the Ministry and the rest on the base of sentences. The inspections were carried out in the districts, diplomatic corps, universities, public organizations on utilization of crest taken under the governmental guarantees. As a result of revisions, the public revenues grew 6bn. The violations included the exaggeration of prices, non-implementation of the tender terms and current state of the book-keeping due to high level of responsibility of accountants and heads of local budgetary organizations.

As the draft law indicates, each year in January the Finance Ministry intends to publicize the list of enterprises and schedules for inspecting. And the brief data on the results of inspecting will be placed on the web-site.

The Ministry of Finances will carry out revision in the budgets of 25 districts, including Khatai , Azizbayov, Surakhani, Binagadi districts of Baku as well as Imishli, Agdam, Zardab, Gedebek, Siyazan, Saatly, Lankaran, Masally, Shamakhi, Alibayramli, Dashkasan, Astara, Lerik, Geranboy, Shamkir, Fizuli, Kelbajar, Jabrayil, Tovuz, Zangelan.

The Azerbaijani Cabinet of Ministers determined the schedule of monitoring on balance sheets execution for 2006 by tax-payers.

In accordance with the schedule, the monitoring on budget execution during half-year is planned to be held at the Baku Metro, Azerkimya State Company, Communications and Information Technologies Ministry in July. This period of activities of Azal Air Lines Company and Azersu JSC will be monitored in August. Monitoring of activities of the rest 5 big tax-payers will be conducted on the results of 9 months. The Caspian Shipping Company, Azerigas JSC and Azerbaijan State Railway Department will be subjected to monitoring in October, SOCAR and Azerenerji - November.

In its turn, the Accountancy Chamber of Azerbaijan confirmed a business schedule for 2006. The functions of the AC, specified by the legislation have been considerably expanded as compared to last year. In compliance with the law on Budget System it is planned to fulfill some tasks such as audit of the public budget, the State Social Security Fund, State Oil Fund, the public budget of Nakhchivan Autonomous Republic and conduct of the financial-budget examination of the municipalities. Major part of measures on control was dedicated to the fulfillment of the public budget audit of public budget revenues (in difference to previous in 2006 it is planned to increase the activities in this direction). The control activities over the tax incomes covers the spheres such as calculation of big taxpayers, estimation of a mechanism on tax payment, as well as appraisal of revenues from major types of taxes, which has special weight in the stricture of the budget, tax revenues payment of taxes by the legal entities,the value added tax and excises, payment of taxes by physical entities.

The Accountancy Chamber said that they cover the major part of tax incomes and the level of revenues was always on focus. It is also planned to carry out joint inspection with the Russian Accountancy Chamber in organization of the customs control over mutual trade.

Thus, this year intensified financial control will be carried out by the Accountancy Chamber and the Finances Ministry. The major principle is not to put any budget sphere in any state body without control. It is necessary to have efficient control based on the law. It will be a Law on State Financial Control, which will establish unified legal and methodological bases of implementation of the state financial control, unified system of different bodies of the state financial control and a mechanism on interaction. The efficient state can be established without bringing order in the state management, first of all, in management of state finance.

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