Financial Control


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Financial Control

 

a key form of state control. Financial control focuses on monetary values rather than physical units. In capitalist countries, financial control is a limited, bureaucratic process concerned primarily with the use of budgetary funds and the financial activities of ministries, departments, and state-run enterprises and institutions. Despite its appearance of strict legality, financial control is an instrument for protecting the interests of the bourgeoisie.

In socialist countries, financial control is the control by the state over public finances in the production and distribution of the social product and national income. Financial control is designed to improve the quantitative and qualitative performance indicators of enterprises, associations, ministries, and departments. The primary task of financial control is to monitor the formation and use of centralized and decentralized monetary resources. Financial control is used to facilitate the fulfillment of national economic and financial plans, preserve socialist property, ensure that material, labor, financial, and natural resources are used rationally and efficiently, and reduce losses and nonproductive expenditures. It also helps to reduce mismanagement and wastefulness and to identify reserves for increasing the efficiency of social production. One of the most important tasks of financial control is to see that all legislation on financial questions is carefully followed and that all financial commitments to the state budget, to banks, and to other enterprises and organizations are promptly and fully met.

Financial control under socialism is characterized by comprehensiveness, practicability, and effectiveness and by the broad participation of working people in administration and management. The organization of financial control in the USSR parallels the structure of government and public bodies. On the national level, financial control is exercised by the bodies of state power and administrative agencies (Committee of the People’s Control of the USSR; planning, statistical, and financial bodies; credit institutions). Intradepartmental financial control is exercised by ministries, departments, and associations. On the enterprise level, financial control is the responsibility of the chief and senior accountants and the finance departments of the enterprise or organization. In addition to the types mentioned above, there is also public financial control. The financial control system assigns an especially prominent role to the Ministry of Finance of the USSR, to the ministry’s republic and local bodies, to the specialized monitoring apparatus known as the control and auditing administration, and to comptrollers and auditors working in the field. Still cogent is V. I. Lenin’s pronouncement that “it ... is the People’s Commissariat of Finance which, not being directly interested, is obliged to establish effective and real control and supervision” (Poln. sobr. soch., 5th ed., vol. 54, p. 151).

Financial control is divided into preliminary and subsequent control on the basis of the duration of the control and the character of the tasks performed. Preliminary control precedes the expenditure of monetary resources and material assets and the receipt of income; it is used to prevent expenditures that are neither expedient nor in conformity with the law. Preliminary control is control over the compilation, examination, and approval of, for example, estimates, financial plans, and budgets. Subsequent control is exercised after the expenditure of resources and the receipt of income. On the basis of records and accounts, this type of control provides information on the amount of revenue received and the timeliness of the receipts, on the condition of material assets and the availability of monetary resources, and on breaches of financial discipline. It is also instrumental in devising measures that can be used to recoup losses and eliminate shortcomings.

The principal financial control techniques are audits, checks of balance sheets and other financial reports, analyses of economic activity, cross-checks, and inventories.

REFERENCES

Lenin, V. I. “Ocherednye zadachi Sovetskoi vlasti” (first version). Poln. sobr. soch., 5th ed., vol. 36.
Kramarovskii, L. M. Reviziia i kontrol’. Moscow, 1970.
Voznesenskii, E. A. Finansovyi kontrol’ v SSSR. Moscow, 1973.

R. D. VINOKUR and R. S. BIKTIMIROVA

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