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A risk-based approach to budget processes at the sub-federal level
Available online: 23 October 2014 Subject Heading: Budgetary system JEL Classification: Pages: 21-29
In view of implementing the Program of increasing public finance (State and municipal) management efficiency for the period till 2018, the problem of using a risk-based approach to the organization of budget processes at the regional level gains prominence. Identification, assessment and effective management of risks inherent in a budget process continue to be the main problems. Their solution significantly influences the stability and independence of budgets. The authors consider the issues related to improving risk management in budget processes of the constituent entities of the Russian Federation. The goals of the research encompass identifying risk factors in a budget process, classifying the risk as applied to its stages, and developing actions to minimize the most significant risks. When studying the risks inherent in a budget process at the level of the constituent entities of the Russian Federation, the authors used the expert evaluation method, which is based on risk mapping that involves two classification criteria: stages of a budget process and risk factors. The paper identifies the risk indicators of a budget process that enable to make conclusion on reliability of planned indicators and their validity, on the level of earning power realization and efficient use of budgetary funds. On the basis of the analysis of risks that received the highest rating during the expert estimates, the authors developed a program for risk mitigation, which includes measures aimed at reducing the risks of inefficient organization of a budget process, possible distortion of planned indicators, non-execution of revenues budget, increase in budget expenses, misrepresentation of accounting and reporting data, and other measures. The authors have arrived at a conclusion that solving the problems of risk management process organization, identifying and assessing all risks of a budget process, as well as building a sufficient and adequate information base for analysis purposes will allow to considerably lower the risk level of a budget process in the constituent entities of the Russian Federation. Reaching stability and long-term sustainability of regional budgets should become an ultimate goal of introducing a risk-focused approach to the organization of a budget process at the sub-federal level. Keywords: budget process, risks, risk management, risk factors References:
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ISSN 2311-8709 (Online)
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