State Audit Office Research Articles

The Interpretation of Public Administration Controlling From an Economic Perspective

Objective: The primary objective of this study is to assess the adherence of state/municipal economic companies to the requirements outlined in Government Decree 339/2019 (XII. 23.) concerning the use of budgetary funds. Furthermore, the study aims to evaluate the effectiveness of internal and external control systems and propose measures to enhance the efficiency and transparency of these companies' financial management. Theoretical Framework: The research builds on the principles of public sector governance, focusing on the role of internal control systems and external monitoring in ensuring the proper use of public funds. Government Decree 339/2019 serves as the regulatory basis for evaluating performance, while theories on financial control, transparency, and accountability in public administration are employed to interpret the findings. Method: A qualitative approach was employed, including an audit of selected state/municipal companies. The study utilized data from the ÁSZ (State Audit Office) reports, internal control mechanisms, and management reviews. Performance evaluations were conducted in light of the companies' compliance with regulatory requirements, with a focus on identifying systemic shortcomings and proposing improvements. Results and Discussion: The audit revealed that while the companies generally complied with Government Decree 339/2019, several shortcomings were noted, particularly in the areas of internal control and economic management. External monitoring by the ÁSZ and existing internal control systems contribute to ensuring the proper use of budgetary funds. However, there is a need to strengthen these systems further to address the observed issues. The study suggests the implementation of a management-oriented controlling system, which would emphasize economic decision-making and improve overall performance and transparency. Research Implications: The findings have significant implications for state and municipal economic companies. By adopting a more economically focused internal control system, these entities can enhance their financial management practices, optimize the use of public funds, and foster greater transparency and efficiency in their operations. This approach would not only benefit public administration but also improve service delivery to the general public. Originality/Value: This study contributes to the existing literature by highlighting the importance of a management-oriented controlling system based on economic principles in the public sector. It provides practical recommendations for enhancing the internal control and audit processes of state/municipal companies, offering valuable insights for policymakers and public administration professionals striving for greater fiscal responsibility and transparency.

Factors Affecting Risk-Based Audit and Quality Audit

There are various issues that are associated with audit quality, which can often lead to audit failures. The State Audit Office of Vietnam (SAV) needs assistance in improving its audit quality. This study was conducted to provide empirical evidence about the correlation between the risks of audited entities, the competitive ability of state auditors, and audit quality. The study also seeks to establish the moderating effect of risk-based auditing on the relationship between the abovementioned factors and audit quality. The research data was collected from 221 state auditors and analyzed using SEM linear structure analysis with SmartPLS 4.0.8.5 software. The research findings suggest that the risk of the audited entity and the competitive ability of state auditors positively and significantly impact the application of RBA, which contributes to the assurance of audit quality in SAV. Therefore, the practical application of RBA, which involves accurately identifying the risks of audited entities, helps to improve audit quality and efficiency. This study contributes to the theory of audit quality in the public sector, which is diverse and inconsistent due to various economic and political factors such as corruption and reputation. Doi: 10.28991/ESJ-2024-08-03-010 Full Text: PDF

Transforming External Control of Municipal Finances in Hungary

The external control of the Hungarian municipal finances has been based on the traditional, continental dual model: the State Audit Office of Hungary, responsible for the professional control of these finances on the one hand, and the County (Capital) Government Offices, performing the legal supervision of the decisions and procedures of municipal finances on the other hand. This paper analyzes how this ecosystem has been transformed, and how central governmental control has been strengthened during the last decade. It also examines the phenomenon of blurring the boundaries between professional and legal control and supervision. Finally, it reviews the complementary elements of this system, such as the inspection competences of the Hungarian State Treasury and the asset management control powers of the public prosecutors.

The perfect quality model and the quality of public finances

The study undertakes to model of perfect quality in order to clarify the basic logic of quality improvement. The model defines the system of requirements based on the stakeholder’s point of view and the philosophy of Total Quality Management, which the perfect quality product can fully meet. The main obstacle may be that the system of stakeholder requirements is almost always fraught with internal contradictions. The system of requirements that has already been harmonized makes it possible to avoid the traditional way of quality development, namely the prioritization of requirements, and in this way, many of them being ignored. Consistency can be created primarily through mutual education, information, and lobbying activities. Some of the domestic public financial organizations can learn directly about the partial set of requirements of non-power stakeholders through legal remedy procedures, but for many this is not possible either. Few public financial organizations have a formal influence channel towards organizations exercising power, such as the State Audit Office and the Hungarian National Bank, which are far ahead of other organizations in terms of education and information.

Political Corruption Monitoring System in Georgia


 Georgia treated combating corruption, a harmful socio-political phenomenon, as one of the top priorities of public policy and, sharing international experience, has defined the regulation of the legality of political finance as an important element of the anti-corruption strategy.
 In 2011, material changes were introduced in the Organic Law of Georgia on Political Associations of Citizens. The reform offered a completely new political corruption monitoring system in the country. They established the Financial Monitoring Service of Political Parties within the State Audit Office of Georgia with the main task to control the legality and transparency of political finance. To that end, the Monitoring Service was assigned to monitor and ensure the transparency of the revenues and expenses of the political parties and also was given the power to apply administrative proceedings and sanctions.
 Since 2022, this mandate, along with other anti-corruption duties, has been granted to a legal entity under public law - the Anti-Corruption Bureau, which is independent in its operations and reports only to the Parliament of Georgia and the Interagency Anti-Corruption Council.
 We will try in this study, giving due consideration to the best international practices, to analyze the specifics of the agencies controlling political corruption and assess the outcomes of their operations in the scope of the mandate. We will discuss the problems that remain a challenge based on the legislation applicable today and are a bar to the process of developing a more effective and result-oriented anti-corruption system.

The Transparency of the Supreme Audit Institution in the Republic of North Macedonia through the Analysis of Official Website Traffic

Transparency refers to unrestricted public access to timely and reliable information about decisions and performance in the public sector. Supreme Audit Institutions as independent institutions, according to professional regulation, are obliged to be transparent to all stakeholders and the general public. Hence, this paper analyzes the transparency of the State Audit Office, as the Supreme Audit Institution in the Republic of North Macedonia through its official website and annual visits by all interested parties. Two independent variables are included in the research: the budget and the change of management from the existence of the State Audit Office until today, to determine if they correlate with the number of visits to the website. To determine the relationship between the variables, a correlation matrix was used, and the data was processed through the SPSS software. The obtained results indicate a strong positive correlation between the determined variables.

Technical Condition of Soviet-Era Apartment Buildings, Related Problems and Possible Solutions in Latvia

Abstract More than half of Latvia’s population lives in Soviet-built, serial apartment blocks that have reached or are rapidly reaching the end of their useful life. The State Audit Office has acknowledged in its report that there is not an effective approach to housing security in the country, and the funds needed to renovate the buildings exceed the owners’ ability to pay. The main problems are the following: the actual technical condition of these buildings is unknown (technical studies are needed), there are no freely available management fee savings for residents to pay for fundamental studies and repairs or renovations, there is insufficient or difficult access to public support for improving energy efficiency and the overall technical condition of buildings. Apartment buildings are also one of the largest contributors to greenhouse gas emissions (36 %), a problem which is relevant in the context of the national climate targets for 2023. In order to establish the actual technical condition of the buildings and to develop the most affordable improvement solutions, it is necessary to carry out a technical investigation for each of the apartment buildings, identifying the problems specific to each series and individual to each building, taking into account the different conditions to which the buildings are exposed in their daily operation. Such an approach would allow for the development of standard solutions to the problems specific to each series, saving resources and ensuring a higher quality of renovation works. The question remains how to address the financial support needed for comprehensive technical studies and the development of standard solutions. Is the technical condition of apartment buildings only a problem for residents (apartment owners), property managers, municipalities or the government?

The supreme audit institution in the Republic of North Macedonia – two decades of building public trust

PurposeThe state audit is crucial for society in ensuring the transparent and legal spending of public funds. In the Republic of North Macedonia, although state audit-related activities have existed since the state's independence, the State Audit Office started operating as a Supreme Audit Institution in 1999. The purpose of this research was to explore the development of the State Audit Office in the Republic of North Macedonia over the past two decades regarding the organisational aspect and the state audit-related activities.Design/methodology/approachThe research is based on a detailed analysis performed using statistical tests of data collected from the State Audit Office's annual reports on operation and performed audits in the period 2001–2020, concerning the budget, organisational size, audit engagements, audited public revenues and expenditures, audit reports, and given recommendations and their implementation. The survey method was used to determine other factors that could have a correlation with the development of the State Audit Office.FindingsIn general, it can be concluded that the State Audit Office has grown in terms of financial resources at its disposal and the organisational size (number of employees). Although there is no correlation between the regularity audit engagements and the audited public revenues and expenditures, there is still a positive correlation between the audited public revenues and expenditures. The implementation of the given recommendations by the auditors is not related to the number of recommendations in the final audit reports. There are several internal, external and international factors that have a positive correlation with the development of the State Audit Office.Research limitations/implicationsThe first limitation of this paper pertains to the period of existence of the Supreme Audit Institution in the Republic of North Macedonia not being very long in order to be able to draw more significant conclusions. The second limitation concerns the measurement of the variables from the survey being based only on the perception of the state auditors. Such a measurement method might be considered less accurate in describing the actual situation.Originality/valueTo the best of our knowledge, this paper is the only one that explores the development of the Supreme Audit Institution in the Republic of North Macedonia. Furthermore, it provides a good basis for further detailed research on areas relevant to the issue. We believe that this research will enrich the existing body of literature on state audit by offering a concrete example of the development of a Supreme Audit Institution in a less-researched geographical area.

How to Improve Performance in Public Sector Auditing Through the Power of Big Data and Data Analytics – The Case of The Republic Of North Macedonia

Purpose: The accelerated process of digitalization is a challenge, and at the same time an opportunity to apply modern and practical solutions in audit engagements. The purpose of this paper is to elaborate the application of big data and data analytics as one of the most advanced disruptive technologies in public sector auditing. Methodology: Qualitative and quantitative research was made on big data and data analytics as technologies that can modernize public sector auditing in Republic of North Macedonia. A survey method was used to identify the perception and attitude of the public sector auditors who are part of the State Audit Office and the internal auditors in public sector departments. The processing of the collected data was done through several statistical methods and tests, using SPSS software. Findings: In general, our research shows the positive attitude and perception of public sector auditors in the Macedonian practice for modernization and automation through the application of advanced data analytics tools in current and future audit engagements. Originality/Value: To the best of our knowledge, this paper is the only one that explores the potential of big data and data analytics technologies in Macedonian practice and presents early results that provide a good basis for further in-depth research.

Administrative and legal protection bodies: problematic issues regarding the classification of law enforcement authorities

The article analyzes the main approaches to the classification of law enforcement agencies, as well as the allocation of a separate category of administrative and legal protection.
 It is argued that recently in our country the issue of reforming law enforcement agencies has become increasingly acute, without the solution of which the effective operation of these state institutions is impossible.
 It was found that democratization of public relations, constitutional reform, intensification of European integration processes, improvement of legislation to strengthen the protection of civil rights and freedoms necessitate a clear definition of the theoretical nature of the legal status of law enforcement agencies. However, despite the study of the peculiarities of the law enforcement system of Ukraine and their legal status in the works of modern scientists, this issue can not be attributed to be resolved at the theoretical and methodological level. After all, most of them are analyzed in general by law enforcement agencies, provide a certain classification model, without considering the specific types of law enforcement agencies, including administrative and legal protection, which is the relevance of this study.
 It is concluded that the bodies of administrative and legal protection should include those bodies that directly perform law enforcement functions, control and supervisory functions in various spheres of public relations, without taking into account their powers to use state coercion. It follows that this category can include a significant number of public authorities. In this regard, we can point to such bodies as: State Customs Service of Ukraine, State Border Guard Service of Ukraine, State Migration Service of Ukraine, State Audit Office of Ukraine, State Financial Monitoring Service, Antimonopoly Committee of Ukraine, National Agency for Prevention of Corruption etc.
 Prospects for further study of the outlined issues should be considered the possibility of distinguishing within the category of "bodies of administrative and legal protection" varieties of such bodies, according to the criterion of public relations.

The Impact of Covid-19 on the State Audit in the Republic of North Macedonia - Lessons from the Crisis

The COVID-19 pandemic has left no area in the society that has not been affected. For auditing the spending of public money, especially in times of uncertainties imposed by the COVID-19 pandemic, the state audit is a crucial factor, hence the synonym for state audit is "watchdog of public money". The activities related to the state audit in the Republic of North Macedonia are performed by the State Audit Office (SAO), as the Supreme Audit Institution. This paper attempts to investigate the impact of the COVID-19 pandemic on the state audit in the Republic of North Macedonia, through the state auditors' perception of the COVID-19 pandemic impact on the dynamics and the scope of SAO activities, with a special focus on ethical dilemmas and expectations for the post-covid period and what have the state auditors specifically learned from the crisis. For that purpose, a structured and detailed survey was submitted to all state auditors in the Republic of North Macedonia, covering all aspects of the audit process, the independence of the State Audit Office, changes in the environment, and the post-covid period. The obtained answers are analyzed through `descriptive statistics` and `analysis of variance`. In general, it can be concluded that the state auditors have retained their independence and the quality of conducting audits during the pandemic.

Nature Management from the Perspective of the Ministers of Agriculture and State Property of the Russian Empire

The article examines how the reports of ministers of Agriculture and State Property reflected the results of their official trips across the Russian Empire and their evaluation of the manifestation of intensive use of natural resources. It also analyses the impact of their opinions and suggestions with regard to the state nature management. The main methodological approach lies in the ideas of environmental history — an interdisciplinary scientific area devoted to various aspects of interaction between man and nature. Ministerial notes on the results of their official trips, along with the State Audit Office, senatorial audits, annual reports of ministers and governors, created an overall picture of the state affairs for the emperor. The article presents an analysis of 11 reports by M. N. Ostrovskii and A. S. Ermolov for the 1880s–1900s based on the archival and published sources. The duality of perception of environmental problems by ministers is noted: they had to balance between the maximum use of natural resources for the economy and the need to protect them from depletion. Often, the ministers’ suggestions on the careful nature management were taken into account in the government decisions. Thus, since the end of the 19th century, reclamation, reforestation, and other activities had been actively carried out. Also, there was an intensive development of the Ural and Siberian resources. The trips of the ministers of Agriculture and State property played an important role in identifying, diagnosing, and minimizing the environmental problems. However, the state nature restoration didn’t adequately compensate anthropogenic damage to nature. That was because the state paid more attention to geopolitical and economic development, which led to the extensive use and depletion of natural resources.

Development of internal control and audit in Ukraine

Control plays an important role in ensuring the efficient use of funds, both public and business sectors of the economy. The purpose of the article is to consider the role of the State Audit Service of Ukraine in the implementation of financial state control. The study is based on the analysis of reports of the State Audit office of Ukraine on the results of state financial audits of health care institutions, which last took place in 2019. The analysis of the reports of the Ministry of Finance of Ukraine allowed to establish the effectiveness of the state financial audit at the national level during last three years. The article provides answers to the following questions: i) what tasks are performed by the State Audit office of Ukraine; ii) features of external and internal audit of public sector entities in Ukraine; iii) the effectiveness of internal audit at the national level on the basis of state financial audits; iv) problematic issues of internal audit development on the example of health care institutions; v) the main directions of development of the state internal audit in Ukraine.

Completion of the Law on State Audit in Vietnam

The Law on State Audit plays a particularly important role in the organization and operation of the State Audit Office. The author analyzes the role of this law in determining the legal status of the institution as an independent constitutional agency. The Law on State Audit defines the functions, tasks, powers and legal validity of the audit reports, the audited entities, the operation principles, the prohibited activities and the organizational system of this agency. On the basis of analyzing the provisions of Vietnam’s and foreign laws on the organization and operation of the State Audit Office, the author suggests some recommendations to complete the Law on State Audit so as to enhance the function and operation of this institutional organization.

Associação Entre Qualidade da Educação e a Receita Arrecadada pelos Municípios: um estudo de caso nos municípios do Espírito Santo

This study aimed to analyze the relationship between quality of education in the municipalities of Espirito Santo, between 2009 and 2017, and the tax revenue collected by these entities. The research used Secondary data from governmental sources such as INEP (National Institute for Educational Studies and Research) and Tribunal de Contas do Espírito Santo (Espírito Santo State audit Office); Secondary data from Aequus Consultoria’s website, which are obtained from governmental website and adjusted by official inflation index, were also used. Data from 78 cities of Espírito Santo State, from the period of 2009 through 2017 were used to obtain a panel data to study temporal and spatial aspects among the variables. It was possible to determine that the spending on education was significant and was positively impacting the dependent variable. Other independent variables, however, were insignificant.

Current State and Perspectives of Legal Support for Digital Transformation of the State Audit Office of Ukraine

Improving the efficiency of the State Audit Office of Ukraine in exercising public financial control is largely determined by the success of the digital transformation of such activities. The legal support of such a process is important. The authors of the article outline the current state and perspectives of legal regulation of digital transformation of the State Audit Service of Ukraine for public financial control, identifies problems of legal regulation of digitalization of this service and ways to solve these problems. In particular, it is noted that one of the important issues is the legal regulation of the automated integrated information database on the status and results of state control over the management and use of state and local resources of the State Audit Service and other state control agencies, as well as databases and registers, the operation of which is financed from the state budget. Given the interdepartmental nature and the fact that the maintenance of some state registers is determined at the level of laws, the need to adopt a relevant law is not excluded. At the same time, appropriate amendments should be made to the Law of Ukraine "On Basic Principles of Public Financial Control in Ukraine", Regulations on the State Audit Office, Procedures for Inspection and Public Financial Audits, Inspection and Monitoring of Public Procurement, which should be supplemented by state financial control entities, in the order of information interaction or by direct access to them. In addition, it is impossible to solve the issue of digital transformation of the State Audit Office without raising the level of knowledge and appropriate training of its employees.

ДЕРЖАВНИЙ ФІНАНСОВИЙ КОНТРОЛЬ В УКРАЇНІ: ЗАРУБІЖНИЙ ДОСВІД

The article is devoted to the study of the state of public financial control in Ukraine based on the experience of developed countries to increase its efficiency. The state and problems of the state financial control of Ukraine for today were analyzed, its features and content were determined. The activity of the state financial control bodies in January-June 2021 and the dynamics of the volume of violations that led to the loss of financial resources, which were identified by the State Audit Office during January-June 2019-2021, are studied. The main financial violations that led to the loss of resources are described. After analyzing the experience of developed countries in the field of public financial control, namely the United States, Germany, Japan, Great Britain, the bodies of financial control of these countries, the peculiarities of their functioning and the principles by which they operate. To date, control activities in Ukraine are assessed by experts, including international ones, as ineffective. First of all, this is due to the significant level of offenses committed in the field of public finances, ineffective warnings, the prompt detection of which is possible due to the coordination of actions of bodies endowed with control powers. Of course, these indicators are influenced by the actual state of war in which Ukraine finds itself, but no less important factor is the political component, capacity and efficiency of governance. Today, the system of public financial control is the engine of qualitative change in the economy as a whole contributes to the security of public financial resources, non-current and other assets, the correctness of determining the needs of budget funds and liabilities, efficient use of funds and property. At the same time, in the current conditions of Ukraine's economic development, the tasks of the financial control system should be determined taking into account the needs of the country's socio-economic development. Accordingly, in modern conditions, the task of financial control becomes the identification of internal reserves of the state, which can participate in resolving crisis issues in the economy and social sphere. State statistics show that regulatory authorities are working to address this issue. The whole situation indicates the need for coordination of financial control, which involves coordination of functions of all controlling entities and concentration of their efforts on priority areas of control, implementation of best domestic and foreign experience, rapid exchange of information between them. The current course of the state in the system of public administration is associated with the need to increase the role of public financial control. However, there are a number of obstacles. One of them is the lack of appropriate legal and methodological framework for public financial control.

Public Finance Challenges of the COVID-19 Epidemic and the State Audit Office's Responses

受新冠疫情的影响，世界各地采取的各类措施本身也带来了危机形成的可能性。这种危机的本质则是将我们所有人阻挡在挑战前面。而挑战同时也带来了实现质的转变的机会。本文主要介绍匈牙利国家审计署(ÁSZ)在新冠疫情期间日常工作中，以及通过分析疫情影响而面临的各种挑战。人际交流的限制带来了组织层面的改变，同时廉政风险则有所增加。为了应对这些挑战进行了组织变革，其中包括组织工作以及数字化的各方面。随着采用新的审计措施，ÁSZ的目标是扩大覆盖面，从而有助于减少增加的腐败风险，从而促进管理良好的国家的运作。ÁSZ增加了公共财政分析的数量，并通过基于这些分析进行的咨询业务促进实现政府的目标，经济弹性的概念必须在预算管理中重新解释，追求财政平衡必须服从于加强整个经济抵抗能力措施的筹资。一个新的挑战是必须在经济重新启动的同时采取步骤巩固预算平衡。

Public Finance Challenges of the COVID-19 Pandemic and Responses of the State Audit Office

Meas­ures in­tro­duced world­wide in re­sponse to the COVID-19 pan­demic have brought with them the po­ten­tial for a crisis to de­velop. A crisis, by its nature, will pose a chal­lenge to all of us. However, a chal­lenge will also cre­ate op­por­tun­it­ies to im­ple­ment a qual­it­at­ive change. This art­icle presents the chal­lenges the State Audit Of­fice has faced dur­ing the COVID-19 pan­demic, as part of its day-to-day work and when ana­lys­ing the ef­fects of the pan­demic. Re­stric­tions on per­sonal con­tacts have in­duced or­gan­iz­a­tional changes and in­teg­rity risks have in­creased. In re­sponse to these chal­lenges, or­gan­iz­a­tional changes have taken place, cov­er­ing as­pects such as work or­gan­iz­a­tion and di­git­al­isa­tion. The State Audit Of­fice has in­tro­duced new types of audits to in­crease audit cov­er­age, thereby con­trib­ut­ing to a re­duc­tion in in­creased risks of cor­rup­tion, and thus to the func­tion­ing of a well-gov­erned state. The SAO has pro­duced an in­creased num­ber of ana­lyses on pub­lic fin­ance to serve as a basis for its ad­vis­ory activ­it­ies in­ten­ded to help achieve the goals of the Gov­ern­ment. In budget man­age­ment, the concept of re­si­li­ence had to be re­in­ter­preted and the aim of en­sur­ing fiscal bal­ance had to be sub­or­din­ated to the fin­an­cing of meas­ures to strengthen the re­si­li­ence of the eco­nomy as a whole. A new chal­lenge is posed by the fact that, con­cur­rently to ef­forts for re­start­ing the eco­nomy, steps must also be made to con­sol­id­ate the bal­ance of the budget.

Accrual Accounting – an Untapped Opportunity to Measure the Performance of Budgetary Bodies

Hungary’s public accounting system underwent a significant reform in 2014. The reform meant not only a change in accounting, but also a new opportunity to support sustainable financial management and the measurement of organizational performance. In order to gather practical experience, a research was carried out by the State Audit Office of Hungary. In the areas selected during the research, based on the results of the survey, accrual-based accounting was only partially integrated into the accounting profit and return calculations of individual activities, and, especially in the case of smaller organizations, it did not exceed the mandatory, administrative role stipulated by law. Accrualbased accounting typically did not support the measurement of organizational performance. Further development can be carried out in terms of increasing the role of governing bodies in order to achieve target-setting, measurement and reporting along the same principles, as well as raising awareness. Moreover, in order to support organizational performance measurement, it may be necessary to develop a sectoral system of task and performance indicators, for which accrual-based accounting can become an important source of information.