Russian Federation : Country Financial Accountability Assessment

Abstract

This CFAA concentrates, by design, on
 federal-level public sector financial management in the
 Russian Federation. Its results feed into the fiduciary
 discussion presented in the new Russian Federation Country
 Assistance Strategy (CAS), and into the Core Integrative
 Fiduciary Assessment (CIFA). In budget management the CFAA
 recommends 1) strengthening the strategy phase of budget
 preparation to link macroeconomic resource constraints and
 sectoral and program targets; 2) adopting a uniform,
 simplified budget coding structure; 3) adopting a more
 participatory approach to budget planning and formulation;
 4) introducing accounting principles by entities with
 extra-budgetary funds and preparing reports that are
 compatible with Treasury accounts and fiscal reporting; 5)
 preparing a program of institutional development for the MOF
 and applying modem information technology; and 6) amending
 the chart of accounts (COA) to fully reflect the budget
 classification. The development and implementation of a
 full-function Treasury system will take several years and is
 not expected to become fully operational before 2004/05. In
 the interim, the CFAA recommends immediate implementation of
 an improved system of expenditure monitoring, extension of
 Treasury control of expenditure commitments to all items of
 the economic expenditure classification, and replacement of
 weekly cash finding limits by monthly funding of
 established expenditure commitments. In accounting and
 financial reporting, some recommendations are to 0 review of
 existing budget classifications and coding structures and
 design of a revised structure and COA that conform with the
 IMF GFS classification; and to integrate the two existing
 coding systems. To improve internal controls and internal
 auditing, the report recommends regarding the internal audit
 as an important management tool, shifting to a new model,
 based on service orientation and performance/risk
 assessment, internal audit functions becoming independent
 from other organizational and functional departments, staff
 reporting directly to the head of the organization,
 regulating the entity by an audit charter, and audit
 functions be carried out by multi-disciplinary teams. As for
 external audits, the CFAA strongly supports the
 Chambers' program of institutional and methodological
 improvements, in particular its preparation of a long- term
 plan to assess public institutions' performance (value
 for money) in the use of public funds. Finally, the CFAA
 finds that the World Bank is adequately discharging its
 financial management fiduciary responsibilities with respect
 to its lending operations. The CFAA risk assessment
 concludes that the current ring-fencing approach to project
 implementation arrangements should be maintained,
 recognizing that--based on the effective operationalization
 of the reforms being introduced in public financial
 accountability--the present arrangements could in due course
 be subject to revision.