International Journal of Mechanical Engineering and Technology (IJMET) Volume 10, Issue 01, January 2019, pp. 1263-1271, Article ID: IJMET_10_01_128 Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=01 ISSN Print: 0976-6340 and ISSN Online: 0976-6359 © IAEME Publication Scopus Indexed PROCESS APPROACH TO IMPROVING REVENUES AND EXPENDITURES MANAGEMENT SYSTEM OF THE MINISTRY OF EDUCATION AND SCIENCE OF RUSSIA Tatiana Viktorovna Krupa GlobalLab, Ltd, Moscow, Russian Federation ABSTRACT According to the results of the Russian Finance Ministry assessment of the quality of financial management of the managers of the federal budget, including process and outcome indicators of financial activity as part of the state programs « Education Development », « Science and Technology Development», the Ministry of Education and Science of the Russian Federation in 2017 occupied the 26th place. The relatively low financial and managerial statements of the Ministry of Education and Science of the Russian Federation activity concerning government program funding are caused by deficiencies in methods and tools for managing budget expenditures, and it is proved by Russian Audit Chamber’s findings concerning the ineffectiveness of financial expenditures in the «5-100» project. In this way the relevance of the research theme is due to need for theoretical development of the conceptual construct, modifying the model of organizational and financial clearing for subsidizing government programs, adapting the algorithm for applying social bonds to the education and science sectors of the Russian Federation, justifying new methodological approaches and practical recommendations for developing the system for financing government programs in the domain of education and science. Keywords: Management, Process approach, higher educational establishment, Structure, Assistance, Ministry of education and science of Russia, Development. Cite this Article: Tatiana Viktorovna Krupa, Process Approach to Improving Revenues and Expenditures Management System of the Ministry of Education and Science of Russia, International Journal of Mechanical Engineering and Technology, 10(01), 2019, pp.1263– 1271 http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&Type=01 1. INTRODUCTION Expenditures and revenues of the state-financed sector and public authorities in the structure of a federalism based on the principles of state integrity, equality and national self-determination, unity of the state power system, supremacy of federal law, delimitation of subjects of introduction http://www.iaeme.com/IJMET/index.asp 1263 editor@iaeme.com Tatiana Viktorovna Krupa between the federation and its subjects, equal rights of subjects, constitute, as it is known, interrelated budgets of three levels of hierarchy: 1.1. Interrelated budgets of three levels of hierarchy 1. federal authorities 2. the authorities of the Federation subjects 3. local governments 1.2. Interpretations of the concept of "budget" In the scientific literature there are various interpretations of the concept of "budget" as: economic relations regarding the formation, distribution and use of budgetary funds; • regulatory act establishing the norms of formation and disposal of public resources; • organizational relations according to the approved list of income and expenses of the organization (enterprise); • material base controlled by the structural unit for a specific use, etc. 2. LITERATURE REVIEW 2.1. Approaches to the perception of “budget” concept Approaches to the perception of “budget” concept in different authors’ studies vary. 2.1.1. Khrutskiy So, Khrutskiy considered, that budget means “financial goals expression” and “planned financial estimates and disbursement schedules” at the same time. 2.1.2. Shvetsov and Bulash To the opinion of Shvetsov and Bulash the concept of budget must be considered as public domain in-use for the good of the country. 2.1.3. Brimson and Antone By contrast Brimson and Antone considered this concept as “quantification of entrepreneur targets during certain period” [1]. 2.1.4. Ways to regard a complex phenomenon of budget The point is, such complex phenomenon of budget can be regarded and interpreted in different ways [2]: 1. independent economic system (the system of cash nexus which provides the formation, distribution and using of Monetary Funds), 2. financial and material base (state Monetary Fund for performing its tasks and functions); 3. the document, which has legal power, legal act, which approves the main state financial plan for the certain period of time (the budget plan of cash flows) 4. as operative plan of costs distribution (approved appropriation directions of a government department) [3]. 5. According to the Russian Budget Code, the “budget is a form of Monetary Fund formation and expenditure, destined for financial supplying state tasks and functions and local self-administration”. http://www.iaeme.com/IJMET/index.asp 1264 editor@iaeme.com Process Approach to Improving Revenues and Expenditures Management System of the Ministry of Education and Science of Russia During analysis and synthesis the definition of state budget imposed by domestic and foreign authors, we decide, that budget as basic part of financial system, reflects all the economic processes concerning the implementation of political decisions as a part of state financial plan (estimates of income and expenditure from the perspective of state program) with certain source of creation and monitoring of using the State Monetary Fund and has leading role in socioeconomic development of the country [4]. 2.2. Functions of state budget: 1. concerning distribution (forming and using of centralized financial resources), 2. redistribution (national income and Gross Domestic Product), 3. control (overview of the timeliness and incoming financial resources flows in the disposal of government authorities etc.) [3]. 2.3. Ways of budget implementation in the international practice There are different ways of budget implementation in the international practice [5]: • Treasury pattern (the responsibility for the organization of performing budgets and management of budgetary funds is confined to authorities of the financial system, which perform functions of administrators’ cashiers and receivers of budgetary funds and pay on their behalf. • Bank pattern (the organization and performing of budget is confined to the Central Bank, and in certain cases – to commercial banks). • Mixed pattern (allows providing financial operations with budgetary accounts by Treasury and the Central Bank). The relevance of this topic on the modern stage of financial science development doesn’t fade because of constant improving of budgetary processes. 3. MATERIALS AND METHODS In the science literature the variety of research findings concerning funding the separate areas of education and science are submitted. The methods and approaches of financial accompanying for researches and favors are regarded independently from the general educational system. Funding issues of educational and scientific sphere are not well studied and need the improving of category-based system register of funding state programs in the Russian educational and science field, the improving of technical and financial accompanying of subsidization these programs pattern, the investigation an algorithm for the application supportive bonds in the educational and science field, new methodological approaches to the impact assessment of using state programs funding tools, development of practical guidance concerning the management of cash flows of these programs [6]. It has been proposed, that by applying developed methodological approach to the assessment of government programs financial security effectiveness’ sources and budget allocation mechanisms while project management with the elements of “process approach”, to allow to create perfect conditions for ensuring the effectiveness of Russian Ministry of Education and Science and to be able to identify priorities for its development. In this context, optimal system character means effectiveness, because of “characterizing system requirements satisfaction and compliance with planning targets, which provide the best usage of system capacities”, namely the destination of specified parameters with the budgetary savings is the goal [7]. For assessing the management of the state programs financing system in the field of education and science the Goldratt’s methodology for efficiency was also used with the aim of identification of priority areas in the state programs developing in the field of science and education, evaluating http://www.iaeme.com/IJMET/index.asp 1265 editor@iaeme.com Tatiana Viktorovna Krupa the results of these programs funding usage with the help of developed methodological approach to the usage of financial resources and improving the whole state projects funding system in the science and education field [8]. 4. RESULT AND DISCUSSIONS 4.1. The theory of constraints The Goldratt’s theory of constraints provides the systemic arrangement for the effective project and successive removal of contractions between the main assessment indicators – deadlines, quality, value, expenditures, required productivity and available resources via the logical solution [9]. The theory of constraints is the process of constant improving, namely the management approaches, which form the sequence of operations of effectiveness and system balancing, which includes: • searching of system restrictions of state programs funding in the science and education field. • solution of tasks concerning the effectiveness of usage of state programs funding restriction in the science and education field. • agreement of the rest of actions in the coincidence with adopted solution. • increasing of carrying capacity of restrictions. • choice under the condition of previous completion of missed links. If the weak links are reviled during the financial monitoring, a non-effective process, which restricts its durability among “P” links (nonrestrictive ones) according to the Goldratt’s theory, it is necessary to identify and eliminate them. Non-effective process is called the restrictiveness. 4.2. The two-pronged approach For achieving the goals of non-commercials, the effectiveness of budgetary processes via the improving revenues and expenditures management system it is necessary to apply the twopronged approach, which consists the monitoring of operating costs and monetary value, but the productivity of business system cash flows is not measured. During this process the investments are divided into active and passive [10]. 4.2.1. The passive investments The passive investments, influenced by active investments, are not measured in monetary value, because during the workflow the ensuring of availability of qualified education for all sectors of the community occurs. 4.2.2. Active investments Active investments, influencing the passive investments include accommodations, tools and material assets. It means the expenditures on central office of authority under the operational expenses. 4.3. Tasks for the project managers in the government authorities The building of interrelation of the main indicators of the constraints theory concerning the Russian Ministry of Education and Science activities, through which in our case the population passes via the non-monetary system part and receives educational services, increases the “productivity” of Russian Ministry of Education and Science due to the changes and the http://www.iaeme.com/IJMET/index.asp 1266 editor@iaeme.com Process Approach to Improving Revenues and Expenditures Management System of the Ministry of Education and Science of Russia increasing demands for the provided services. In connection with that, the main task for the project managers in the government authorities are: • the increasing of productivity via the non-monetary flows; • performing their duties; • decreasing the levels of investment, budgetary expenditures; • reducing the transaction costs; • the use of versatile control; • to monitor all procedures (performed not only at the implementation stage, but throughout the entire life cycle of the implementation of state programs). It will reduce the risk of failing to achieve the maximum level of performance of end indicators and improving the efficiency of structural units of the Ministry of Education and Science of Russia. Successful implementation of project management in the system of financing state programs in the field of education and science depends on: • the timeliness of identifying the causes of adverse events affecting its non-cash flow performance; • eradicating the causes of adverse events affecting its non-cash flow performance without increasing the level of active investments and operating expenses; • annual operating budget (it is secondary here, since it is a means of a necessary condition, but not a goal; • reduction in active investments i.e. and operating expenses will make a positive impact on it. In this regard, it is possible to observe continuous improvement of existing processes that contribute both to the development of mechanisms for allocation of budgetary funds during implementation of state programs, and in general, management of the financing system of state programs in the Russian Federation. 4.3.1. Responsibility for implementation of state programs The responsibility for implementation of state programs is imposed on all project participants — these are representatives of various structural units of the Ministry of Education and Science of Russia. Thus, the responsibility for the final result increases not only in implementation of a certain project, but also in obtaining a positive result for the department as a whole. 4.3.2. Main problems: • The lack of flexibility and dynamism in the current system for assessing the effectiveness of financial support for state programs in the field of education and science of the Russian Federation [11]. • When conducting internal financial management, the department does not take into account the integrated indicator of financial, managerial and indicative parameters for implementation of state programs. • First, the need to improve the budget allocation mechanism is due to the fact that for the prospective development of the economy, it is necessary to raise the status of the public administration system and control over the effectiveness of the budget funds use. • In order to analyze current activities and the future outlook (introducing a financial instrument using social bonds), it is necessary to take into account that investments http://www.iaeme.com/IJMET/index.asp 1267 editor@iaeme.com Tatiana Viktorovna Krupa have a long-term character, and project management is an effective way of implementing long-term projects, which allows you to optimally distribute increased risks among numerous project participants. It can be concluded that, knowing the root cause, it is possible: • to accurately identify the causes in conjunction with the resources and peculiarities of interaction with the environment, • to determine the priorities that need some resource support, • to build a consistent action plan on eliminating the causes of the inefficient operation of the financial system of financing these government programs, with the help of the future reality tree. All these actions will allow to adapt the system of their financing, including the processes of budget allocation to changes and requirements of the external environment, which ultimately should lead to the planned results of the activities of the Ministry of Education and Science of Russia. 4.4. The process approach privileges A process approach is the elemental core of ISO’s view of a QMS. When your organization is using a process approach it means that the organization manages and controls the processes that make up their organization, the interactions between the processes and the inputs and the outputs that string these processes together. The activities of Russian Ministry of Science and Education are carried via state programs funding in the field of science and education, based on budget allocation mechanism, the statement of work of which constantly focuses to legislation and regulations of budgetary relations (taking into account the fact of its constant changing). That means, that the process of state programs financial system developing in the science and education field has an adaptive type and implies its adaptation to the real operating conditions, also designed to perform the monitoring activities for designing, execution and analysis of budgetary expenditures with further consolidation of data for making up the prediction of further developing and its compatibility with the goals implementation [12]. In that regard, we need to improve the current mechanism of budgetary allocations, belonging to state programs funding in the science and education field via the constant accommodation of system parameters to the changing circumstances of environment [13]. The procurement activity in the Ministry of Education and Science of the Russian Federation is carried out through an interconnected set of systemically repetitive actions, which corresponds to the process approach of managing by a federal body. Implementation of state programs in project management with elements of the process approach, accompanied by an assessment of the effectiveness of their financial support, is quite relevant, it allows you to identify the main elements, the links between them, properties, subsystems, and directions for development of the system of financing state programs in the field of education and science of the Russian Federation The control functions of the Ministry of Education and Science of Russia under project management with elements of the process approach will provide: • improving the efficiency of the state structure; • strengthening of financial control measures for the resource support of state programs implementation in the Ministry of Education and Science of Russia; • improving the efficiency of budget expenditures; http://www.iaeme.com/IJMET/index.asp 1268 editor@iaeme.com Process Approach to Improving Revenues and Expenditures Management System of the Ministry of Education and Science of Russia minimizing the risks of loss of time, resources and deadlines during implementation of the state programs of the Russian Federation; • positive impact on implementation of the strategic planning of the Ministry; • identification of promising areas of development of the financing system of state programs of the Russian Federation. Taking into account the fact that RVC is an inter-program project of a diversified target orientation, it was proposed, in codes of budget classification, to assign a separate type of expenditures reflecting the execution of priority projects, including activities of RVC and projects included in STI (scientific and technical information) with the aim of conducting a more in-depth analysis of the effectiveness of budget expenditures [14]. Confirmation of the existing contradiction and proof of the correctness of the proposal is the position of Melnikova E. V. and Tsvetkova V. A. [15], which states that the Russian STI system need to be the unique and must be coordinated from the only center, it will help avoid department dissociation, will help overcome duplication in the work of various elements of the NTI system, reduce working hours, optimize the use of financial resources in the STI sphere and ensure the sustainable development of Russian economy and society. From this perspective, we consider it necessary to single out a single type of accounting expenses in accordance with the principles of assigning budget classification codes for a set of different types of expenses to develop promising industries in Russia for separate accounting using the separate type of expenses in the budget classification code ensuring the costs of legal entities for implementation of STI. It is important to note that in 2016 the Ministry of Finance of Russia developed a comparative table on changes in the grouping of types of expenses for budgets of the budget system of the Russian Federation for 2017 [16]. However, no changes regarding the allocation of costs in terms of implementation of STI into a separate type have been identified [17, 18]. • 5. CONCLUSION Considering the above, we can draw the following conclusion that the existing problems impede the collection of data on the objects of analytical accounting of scientific and technological information, and therefore cannot fully comply with the principles of the budget system, including meeting the need for transparency of the structure of budget expenditures when allocating provisions, stipulated by the law (decision) on the budget, by the main managers of budgetary funds, sections, subsections, target items, groups (groups and subgroups) of the types of expenditures of budgets and targeting the targeted nature of the budget. It is revealed: • The presented control and analytical measures contribute to the aggregation of financial resources by the objects of analytical accounting within the framework of STI, to the increase the transparency of the budget expenditure structure in allocation of budgetary provisions. • As a whole, implementation of all the above proposals contributes to improving the functioning of the system of financing state programs in the field of education and science of the Russian Federation by increasing the level of forecasting, organization, regulation, coordination, incentives and control. • the proposals on financial and informational interaction with the environment will allow the system of financing state programs in the field of education and science of the Russian Federation to meet the modern needs of the information society. http://www.iaeme.com/IJMET/index.asp 1269 editor@iaeme.com Tatiana Viktorovna Krupa • • • • • • The establishment of a single budget classification code for NTI objects will allow to conduct analytical accounting in accordance with the principle of unity of the budget system. Implementation of practical recommendations (definition of the formula for calculating the total amount of unfulfilled obligations) and the proposal to form a register of unfulfilled obligations contribute to improving the quality of federal budget execution and improving the management of state program finances. The study of the effectiveness of the financing state works (services) system made it possible to substantiate proposals for creating an information base for ensuring transparency, openness and accountability of budget financing, and repayment of outstanding financial obligations. According to the results of the work, a formula for calculating the total amount of outstanding responsibilities is presented (taking into account the accrued and written off amounts of debt). It was proposed to form a register of unfulfilled responsibilities, based on the data of the calculations made. 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