Risk Management Technologies within the System of State Financial Control
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TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
Risk Management Technologies within the
System of State Financial Control
Andrey Gennadievich Lukin
Korolev Samara National Research University, 34 Moscow shosse, Samara, Russia
Abstract The paper analyses international risk sector is most regulated in terms of accounting,
management models and identifies possibilities of their assessment and analysis of various risks. Many
application within Russian state financial control. The researchers recognise that risk management
legislative acts regulating the organisation and technologies should be applied at the state level: in
implementation of state financial control will need to
particular, within the system of state financial
be changed. Based upon the studies and analysis, a
conclusion was drawn as to the application of risk
management. The application of these technologies is
management technology in the system of state financial especially important in connection with the concept
control. The results can be used for improving risk introduced in Russia on sustainable economic
management technologies within the state financial development. Utilising general scientific methods
control in the conditions of digitization of economy. were studied, namely: a systematic approach, logical
Keywords – State financial management, risk-
generalisation and analysis, the main international
oriented management technologies, risk-based decision models of risk management.
making; risk assessment. According to the State standard “R 31000-2010”,
in Russia, risk management is understood as
coordinated actions to manage the organisation
1. Introduction taking into account the risk. Also, "the risk
management infrastructure is built into the entire
The identification of risks utilising risk assessment, strategic and operational policies and practices of
accounting and analysis in the last decade, have organisation". The standard risk management process
become very relevant for practical management in is systematic application of management policies,
general, and financial management in particular. procedures and practices to the activities of
Publications in the field of risk management affect information exchange (context) and identification,
risk management techniques in the banking and analysis, assessment, impact on risk, monitoring and
financial spheres. This is understandable, since these risk revision.
industries are controlled by the regulator and define a
system for managing financial flows, therefore,
guarantees of stability through limiting risks in them 2. Materials and methods
are particularly important. For these reasons, this
Risk is an undefined event or condition that has a
positive or negative impact on the objectives of the
Cagliano project [1]. At present, two conceptual
DOI: 10.18421/TEM82-18 models of risk management are widespread in the
https://dx.doi.org/10.18421/TEM82-18 world, namely: COSO (2004) and FERMA (2003).
The first model is "Risk management of
Corresponding author: Andrey Gennadievich Lukin,
organisations. The integrated model COSO, 2004",
Korolev Samara National Research University,
Samara, Russia
was developed by the specialists of Price water house
Email: a.economylukin@rambler.ru Coopers, i.e. by the auditors for the internal auditors
[2]. The main emphasis in it is on increasing the
Received: 12 February 2019. reliability and informative reporting of public
Accepted: 16 April 2019. enterprises through assessing the risks of the internal
Published: 27 May 2019. control system of an economic entity. At the same
time, risk management is a process that is carried out
© 2019 Andrey Gennadievich Lukin;
by the board of directors, managers and other
published by UIKTEN. This work is licensed under the
employees and begins when developing a strategy
Creative Commons Attribution-NonCommercial-NoDerivs
which affects the whole activity of the organisation.
3.0 License.
The risk management in this model is aimed to
The article is published with Open Access identify events that can affect the organisation, to
at www.temjournal.com manage the risks associated with these events, to
444 TEM Journal – Volume 8 / Number 2 / 2019TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
monitor the organisation’s "risk appetite" and to objectives and compliance objectives, which are
provide a reasonable guarantee of achieving its goals. operational, because they are functions of individual
The second model, the FERMA model, was units. These goals are emphasised due to their
developed by several highly specialised organisations importance.
(mainly from Europe) dealing with issues of risk Further, taking into account the Russian
management (2003). The European FERMA model accounting standards – Regulations on Accounting
defines risk management as a process, ensuring that 7/98 and 8/01, a list of events that may have a
an organisation systematically analyses risks in order negative impact on the achievement of these
to maximise the effectiveness of both individual objectives (a list of risks) is drawn up. The most
decisions and all activities in general. At the same complete list can be obtained on the basis of
time, the aim of risk management is to achieve the classification of threats by some indications.
highest possible value of the organisation, which can The evaluation of each risk is determined to
be regarded as the development of the natural goal of compare them with each other. For the convenience
any commercial organisation – to obtain the of making decisions, manager needs a description
maximum possible profit. In this model, the process and systematisation of risks. on how to respond to
of setting up a risk management system is more them. Measures for risk management are developed
clearly presented and more specific and implemented in practice.
recommendations are given (FERMA, 2011). A risk monitoring system is established to
When examining risks in Russia, we used other determine such parameters of risk management as
conceptual documents developed by international efficiency (the positive effect of this process),
and Russian professional organizations. timeliness and capacity of the system. A system of
internal control of risk management is being
developed. A system for monitoring fraud risks and
3. Results
reporting distortions is being established.
The process of risk management in an organisation Periodic reviews of risk management are
based on widely recognised international approaches conducted to ensure that they meet the requirements
can be presented in the form of a specific model of standards or procedures [3].
(Figure 1.), which gives the following idea of how a Thus, the definition of the organisation’s goals is
risk management system should operate in any the starting point of the risk management process.
organization. Therefore, the completeness of control over the entire
risk management system depends on how fully the
company's goals are allocated at this stage.
In the first stage, the company's risk management
team and the current management team initiates the
process by obtaining information. In future, at the
decision-making stage on risk management options,
the impact on the processes of the current
management system comes from the side of risk
management, which is fully integrated into the
operating processes of the economic entity [4].
At the stage of risk assessment, a full description
of the risks is drawn up, that is, events that may have
a negative impact on the achievement of the
objectives of the enterprise. At this stage companies
often use the method of SWOT-analysis. First of all
however, it is necessary to classify the risks.
Although the completeness of the identified risks of
Figure 1. The process model of risk management within the economic entity is determined by the latitude of
an organisation (author’s development) classification characteristics, it is desirable that this
grouping is compact and understandable for persons
It is necessary to determine the goals of the who will be involved in risk management.
economic entity, for example, by analysing the We have presented classification options that
statutory registration and bank documents and the quite successfully combine both of these features:
organisation’s strategy. It is important to note that the they cover all the functional elements of the
goals are to be measurable, that is, there should be an management system with the division of risk factors
opportunity to determine whether the organisation’s into internal and external and, at the same time, are
goals have reached or are moving towards achieving not excessive.
them. The goal grouping includes reporting
TEM Journal – Volume 8 / Number 2 / 2019. 445TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
The next element of risk assessment is risk Functions of the According to the provisions on units
identification, which is the process of identifying unit (official) at (job descriptions or other
events that potentially have a negative impact on the risk documents)
organization's operations. For this, the methods Interested people Specific officials or their group
recommended in the FERMA model can be used: according to the organisational and
staff structure and their expectations
• compilation of questionnaires. Experts from
among officials are invited to choose from the list
of the risks they face, or to propose their own Risk factors Description of the prerequisites for
option and assess the magnitude of the impact of (causes) the occurrence of risks
these threats;
• study of business processes with the definition of The next step is to measure the risks. In world
a number of internal and external factors and the practice, a combination is made of the assessment of
extent of their impact on the enterprise. This the probability of occurrence of a negative event and
method is suitable for compiling a list of risks, the magnitude of possible damage, usually in the
which is then proposed for consideration by range from zero to one. The measurement of risk can
experts; be: quantitative (in determining the probability and
• analysis of emergency events, which can be used damage using numerical values obtained as a result
to compile a list of risks; of the application of mathematical methods and
• the method of spontaneous detection of possible models); qualitative (non-numerical values used, as a
risks (brainstorming), which can also be used to rule, from experts in the field of knowledge); mixed
compile the list [2]. (both numerical and non-numeric values are used for
estimation).
Thus, the identification of risks can be carried out Quantitative methods of analysis are more often
in two stages: at the first stage, by preparing a list of more expensive (usually an order of magnitude),
possible risks, then during the analysis of this list by since they require the collection of a large amount of
the experts who may develop their own version. It statistical information and the use of specialised
should be noted that this approach makes it possible software. During the time spent on obtaining
to increase the likelihood that the maximum number quantitative risk assessment, a negative event may
of major risks will be identified. occur before the analysis is received.
The next element of the stage under study According to the data and the results of a study
includes a description of risks, the main purpose of conducted by the Marsh & McLennan group of
which is to present possible threats in a specific companies (one of the world's recognised lighthouses
format, enabling their comparative analysis and in the field of risk management consulting), the
allocation of the most significant threats. Most often, practice of risk management in enterprises and
the method of expert assessment is used as a method organisations registered in the Russian Federation, a
of describing risks. qualitative risk assessment prevails at present.
The format of the FERMA model can be taken as According to the researchers, this is due to the fact
a basis for the description of risks, which, in this that companies are experiencing a shortage of
article, has been adapted for better perceptions, methods for quantifying risks [5].
taking into account changes in international risk Also, attention should be paid to the fact that
management models (Table 1.). there is not always sufficient statistical data, on the
basis of which it is possible to obtain quantitative
Table 1. Description of risks in the FERMA assessment estimates with a low level of variance (spread). In the
(based on Steinberg et al, 2004) practice of risk management for approximately 50%
Criterion of risk Verbal description of the risks, it is simply impossible to obtain
Relation to External or internal. quantitative estimates.
classification Strategic or operational. As for qualitative methods of risk assessment, it
features Risk of distortion of a particular should be noted that an important condition for
reporting item obtaining acceptable results is the high qualification
The objectives of Strategic. of the expert in the subject area. This can be achieved
the activities Operating, including: by attracting key leaders as experts. After all the risks
associated with - reliability of reporting; are measured, it is necessary to identify the most
the risk - completeness of compliance with significant of them, those that need to be reduced in
legislation the first place. To do this, you first need to compare
A unit (officer) According to the organisational and
the estimates with each other, and then determine the
that faces a risk staff structure level of risk tolerance. The risk report refers to the
stages that require special attention. It is accepted to
446 TEM Journal – Volume 8 / Number 2 / 2019TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
highlight internal and external reports. Internal risk of possible damage from risks or increase in
reports are intended for use at different levels of additional benefits in the following ways:
organisation management:
− avoidance of risk. In practice, aversion is
− at the level of the founders and the board of expressed in the rejection of activities that entail
directors (supervisory board). The report should the occurrence of this risk;
describe the most significant risks of the − reduction of risk. The essence of this technology
economic entity, as well as measures to reduce lies in the steps: risk insurance (transfer to
them. The report should be prepared by top insurance companies for a fee); diversifying the
managers; risk (reducing the likelihood of a negative event,
− at the level of top management, trade unions of for example, by increasing the number of
workers of the organisation. The report should suppliers); in the localisation of the risk
describe all the risks of the organisation and (decrease in the magnitude of the expected
present measures to reduce them to such an extent damage from the onset of a negative event, for
that representatives of the management can example, by setting the maximum limit on the
publicly state the information on the risk amount of debt to work with each counterparty);
management system. The report should be compensation of risk (for example, by
prepared by the units (officials) responsible for increasing the additional capacity of the
risk management; organisation in carrying out a risky activity);
at the level of structural units. The report should − in the redistribution of risk, that is, transferring
reflect the risks for which the unit is responsible, it to outsourcing (to other organisations);
how to manage them, and the monitoring − acceptance of risk, that is the absence of any
mechanism. In addition, it is advisable to indicate action to reduce it.
the possible actions of the unit, which affect the
risks of other units. The report should be prepared The process of risk management should include
by the structural unit in coordination with the three stages: inclusion of risk management functions
department (official) responsible for risk in the organisational structure of the organisation,
management; that is, the decision of the question of who is
− at the level of employees. Individual reports are responsible for the risk management process;
not compiled. It is important that each employee development of a risk management strategy
understands his contribution to the risk (approaches to identification, risk assessment, ways
management process, which is achieved by of responding to it, etc.), that is, a description of the
developing a risk management system (officer) main ways of implementing each of the risk
responsible for risk management, and management steps (see Figure 1.); description of the
familiarising all employees of the organisation functions of risk management for specific officials.
with its provisions. [7].
Thus, at all stages it is useful to remember the
It is advisable to include the external report in the recommendation: in specific cases, the choice of
explanations to the annual financial statements for means for reducing the risk depends on the
the possibility of acquaintance with the risk possibilities of its prediction [8]. The issues of risk
management system of the enterprise of any management must be reflected in the organisation’s
interested persons. It is useful to include in this strategy, employee training programs, departmental
document the information from the report prepared regulations and job descriptions, so that the entire
for the founder and the board of directors. economic entity permeates the risk management
The next stage is the risk management activities, process, otherwise, implementing an effective risk
to which important element is an internal audit. management system is unlikely.
Internal audit carries out the audit and evaluation of The next stage we should consider is risk
the risk management system within the framework of monitoring, which is a source of information for
its current activities or at the special request of monitoring the process of risk management. It is on
managers responsible for specific areas of work [6]. the basis of the data received from the monitoring
Any financial and economic activity is system that decisions are taken in the internal control
characterised by uncertainty, which combines system. Within the framework of monitoring, risk
negative consequences (risks) and positive factors are identified and evaluated in the
(opportunities). Therefore, the risk management interrelation of all functions and actions in the
process of an enterprise is the search for an process of enterprise management.
acceptable compromise between the expected costs Thus, the main requirement for a risk monitoring
of risk management and the reduction in the amount system is the reflection of such parameters of the risk
management process as efficiency and timeliness,
TEM Journal – Volume 8 / Number 2 / 2019. 447TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
that is, the ability of the system at the right time to economic agents to minimise risks and increase the
prevent possible losses by lower current costs. profitability of companies.
Indirectly, the effectiveness and timeliness of the risk In other words, what is the purpose of introducing
management process can be demonstrated by the full these technologies into the structure of the financial
and timely performance of all the participants in the control bodies of the Russian Federation?
system of their duties. Until recently, financial risk management was the
One of the key elements of the risk management subject of research by the scientific community, and
process model is the control system, which should its application to entrepreneurs was voluntary.
include internal and external control. The objectives However, since the early 90's in the 20th century, the
of internal control are: state became interested in the subject. The reason for
this were recurring corporate scandals, which shook
− description and organisation of the risk the national economy. It was recognised that the
management system for all phases, reflected in internal control systems in conjunction with the audit
Fig. 1., bringing its provisions to all employees of do not provide the necessary protection, primarily
the organisation; from the actions of hired management, which may
− continuous analysis of the results of monitoring act contrary to the mission of the company or
the risk management system; companies.
− making adjustments to the risk management A series of corporate scandals in which the largest
process based on monitoring results; audit companies of the United States were
− preparing reports for different users; implicated, according to scientists, led to the
− periodic (as a rule, once a year) carrying out the financial crisis of the early 21st century.
following activities: identification of new goals Over the entire history of the state's development,
set by the enterprise (with the person who is the search for the most optimal methods of financial
responsible for the risk management system, it is management of public financial resources, which the
advisable to coordinate any changes in job people entrusted to it in operational management, did
descriptions, organizational structure and not stop.
functions of the units); assessment of new threats It should be noted that, firstly, the state has the
faced by the enterprise; developing ways to ability to influence most of the factors (except
manage new risks; perhaps the natural phenomena) through coercive
− participation in the development of the budget tools permitted in the country's Constitution (the so-
plan for the following periods in terms of costs for called administrative resource). And what is
risk management; uncertain for business, can become planned actions
− participation in the formation of insurance for the state. Therefore, the emergence of most of the
corporate programs; risks that we attributed to the entrepreneurial is only
− analysis of any new projects for risks, for which possible for the state if it voluntarily steps down from
management has not yet been identified as the administrative regulation of certain processes and
responsible person [9]. passes it to "clean" market relations.
Suffice it to recall the events of mid-2014, when
It is worth noting that the rules, procedures and the Central Bank of Russia abandoned the currency
methods of internal control must correspond to risks corridor and sent the Russian ruble to free
and change in the interest of improving its quality. navigation. However, in this case, one can not talk
Risk management is an independent block in the about public administration. Public administration
overall system of company management. It does not leads to administrative impact on financial processes
duplicate existing systems, but is their complement. in the country.
Thus, risk management technologies help to The greatest risks in connection with the least
reduce the impact of various threats on organisation, possibilities of state influence are contained in the
which allows to develop more systematically and process of forming public finances, i.e. in the process
avoid the occurrence of negative events. of collecting revenues of budgets of the budgetary
system [10]. Procedures for the use of public
4. Discussion: Approbation risk management financial resources are less susceptible to various
technology in the system of public financial negative impacts, if there are clear rules for their use
management that lead to concrete achievable results.
The major concern is in the adaptation of risk The greatest uncertainty for public financial
management technologies into the activities of the management is the internal risks that arise from the
state financial control system, mainly because the unpredictability of people's behavior. It is clear that
original purpose of these technologies was for free the most effective methods of financial management,
allowing minimising a large number of risks, are
448 TEM Journal – Volume 8 / Number 2 / 2019TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
based on taking into account natural human It is understood that the participants in the
aspirations and desires. procedures for planning and using financial resources
In the state financial management it is necessary to know what result should be achieved based on the
divide the participants into those who create rules, needs and requests of the state and society; that they
but do not have the opportunity to directly use do not seek to use their official powers for personal
financial resources (managers), and those who are purposes and that they have the appropriate level of
obliged to execute these rules with direct use of knowledge and skills.
public money, but do not have the opportunity to However, as practice shows, this is far from the
change them (executors). case, and risks in the management of public financial
The basis of this scheme is an understanding of resources are realised with frightening consistency.
human nature, according to which, if a person does Therefore, additional control tools are becoming
not have the opportunity to use the financial more urgent, the application of which is especially
resources, but he is able to create rules for using it, important if the state seeks to avoid administrative
he will practically and intuitively create obstacles to methods for regulating the use of financial resources.
others who have the opportunity to take advantage of For example, it is the minimisation of the above-
this benefit in order to minimise the possibility of mentioned risks that is directed by the risk-oriented
abuse. By using this effect, the technologies of preliminary control carried out by the newly
mutual control of ISO standards work, in which the organised State Financial Control Service of the
specialist, trying to confirm the correctness of the Samara Region. The experience of preliminary
operation by another specialist (if he does not have a control was reviewed at the end of October 2015 in
preliminary collusion with him), will try to prevent Samara at the All-Russian Forum on the
his unjustified enrichment. To be effective from a Implementation of State Financial Control.
risk management standpoint, the specialist must be Deputy Finance Minister of the Russian Federation
independent and free from the auditor in evaluating Aleksey Lavrov emphasised that the innovative
accounting reports. experience of the State Financial Control Service of
As regulatory instruments on the part of the the Samara region requires implementation in all
manager, the following are used: formulation of major regions of Russia. He also noted that if
financial policies and the definition of financial specialists from other subjects worked in the same
performance based on the strategic objectives of the way as the local Gosfinfinance Service, there would
state planning (not forecasting) and strict control be fewer problems in the economy of the country
over the execution of plans; standardisation of costs [11].
and prevention of exceeding the established norms; What is the innovation in the activities of this
creation of a system of administrative responsibility service? Judging by the reports, it consists in the
for failure to comply with rules and regulations, etc. application of the so-called "traffic light" technique,
If this scheme is broken, then additional in which unreasonable expenditure obligations
monitoring tools must be applied which risk correspond to "red light", and a requirement is put
management suggests. When delegating authority to forward for the provision of additional supporting
create rules and parameters of activity, evaluating the documents. Expenses for which certain budget risks
performance of the employees, human aspirations have been identified and taken by the Gosfinfontrol
and desires should be included, namely, the desire to of the Samara region for control until the time of
justify their shortcomings and mistakes, to adjust the their development correspond to the "yellow light".
plan for the result "backdated", to assign what is And, finally, only the expenditure commitments, in
"bad" and etc., and for this there are many respect of which the effectiveness of their
possibilities. The exercise of control becomes implementation was confirmed and the validity of
practically impossible, as the rules and plans are budget expenditures (including the results of
adjusted and brought into line with the real eliminating violations and observations identified by
indicators. the State Financial Department of the Samara
Today, the main source of risks in the management Region, the implementation of recommendations),
of public financial resources is that the requirements corresponds to the "green light". The main risks
for the content of operations for the planning and use identified by this service are: planning of budgetary
of funds, as well as the requirements for the results of expenses without taking into account actually
such use are replaced by the requirements for incurred or already planned expenses; incorrect
organising the planning and use process. What is the application of single quotations and norms of pricing
danger of such a replacement? The fact that the in construction, as well as inclusion of unreasonable
requirements for the process, as well as the ideal expenses; addition (increase) in the calculation of
models, include many assumptions. aggregated indexes, the validity of which is not
available; insurance at the expense of the budget of
TEM Journal – Volume 8 / Number 2 / 2019. 449TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
construction works, which, despite the absence of remain, strengthening the negative effect of such
insured events, significant funds were spent; use in reforms.
the planning of works of expensive materials and Therefore, any departure from the above-
fixed assets with excessive properties; lack of proper mentioned "executor-executor" scheme, even under
justification for the acquisition of various models of the most seemingly good slogans, entails an increase
vehicles and computer equipment; incorrect in the number of risks, the fight against which begins
calculation of the cost of the event, included due to to take away many forces, resources (including
the presence of arithmetic errors [12]. financial ones) and the time needed for social
As can be seen from the above list, a high degree economic development.
of uncertainty, which can be attributed to real risks, A vivid example of ignoring the rule "executor –
only has the possibility of arithmetical errors. The executor", which caused significant damage to the
remaining risks can to a large extent be minimised domestic state financial management, was the
due to the correct organisation of financial "system of material incentives for workers in the
management and the application of methods of budgetary sphere" [14], which, under the slogan
rationing, rigid planning and financial control by the "granting greater rights for material incentives for
administrator of budget funds without engaging a workers heads of budgetary organisations" led to the
specially created service. delegation of authority to formulate rules for the
Another source of uncertainty in state financial formation of the wage system, at the level of the
control is the error in determining the role of finance recipient it means budget.
in the economy. It must be remembered that finance This, in turn, led to the enrichment of leaders and
is an instrument, not the goal of state policy. The to the actual impoverishment of workers in this very
businessman's result of his activity is expressed in budgetary sphere. The gap in wages (primarily in
profit. But for the state, profits are not important. For bonus payments at the end of the year) in budgetary
the state, the social and economic effect of its and public institutions between managers and
activities is important, which is not always expressed employees has increased tenfold. The result was a
in money. How, for example, to assess in financial massive outflow of workers from the necessary, but
terms, the health of the nation, the level of education now low-paid categories – doctors, nurses, teachers
of the population, the level of defense or the level of and teachers, etc., that is, a reverse economic effect
law enforcement? was obtained.
Therefore, making money in recent decades In fact, the state because of such reforms, was not
became a fundamental indicator in determining the able to perform its functions to provide the public
result of socio-economic activity. This generated a with public goods with high quality. The possibilities
large number of risks and was the most serious of control without changing this situation are
mistake of public administration. negligible.
So, in the first "composition" of the Russian Another source of risks for today is the total
Empire on finance, published in 1841, it is stated: in subordination of modern financial planning and the
the state, there are necessary, substantial costs, the use of financial resources to the rules of financial
dissatisfaction of which would entail the destruction accounting. Any financial documents, whether they
of the whole state organism. The frugality with are plans, reports, estimates of income and expenses,
regard to the maintenance of the troops, sufficient for requests for expenditure or tender documentation, are
external defense, would be detrimental. Here, small drawn up according to the rules established by the
calculations and benefits must fall before great Ministry of Finance of Russia, in accordance with the
popular interests. requirements of the budget classification (with the
All that we mean at the beginning of thrift is recently implemented control over purchases and
avoiding unnecessary, useless costs, luxury and natural indicators, it became possible to control the
extravagance [13]. It also says: how all the useful validity of the purchase of certain goods).
rules, brought to the extreme, can become harmful, As a result, the activity of the entire system of state
so the beginning of thrift should not be used for evil. financial control is aimed at assessing the compliance
Unfortunately, today we are witnessing exactly such of expenditures with budget classification codes.
a picture when, under the slogan "we learned to Meanwhile, the budget classification is a grouping of
count money", crushing blows are struck on the revenues and expenditures used to maintain budget
health care system, education and law enforcement accounting, compile budget (accounting) and other
activities, etc. financial statements to ensure comparability of the
At the same time, the most undesirable results of budget indicators of the budgetary system of the
misuse of financial resources, such as the cost of Russian Federation [15].
luxury, unnecessary and expensive travel, abuse, etc. From the total subordination of financial planning
and the use of financial resources to the rules of
450 TEM Journal – Volume 8 / Number 2 / 2019TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019. financial accounting, the principle of transparency of the privatisation programme of a number of state- (openness) of the budgets of the budgetary system, owned enterprises during the rule of M. Thatcher. declared in the budget code suffers [15]. After all, in [17]. order to understand where budget money is directed Some scientists recommend the use of risk from the budget laws for the corresponding financial assessment methods in the development of year, you need not only knowledge of the budget innovative enterprise development programs in the classification itself, but also a lot of time for the public sector of the economy [19]. As the scientists analysis of articles, sub-items and cost elements. In of the Polytechnic University "Bari" emphasise in the this group there is an opportunity to hide any system of public-private partnership in the transport expenses from any kind of control. sector of the economy, risk management Thus, an analysis of the law on the budget of the technologies can be used to determine the validity of Samara region for 2014 showed that the costs of tariffs and identify shadow revenues [20],[21]. maintaining government bodies, considered in the In China, the evaluation of political risks is of context of sections / subsections of the classification particular importance in the system of public-private of expenditures of the budget classification of the partnership [17]. Russian Federation, are about 4%, in terms of The approbation of risk management technologies targeted articles – 9.4% and in the context of codes in the system of state financial management of the KOSGU already 19% of the total budget Russian Federation can, in our opinion, be carried out expenditures [16]. within the framework of the state financial control in Abroad, risk management technologies are most the following key areas. often used within the framework of the activities of First, to assess the risks of non-compliance with public organisations responsible for such services as budget legislation by institutions and agencies. the provision of health-care and education, industry During the risk assessment and analysis phase, regulation and payment of a social nature. threats and weaknesses of possible non-compliance An example of the introduction of risk of the requirements of the budget legislation of the management technology in Italy is the introduction Russian Federation by the subjects of control may be of ISTAT, a public research organisation founded in determined, distortion of budgetary reporting with 1926 and engaged in the production of official the purpose of understating budget expenditures and statistics in Italy, the ERM (Corporate Risk misappropriation or waste of funds may be revealed. Management) model. The implementation process Secondly, to assess the risks of non-compliance included the following phases: the experimental with legislation in the field of public procurement. phase, creation of a risk map, quantitative and Risk management technologies can allow you to qualitative risk assessmentThe first step of the assess the likelihood of collusion in the conduct of ISTAT RM process was the analysis of the internal auctions and the placement of tenders. At the same environment. The second phase is the creation of a time, parallel control technologies can be used risk map. actively when risk assessment is carried out by both A list of managed risks was established and their state authorities and internal control services of impact on the activities of the institute was assessed. private enterprises in parallel for the same The third phase is risk assessment with the help of transactions [22]. quantitative and qualitative methods. The main issues Third, to monitor and identify the risks of financial of implementation can be considered: difficulties that pyramids and prevent illegal banking activities. This prevented the corresponding risk identification and sphere of application of risk management is actively treatment; selection of identification methods that are studied in the foreign press [23]. The first attempts to most suitable for attracting internal and external apply risk management technologies are currently stakeholders; agreeing on the need to involve staff in being undertaken by the Bank of Russia Service for order to communicate without overlapping other Financial Markets, which implements the automated organisational structures; identification of the information system of internal control "Cash Flow" relationship between risks to actively manage risks, [24]. especially when these occur in many cases; anticipate According to this system, on the basis of emerging risks and risks that never occurred in the transactions and cash flows in the accounts of [17]. commercial banks, signs and indicators of fraudulent Another specific area of application of risk actions by organisations and institutions of "financial management models is the assessment of political pyramids" and illegal banks operating without risk. In particular, in the studies of Barrett [18], the appropriate licenses are identified, and a full risk of political reforms in Australia was assessed. assessment of the risk of bankruptcy and illegal An interesting experience in the application of risk withdrawal of the assets of these types of financial management models in the UK is the risk assessment institutions is possible. TEM Journal – Volume 8 / Number 2 / 2019. 451
TEM Journal. Volume 8, Issue 2, Pages 444-453, ISSN 2217-8309, DOI: 10.18421/TEM82-18, May 2019.
Fourth, risk management technologies can be to a digital economy, automation of risk management
tested in the course of countering illegal gambling technology is necessary. These problems can become
businesses by assessing the risks and developing key in the process of advancing risk management
measures taken towards professional participants of technologies in the system of state financial
the securities market involved in the organisation of management of Russia in the future.
illegal gambling businesses. The application of risk management technologies
Fifth, for the law enforcement agencies, risk in the system of state financial control of Russia is an
management technologies can be acquired for important element of control organization in the
identifying problem areas and assessing the risks of transition to a new digital economy, which
corruption and preparing a forecast of criminological determines these technologies as promising and
characteristics of corruption-related crimes. progressive.
Thus, risk management technologies and their Risk management technologies and their elements
elements can first of all be tested in countering can be tested first of all in countering unscrupulous
unscrupulous practices and crimes in the financial practices and crimes in the financial market and in
market and in the budgetary sphere, which certainly the budgetary sphere, which makes them a promising
make them promising in the system of state financial technology within the system of state financial
control. control.
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