Expanded summary

Effective management of state procurement processes is one of the key challenges for budgetary organizations, because it provides a rational expenditure of funds, healthy competition based on cost and quality of services and goods, publicity and etc. In turn, internal control system plays an important role in the management of public procurement, allowing organizations reduce deficiencies and risks to a minimum.

The processes related to state procurement are regulated by the Law on State Procurement, the purpose of which is to ensure the rational expenditure of the funds intended for public procurement, to produce healthy competition in the field of production of the necessary goods, servicesandconstruction work, ensuring public procurement publicity, etc.

Therefore, efficient management of state procurement in budgetary organizations is a crucial issue for economically and efficiently disposes of the organization's financial resources. The internal control system plays an important role in regulating this issue.

 In order to study the situation in the budget sector, we evaluated the situation in the local municipalities in 2014-2017 years. Various types of disorders have been identified in the process of research and analysis, which is due to the following main reasons:

  Budgetary funds are transferred without comprehensive documentary reasons;

  The volumes of work and values of the unit have been improperly improved. Non-performing works are reimbursed;

  Weak control mechanisms in the process of planning and execution of the work;

  Amendments are made without proper justification for the completion of the work, which is why it is not used for contractual penalties

  The works specified in the contract are completely or partly unfulfilled

  The tender procedures included unfair selection, assessment, and disqualification of candidates

  Unjustified payments and inefficientcosts.

According to our assessment, the above mentioned shortcomings indicate several types of problems, among which the most important is the weak functioning of internal control in the organization.

It is important that these organizational flaws do not occur in most internal audit reports.Therefore, we can conclude that the internal audit in the organization is ineffective because it cannot reach its goals and objectives

During the audit each stage and issue are studied and analyzed with relevant evidence.In case the state procurement process was adequately studied and payments made withinsignedcontracts were properly analyzed,it was necessary to reflect the issues in the audit report and elaborate the relevant recommendations.

As for the unreasonably increased work volume and unit values,this problem also can be found if the reasons of changes of each contract are analyzed.

The current issue requires additional study and search for the reasons that caused it.Internal financial control system is not only an internal audit, management unit plays a key role.Consequently, the analysis of the problem would have made clear the flawsthat are related to the weakness or absence of internal financial control.One of the most important issues in internal audit inspection is to assess the risks of corruption and fraud, moreover, if we consider the issue, that there are some facts of unfinished works that are already paid.

Introduction and effective functioning of the internal control system serves to increase the accountability of structural units and early detection of potential risks.It is one of the prerequisites for successful and effective work of budget organizations and private enterprises.The need for introducing and development of internal control system depends on increasing awareness of the internal control, for which it is necessary to organize large-scale trainings in the municipalities as well as in other institutions of budgetary resources.Solving existing problems and taking effective steps will help to ensure rationaland efficient management of the budget funds.