Authorities of the Accounting Chamber regarding analysis of the budget process and provision of the common continued tree-year cycle of control over execution of the state budget, specified by the standards of the Budget Code of Ukraine, were fulfilled through performance of quarterly, half-year and annual analyses of execution of the State Budget of Ukraine, provision to the Verkhovna Rada of Ukraine of the Conclusions regarding execution of the profitable part of the State Budget of Ukraine during tree quarters, and expertise of the project of the Law of Ukraine "About State Budget of Ukraine for the year 2004".

One of the main directions, which are always under survey of the Accounting Chamber, is control of usage of budget funds for social needs¸ for taxpayer needs.

In particular, during the previous year the Board considered issues of:

Provision of insulin to people with diabetes;

Provision of invalids with cars and other orthopedic products;

occupational safety and health, and improvement of safety in coalmining industry;

execution of programs by the State Committee of Ukraine on issues of family and youth;

provision of social services, material help to unemployed and re-grouping of labour resources of Donbas;

provision of educational institutions with study books and manuals;

sanatorium-and-spa treatment of invalids and veterans of war;

results of the analysis and inspection of legality and validity of Government decisions regarding advance of wages to budget employees, and, as the result, corresponding rise of state budget allocations  for this purpose in 2001-2002;

results of analysis and inspection of financial provision of rise of wages in budget sphere in 2003 due to introduction of the new amount of minimal wages;

construction of "Emergency Ambulance" and "Fitness Center" in Odessa and compliance with legislation in the process of its privatization.

Problems of agricultural complex and farmers' support were considered by the Board based on the results of the analysis and inspection of allocation of budget funds, assigned for:

Purchase of domestic agricultural equipment on conditions of financial leasing and measures, connected with redemption of the indebtedness for the equipment  for the years 2000-2002;

partial reimbursement of the cost of complex equipment of domestic production and development of  samples of agricultural equipment;

state support of farms for the year 2002;

reimbursement of losses to agricultural producers, suffered due to natural disasters in March-April of 2002;

fulfillment of land reform, provision of official acts for the right of private property for land and protection and rational usage of lands.

The issues of state support and preservation of industrial potential of the country are also under continuous monitoring of the Accounting Chamber. These problems were considered by the Board based on the results of inspection and analysis of allocation of state budget funds:

By the State Committee of Ukraine on energy-saving and energy-saving measures between different branches of industry;

by the Ministry of Fuel and Energy of Ukraine for "Rescue measures at coalmining enterprises";

for financial support of domestic producers of potassium fertilizers;

for financial support of domestic engineering industry for agricultural complex;

for state support of construction works at coal-, lignite- and peat mining enterprises.

Issues concerning defensive capability of the country and material support of The Armed Forces of Ukraine were discussed during consideration of the Reports:

About results of inspection of usage of State Budget Funds of Ukraine assigned to the Ministry of Defense of Ukraine for construction of housing for military personnel and of funds, invested in 2002 into construction of housing according to the Decree of the Cabinet of Ministers of Ukraine as of  27.04.98 № 568;

About results of inspection of usage of State Budget Funds of Ukraine assigned to the Ministry of Defense of Ukraine for reformation of the Armed Forces of Ukraine in 2001-2002;

About results of inspection of usage of State Budget Funds of Ukraine assigned to the State Border Defense Committee according to the program "State Border Defense".

Continuous attention is being paid to problems of state debt, usage and repayment of loans, received under state guarantees. It concerns the reviewed and approved by the Board Statements of results of inspections and analysis:

Reasons and financial consequences of reconstruction of external debt liabilities of Ukraine before governing bodies of foreign countries - members of the Paris Creditor Society;

State Budget expenses for service and repayment of state debt and its management in 2002;

Results of implementation of the proposal of the Accounting Chamber to control allocation of the IBRD loan, received under state guarantee for realization of the Project of the electric energy market development.

To the important control and analytical measures concerning national problems can also be referred inspections of budget fund allocations:

Connected with construction and reconstruction of automobile roads of national use, for the year 2002;

General and special Funds of the State Budget of Ukraine by the Department of State Auto Inspection of the Ministry of Internal Affairs in 2002 for provision of safety of road traffic, registration of means of transportation;

Assigned to the Ministry of Internal Affairs of Ukraine for provision of protection of rights and liberties of the people, of the society and of the country from illegal actions, for protection of public order, for 2002 and 1^st quarter of 2003;

Allocation of State Budget funds of Ukraine for external political activity in 2002 by the Ministry of External Affairs of Ukraine;

For fulfillment of complex measures of through development of the Ukrainian language, planning and usage of State Budget funds for their implementation;

For execution of tasks (projects) of the National Informatization Program;

Results of audit of efficiency of management of the Carpathian region forest resources.

A separate direction of the Board activity was devoted to analysis and control of issues, dealing with efficient usage of budget funds by central executive authorities and National Bank of Ukraine, which resulted in consideration of Statements:

About results of analysis of usage state budget funds by executive power authorities;

About results of analysis of legal and administrative provision of stock market performance and inspection of usage of State Budget funds by the State Securities and Stock Market Committee of Ukraine;

On compliance with current legislation while creation and functioning of state (national) joint stock and holding companies;

About results of inspection of the expense estimates of the National Bank of Ukraine;

About results of inspection of usage of State Budget funds, assigned for provision of functional activity of the State Customs Service of Ukraine.

The Board considered a set of Statements, devoted to inter-relations between the State Budget of Ukraine and local budgets, in particular:

About results of inspection of state of provision and usage of subventions the State Budget of Ukraine for social and economical development of the town of Sevastopol in 2001 and 2002;

About results of analysis of formation, transmission and usage of subventions from the state budget to local budgets, provided by paragraphs 4, 5 of the Law of Ukraine "About the State Budget of Ukraine for the year 2002";

About results of inspection of usage of state budget funds and analysis of interdepartmental  accounting in Kyiv oblast;

About results of analysis of formation and usage of subventions form the state budget to local budgets for provision of privileges to citizens, who suffered because of Chernobyl disaster, provided for by paragraph 10 of the Article 40 of the Law of Ukraine "About the State Budget of Ukraine for the year 2003";

About results of inspection of provision, legality and efficiency of usage of subventions from the state budget for execution of investment projects, aimed at development of social infrastructure of the Autonomous Republic of the Crimea in 2003.

In general during 2003 control-analytical measures of the Accounting Chamber covered all oblasts of Ukraine.

Separately there was performed control of compliance with requirements of the Law of Ukraine "About purchase of goods, works and services for state funds" by chief allocators of budget funds. These issues were considered in Statements:

About results of inspection of compliance with requirements of current legislation in 2002 by the Ministry of Economy and of European Integration of Ukraine while negotiation implementation of, other than tenders, procedures of purchase of goods, works and services for state funds;

About results of inspection and analysis of compliance with requirements with requirements of the Law of Ukraine "About purchase of goods, works and services for state funds" by the State Committee of Ukraine on information policy, television and broadcasting, and TV-broadcasting companies within its sphere of management in 2002;

About results of inspection of the state of normative-legal regulation, legality of formation and usage of resources of the special fund of the State Budget of Ukraine in the Ministry of Justice of Ukraine, compliance with legislation about state purchases.

A lot of attention was paid by the Board to issues of normative-legal regulation of the budget process. In 2003 they were addressed by the "Statement about results of analysis of the normative-legal regulation by the Cabinet of Ministers of Ukraine, Ministry of Finance of Ukraine, State Treasury of Ukraine and other executive authorities, of the relations, which appear in the process of execution of the State Budget of Ukraine".

Environment issues were discussed by the Board according to the results of inspections of the following issues:

Allocation of budget funds in 2001-2002 for fulfillment of measures of the National program of restoration of environment of the Azov and Black seas;

Allocation of State Budget funds in 2002 for support of ecologically safe state in the alienation zone and in the zone of unconditional (obligatory) resettlement;

Allocation of state budget funds, assigned in 2002-2003 to the State Committee of Water Industry for exploitation of state melioration systems, for execution of programs of protection of settlements from damaging influence of waters and anti-flood protection.

In the reported year the Board paid subjected attention to allocation of state budget funds for preservation of cultural heritage. Results of the following inspections were reviewed and verified:

Expediency and efficiency of usage of state budget funds in 2002 by the Ministry of Culture and Arts of Ukraine for measures, connected with preservation of cultural heritage;

Usage of budget funds, assigned in 2002 to the State Committee of Ukraine on Construction works and Architecture for objects of historical and architectural heritage and reserves;

Usage of State Budget funds by institutions of natural reserve fund in 2002.

There were inspected and analyzed creation and execution of the following budgets:

Fund of Social Insurance from temporary loss of working ability;

Fund of Social Insurance from accidents at work and professional illnesses.

Executing functions and authorities, assigned by the Law of Ukraine "About the Accounting Chamber", there was performed annual control of allocation of resources of the reserve fund of the State Budget of Ukraine, execution of the budget of the National Bank of Ukraine,  Statements of the Antimonopoly Committee of Ukraine and of the State Property Fund  of Ukraine.

Primary attention was paid to planning of activities based on prospective and current plans, created with consideration of all the types and directions of its performance and particular assignments of the Verkhovna Rada of Ukraine and its committees.

Off-plan control measures were conducted exclusively according to decisions of the Board of the Accounting Chamber based on resolutions and protocol instructions of the Verkhovna Rada of Ukraine, appeals of its committees and requests from people's deputies of Ukraine, according to which the Verkhovna Rada of Ukraine made decisions (hereafter - appeals).

According to the Article 15 of the Law of Ukraine "About the Accounting Chamber", meetings of the Board reviewed 5 appeals, received in 2003 (14 percent of the total amount of instructions, which required additional control and analytical measures).

Statement - is the result of a control and analytical measure, which is proposed for consideration of the Board. Based on the approved Statements, Conclusions of the Board of the Accounting Chamber are being verified and proper information is being prepared.

Considering the total number of Statements, reviewed by the Board (65) - 15 Statements, or 23 percent, were prepared based on appeals (for comparison: in 2000 - 13 %, in 2001 - 17 %, in 2002 - 11 %).

Based on appeals there were performed 15 control and analytical measures, 14 Statements and 1 information were reviewed (of them 11 Statements - addressing the 2002 year appeals):

- based on the appeal of the Special Privatization Control Committee of the Verkhovna Rada of Ukraine as of 26.11.2002 № 06-24/14-182 there has been prepared "Information about results of inspection of usage of funds of the State Budget of Ukraine for construction of "Emergency Ambulance" and "Fitness Center" in the town of Odessa and compliance with the legislation in the process of their privatization";

- based on the appeal of the Chairman of the Verkhovna Rada of Ukraine as of 19.02.2003 № 01-3/97 - Statement of results of analysis and inspection of creation and execution of the budget of the Fund of Social Insurance against temporary loss of working ability in 2002;

- based on the appeal of the people's deputy Movchan P. M. as of 18.03.2003 № 01-02/102, sent to the Accounting Chamber of Ukraine by the letter as of 19.03.2003 № 11/10-445, there was prepared the "Statement about results of analysis of the state of execution of Complex measures on thorough development of the Ukrainian language, planning and usage of funds of the State Budget of Ukraine for their fulfillment";

- based on the appeal of the Chairman of the Verkhovna Rada of Ukraine as of 15.11.2002 № 01-6/294 the Board reviewed the "Statement about results of analysis of efficiency of management of state property and compliance with the current legislation in the process of creation and activity of state (national) joint stock and holding companies";

- the issue of inspection of usage of funds of the state budget by the Ukrainian Academy of Agrarian Sciences, which was places in the appeal of the people's deputies of Ukraine, Masenko O. M., Tiagnybok O. J., Polishchuk M. E. and Rudkovskiy M. M. as of 16.10.2003 was considered while preparation of the "Statement about the results of inspection of planning and usage of funds of the State Budget  of Ukraine, assigned to the Ukrainian Academy of Agrarian Sciences for science in 2002 and 9 months of 2003", which was considered at the meeting of the Board in February of 2004;

- based on execution of the Resolution of the Verkhovna Rada of Ukraine as of 21.11.2002 № 223-IY - "Statement of the results of inspection and analysis of usage of funds of the state budget, assigned in 2002-2003 to the State Committee of Water Industry for exploitation of state melioration systems, for execution of programs of protection of settlements from damaging influence of waters and anti-flood protection";

- based on execution of the article 5 of the Resolution of the Verkhovna Rada of Ukraine as of 12.09.2002 № 140-ІУ, the following three Statements were prepared:

"Statement of the results of inspection of expediency and efficiency of usage of state budget funds in 2002 by the Ministry of Culture and Arts of Ukraine for measures, connected with preservation of cultural heritage";

"Statement of the results of inspection and analysis of usage of budget funds, assigned in 2002 to the State Committee of Ukraine on Construction works and Architecture for objects of historical and architectural heritage and reserves";

"Statement of the results of inspection of usage of State Budget funds by institutions of natural reserve fund in 2002";

- two Statements were prepared based on execution of appeals of the people's deputies of Ukraine, announced at the session:

G. Rudenko, as of 16.10.2002 № 11/10-115 - "Statement of the results of inspection of usage of funds of the State Budget of Ukraine, assigned for purchase of domestic agricultural equipment on conditions of financial leasing of the National Joint Stock Company "Ukragroleasing" and measures, connected with repayment of this debt" ;

J. Lutsenko, as of 02.12.2002 № 11/9-66 - "Statement of the results of inspection and analysis of usage of state budget funds, assigned for partial reimbursement of the cost of complex domestic equipment and development of samples of agricultural equipment";

- four Statements were prepared based on execution of appeals of the Committees of the Verkhovna Rada of Ukraine:

on budget issues as of 18.10.2002 № 06-9/9-287 - " Statement of the results of analysis of creation, transmission and usage of subventions from the state budget to local budgets, provided for by the Articles 4, 5 of the Law of Ukraine "About State Budget of Ukraine for the year 2002";

on issues of finances and banking activity - "Statement of the results of inspection and analysis of usage of funds of the State Budget of Ukraine, assigned for state support of agriculture (farming) in 2002";

on issues of pensioners, veterans and invalids as of 24.09.2002 and of the people's deputy of Ukraine, M. Rodionov,  as of 08.07.2002 - "Statement of the results of inspection of usage of state budget funds in 2002, assigned for provision of invalids with cars and other orthopedic products";

on issues of youth policy, physical culture and sports as of 01.11.2002 № 06-5/13-386 - "Statement of the results of inspection of usage of funds of the State Budget of Ukraine by the State Youth and Family Committee of Ukraine";

- based on the appeal of the Commissary of the Verkhovna Rada of Ukraine on People's Rights, Kharpachova N. I. as of 21.05.2002. № 486/1182/343-01-35, the Board has considered the "Statement of the results of inspection of usage of funds of the State Budget of Ukraine in 2002 and the first quarter of 2003 by the Ministry of Internal Affairs, assigned for provision of protection of rights and freedoms of the people, of the society and of the country from illegal acts, for protection of public order".

With the aim to provide the people's deputies of Ukraine with results of control-analytical and expert activity of the Accounting Chamber, based on the Statements' data there were prepared 23 information bulletins.

1.3. Fulfillment of Main Objectives and Powers

The Accounting Chamber has fulfilled a total amount of 646 analytical and expert measures in 2003.

520 Reports, Conclusions, information lists and statements have been prepared on their basis and sent to the Supreme Legislative and Executive authorities, bodies, organizations and companies for provision of the corresponding response, elimination of the revealed violations and faults as well as for reimbursement of losses inflicted on the State budget of Ukraine. 155 of the mentioned above documents have been sent to the Verkhovna Rada of Ukraine, 12 - to Administration of President of Ukraine, 10 - to people's deputies, 69 - to the Cabinet of Ministries of Ukraine, 10 - to the Ministry of Finances of Ukraine, 36 - to the Prosecutor authorities and other law enforcement bodies, 164 - to the ministries and departments, 64 - to other bodies, organizations and companies.

The analytical and expert examinations fulfilled by departments of the Accounting Chamber in the financial year have revealed, according to the Articles 116 and 119 of the Budget codex of Ukraine, budget violations (of illegal and no-target employment) as well as ineffective employment of funds of the State budget of Ukraine and off-budget funds for the total amount of 7 billions 198.7 million UAH. Illegal as well as no-target employment of funds comprised 4 billions 389.7 million UAH, ineffective employment - 2 billions 809 million UAH (see Chart 1).

Chart 1. The amount of budget violations and ineffective employment of funds revealed by the Accounting Chamber

The structure of the revealed violations in employment of budget funds (see Chart 2) provides evidences for the stable and effective activity of the Accounting Chamber in the auditing of the effectiveness of employment of State budget and off-budget funds, administrative decisions of the Government, leaders of Branches, bodies, organizations and companies, which have been the subjects of the audit.

Chart 2. Structure of the revealed violations in employment of budget funds

Analysis of results of the control measures executed within 2003 testifies of the same budget violations from year to year and of the increase of their amounts. By significance and amount the revealed violations can be classified as follows:

Spending of budget funds for the purposes not provided by the budget;

Long lasting withdrawal of the State budget funds to the accounts receivable;

Illegal admission of business subjects' debts as a state debt;

Employment of State budget funds with violation of the Law of Ukraine "About purchase of goods and services at the expense of the State";

Illegal underdeclaration of the receipts and expenditures of the State budget of Ukraine;

Illegal wages payment at the expense of the State budget funds;

Approval of illegal administrative decisions;

Overstated allocations and surplus budget funds as a result of the unreasonable composition of budget assignments;

Spending of budget funds over limits approved for a certain financial year;

Illegal assignment of funds from the reserve funds of the State budget of Ukraine;

Illegal and irrational employment of the state property;

No-target employment of state budget funds provided for execution of the state programs;

Underdeclaration in the accounting of the value of basic devices and other inventory holdings;

Illegal underfinancing of the protected articles of the State budget of Ukraine;

No-target employment of budget funds as a result of financing of contracts, which are not subjects of the state programs;

Illegal performance of reciprocal accounting;

Illegal change of type of property, which has led to the major losses of budget funds;

Illegal spending of budget funds from different budgets simultaneously for financing of budget institutions;

Support of the organization of higher status at the expense of funds assigned for support of subordinated institutions;

No-target employment of budget funds, assigned for the current expenses;

Improper business;

Budget violations, connected with placement and fulfillment of state order;

No-target employment of funds of the State budget of Ukraine, assigned for restructuring of the coal industry;

Underpay to the budget as a result of financial and economic activity of enterprises.

It can also be stated, that judging from the experience of analytical measures, certain systematic types of ineffective employment of budget funds have happened. The most significant types for the financial year are the following:

Ineffective employment of budget funds as a result of approval of groundless administrative decisions;

Ineffective spending of budget funds, connected with service of the foreign loan untimely cancelled by the debtor;

Ineffective employment of funds of the State budget of Ukraine by means of their prolonged retention without employment on registration accounts of allocators of the budget funds;

Ineffective employment of budget funds as a result of payment of interest on the credits and penalty provisions;

Ineffective employment of budget funds because of prolonged disuse of financing from the State budget of Ukraine;

Ineffective employment of budget funds because of participation in share construction works;

Ineffective employment of budget funds because of unregulated order of employment of returned credits and interests by the debtor;

Ineffective employment of the funds of the State budget of Ukraine because of the financing of measures, which are not of the first priority;

Ineffective spending of state budget funds, connected with attraction of foreign councils;

Ineffective employment of budget funds for the payment of construction works at the objects, which exploitation is considered inexpedient or the construction is terminated as having no future.

Spending of budget funds for the purposes, which are not provided by the budget, is the most common way of budget violation. Total amount of such violations for the financial year comprised 696.7 million UAH (15.9 % from the total amount of illegally employed budget funds).

Thus, during examination of expenditures of the State budget of Ukraine assigned  for service and acquittance of the state debt and its management in 2003, it has been established that in the absence of budget assignments from the Ministry of Finances of Ukraine, determined by the Laws of Ukraine about the State Budget of Ukraine for 2001-2002 for fulfillment of secret decisions of the Government within this period there has been spent budget funds for the purchase of Turkmenistan bills to pay back public debt for the total amount of 622 million UAH (117 million USD).  Within these funds and regardless of the Part 4, Article 15 of the Budget codex of Ukraine, despite the absence of agreement about the restructure of the state debt of Ukraine towards Turkmenistan there have been spent 145 million UAH (27.5 million USD) of the funds to service the state debt.

The examination of employment of state budget funds, assigned for fulfillment of the projects of National program of informatization has revealed that the Ministry of Finances of Ukraine, State Treasury of Ukraine and State Tax Administration of Ukraine, violating the second part of the Article 24 of the Law of Ukraine "About national program of informatization", stating that the amount of financing of NPI from the State budget of Ukraine is determined by the Law of Ukraine about the State budget of Ukraine for the next year and is stated in a separate paragraph, have spent the funds not assigned for the projects of informatization, in particular, instead of other budget programs, for the total amount of 25.4 million UAH. 

State Committee of Ukraine in energy saving, violating the Laws of Ukraine about the State budget 2001 and 2002, which have determined the expenditures for performance of interdepartmental energy saving measures as current, within 2001-2002 has accepted the works of the capital character for the total amount of 7.9 million UAH. State Committee of Ukraine in energy saving has spent 6.5 million UAH for no-target purposes, which mean purposes not assigned by the budget, by the agreements on performance of the capital works and without the control provided by the State Treasury of Ukraine. These facts were revealed during performance of examination and analysis of target employment of state budget funds, assigned in 2001-2002 to the State Committee of Ukraine in energy saving for interdepartmental measures.

Wrong practice of retraction of state budget funds to accounts receivable continues to exist for a long time. There have been revealed violations for the total amount of 435.1 million UAH (9.9% of illegal employment of budget funds).

Examination of the employment of state budget funds by the internal troops of the Ministry of Internal Affairs has revealed that the existing system of employment of investor funds (which are considered as budget funds according to the current legislation) for the building (purchasing) of houses for military personnel and members of their families leads to the long lasting retraction of the funds (they are used by subcontractors), which are considered as accounts receivable, and comprised 145.2 million UAH in 2002 and have been completely overdue.

Analysis of employment of state budget funds by the bodies of executive power in 2002 testifies of the numerous violations of budget legislation in employment of state budget funds at direction "Management in a certain field". The amount of accounts receivable (advance payments) as of 01.01.2003 comprised 25.3 million UAH, which is in conflict with requirements of the Article 51 of the Budget codex of Ukraine (part of the Article about the established order of expenditures, the order of payment after receiving of goods and services.

The same violations have been revealed during performance of analysis of fulfillment of Complex measures for comprehensive development of Ukrainian language, planning and employment of State budget funds for their implementation. Thus, violating the requirements of the order of the Ministry of Finances of Ukraine "About the order of making agreements as for the provision of services (fulfillment of works) and purchase of stocks of materials and capital equipment from the agents of management, in case of payment at the expense of the budget funds", State Committee of Television and Radio of Ukraine has systematically diverted the budget funds in accounts receivable for the amount of 6 million UAH for more than one month, what is, practically, interest-free crediting of the enterprises.

State Treasury of Ukraine and the Ministry of Finances of Ukraine have controlled insufficiently and considered partially the state of debt in assignment of funds from the state budget to local budgets for provision of benefits and subventions to population. As a result, a number of districts for a long time had the accounts receivable with organizations, which sell liquefied natural gas and solid fuel. Thus, the analysis of formation, transfer and use of subventions from the state budget  to local budgets, stated in the paragraphs 4,5 of the Article 34 of the Law of Ukraine "About the State budget 2002" has revealed that in 2002 such kind of debt just for Ivano-Frankivsk and Chernivtsi districts comprised 1.8 million UAH and 0.9 million UAH correspondingly.

Employment of State budget funds with violation of the Law of Ukraine "About purchase of goods and services at the expense of the state funds" is still one of the most common budget violations. In 2003 the mentioned above violations have been revealed during the majority of the control measures. The total amount of the revealed violations comprised 423.7 million UAH (9.7% of the total amount of illegally employed budget funds).

Thus, the examination of adherence to the requirements of the current legislation as for the agreement of separate procedures of purchase of goods and services at the expense of the state budget funds by the Ministry of Economy and European integration of Ukraine has revealed the insufficient activity of the Ministry as authorized body of the executive power in purchase of goods and services at the expense of state funds. According to the results of examination of 527 materials, in 2002 the Ministry of Economy of Ukraine, as an authorized body, has given 103 letters of agreement for the total amount of 220.3 million UAH with violation of the current legislation, in particular of  the paragraph 2 of the Article 1 of the Law of Ukraine "About purchase of goods and services at the expense of state funds" (in the paragraph concerning determination of subjects, who can be contractors), of the part 2 of the Article 22 of the mentioned Law (about the reasons for agreement by the authorized body of the procedure of purchase by contractor of goods and services from one executor) and the Order of agreement with contractors of the separate purchase procedures.

Neglect of the current legislation has been established during examination and analysis of observance by the State Committee of information policy, television and broadcasting of Ukraine and by TV companies, which are under its jurisdiction, of the Law of Ukraine "About purchase of goods and services at the expense of state funds". Thus, till July 2002 there was no tender committee in the National TV Company of Ukraine. 44 purchases of goods and services for the amount of 1.3 million UAH have been performed without procedures of purchase, violating the requirements of the Articles 2 and 13 of the mentioned above Law of Ukraine.

The same violations have been made by the National TV Company of Ukraine. From 85 agreements made by the National TV Company of Ukraine for the purchase of goods and services for amount of 2.5 million UAH, 56 agreements of the amount of 0.6 million UAH (23.3 %) have been made without performance of the procedures of purchase, required by the current legislation. Actual payment according to these agreements comprised 0.5 million UAH.

Failure to comply with the procedure, determined by the Law of Ukraine "About the purchase of goods and services at the expense of the state funds" by the board of the Fund of social insurance from the temporary loss of capability, revealed during performance of the analysis and examination of formation and execution of the Fund budget in 2002, has led to illegal employment of funds for the purchase and construction of premises for the placement of Funds bodies for the total amount of 24.1 million UAH.

Purchases performed by the State committee of Ukraine in energy saving for the amount 2.8 million UAH have not complied with the procedures of auctions. This was confirmed by the examination and analysis of the target employment of state budget funds, assigned in 2001-2002 to the Committee for interdepartmental energy saving measures.

All analytical measures, performed by the Accounting Chamber on the financial year in the Ministry of Fuel and Energy have revealed numerous violations of the current legislation during purchasing of goods and services.

Examination and analysis of the employment of state budget funds, assigned to the Ministry of Fuel and Energy of Ukraine in 2002 and first quarter of 2003 according to the article "Rescue operations at coal mines" have revealed that the State military mine-rescue service in coal mining industry has performed purchases at the expense of the state funds for the amount of 10.7 million UAH, violating the requirements of the mentioned above Law and Order of inter-departmental coordination of purchases of separate groups of goods at the expense of the state budget, approved by the Cabinet of Ministers of Ukraine as of 10.10.2001 № 1312. In particular, purchase of goods and services, with estimated value not higher than 200 thousand EURO, has been performed not by the main funds manager - the Ministry of Fuel and Energy of Ukraine, but by recipient of the budget funds - Headquarters of the military mine-rescue service. Headquarters and subdivisions of the Service have spent 2.8 million UAH for the mentioned purchases.

Examination and analysis of employment of state budget funds, assigned to the ministry of Fuel and Energy in 2002 for labor protection and improvement of safety measures at the coal mines, have confirmed the formalism of the Ministry in the purchasing at the state expenses. The procedure of purchase looked just like preparation of reports about results of auctions for execution of scientific research and design works after signing of agreements or even before tender performance. Total amount of state budget funds, employed in 2002 by the Ministry and coalmining industries (recipients of the budget funds) with violation of the Law of Ukraine "About purchase of goods and services at the state expenses" comprised 8.5 million UAH.

Similar violations for the amount of 6.4 million UAH have been revealed during examination and analysis of employment of state budget funds, assigned to the Ministry of Fuel and Energy of Ukraine for the state support of construction at the coal, brown coal and peat mining enterprises.

Similar situation exists also in the Ministry of Industrial Policy of Ukraine. In the absence of its necessary control over the enterprises producers of the agricultural machinery, 7.1 million UAH have been spent with the violation of the Law of Ukraine "About purchase of goods and services at the expense of the state funds". This fact was established by the examination and analysis of employment of state budget funds, assigned for the financial support of domestic mechanical engineering for the agro-industrial complex.

Thus, violating the Article 1 of the Law of Ukraine "customers" of the goods and services were the enterprises of the branch, not authorized by the Cabinet of Ministers of Ukraine, because they are not bodies of the state power. In general, OJSC "Kharkiv Tractor Plant" has purchased at the expense of the state budget funds materials, spare parts and other stocks of materials and capital equipment for the total amount of 2.9 million UAH; OJSC "JSC ADVIS" - for 0.9 million UAH; OJSC "Kherson combines" - for 2.6 million UAH; OJSC "Ternopil combine factory" - for 0.7 million UAH.

Examination of the employment of state budget funds, assigned for construction and reconstruction of highways of the general use has testified that the State service of highways of Ukraine, while signing separate agreements on the purchase of equipment and machinery has violated the requirements of the Article 33 of the Law of Ukraine "About purchase of goods and services at the expense of the state funds", and used illegally the amount of 46.4 million UAH. Thus, the agreement with German enterprise "Wirtgen" for the total amount of 9.9 million EURO has been signed one day before the receipt of expert conclusions of Kiev Chamber of Commerce and Industry and Mechanical engineering department of the Ministry of Industrial Policy of Ukraine and two days before receipt of the letter of the Ministry of Economy and European Integration of Ukraine about reconciliation of the procedure of purchase by one executor.

Funds of the Surplus fund of the State budget of Ukraine have been employed with violation of the Law of Ukraine "About purchase of goods and services at the expense of the state funds" too.

Thus, for the partial reimbursement of losses, yielded to the agricultural manufacturers because of the natural disasters on March-July 2002 in Zhytomyr, Lugansk and Kherson districts have been illegally used 14.2 million UAH. The mentioned above violations have been revealed during examination of employment of the funds of the Surplus fund of the State budget of Ukraine, assigned in 2002-2003 for reimbursement of losses of agricultural manufacturers, who suffered from the natural disasters in 2002.

Another control measure - examination of employment of the funds of the Surplus fund of the State budget of Ukraine in 2002 - has also revealed the illegal employment of state funds for the purchase of goods and services for the amount of 5.7 million UAH. Thus, violating the Article 33 of the Law of Ukraine "About purchase of goods and services at the expense of the state funds", the agreement for purchase of the equipment for the Institute of cardiovascular surgery has been signed one day before reconciliation of the purchase procedure with one of the executors.

Facts of the illegal wage payment have been revealed in the current financial year. Thus, the examination of employment of state budget funds, assigned to the Ministry of Culture and Art of Ukraine in 2002 and first quarter of 2003 for development of circus, has revealed that violating the requirements of the current legislation, in particular, of the Law of Ukraine "About remuneration of labor", the Ministry of Culture and Art of Ukraine on the basis of approved staff lists, with the aid of the Ministry of Labor and Social Policy of Ukraine and Ministry of Finances of Ukraine, at the expense of the budget assignments for reimbursement of losses of 2002 and first quarter of 2003, has performed expenditures for the 100% increase of the salaries at 15 state circuses and National circus of Ukraine for the total amount of 3 million UAH, which is a budget violation according to the Article 116 of the Budget codex of Ukraine.

1.4 million UAH of the budget funds have been used in the system of Ministry of Emergency situations and population protection from the sequences of Chernobyl disaster with violations of the current legislation, which regulates remuneration of labor and insurance of the workers of fire safety. This fact has been revealed during examination of employment of state budget funds, assigned for support of the ecologically safe condition at the alienation zone and zone of obligatory resettlement.

Increase of salaries has been performed without taking in consideration of the announced state priorities, state budget implementation and budgets of managers of the budget funds, as well as evaluation of budget debt and available financial resources and is a consequence of the grounded planning of state budget expenditures, "hand management" of budget funds and their inadequate distribution. But decisions, approved in 2001-2002 have not solved the problems, which have arisen in the system of labor remuneration of workers of budget sphere.  Level of their salary kept low, the disproportion in labor remuneration has not been liquidated.

Negative practice of illegal assignment of funds from the Surplus fund of the State budget of Ukraine persists. Thus, examination of employment of the funds of the Surplus fund of the State budget of Ukraine in 2002 has revealed that the Cabinet of Ministers of Ukraine, violating the Article 24 of the Budget codex of Ukraine, continues to approve assignment of funds from the Surplus fund for regular spending, which could be included to the project of state budget. Specific weight of such expenditures of the total amount of assigned from the surplus fund has increased to 43.4% (33.1% - in 2001). The total amount of 63.1 million UAH of expenditures has been spent in 2002 in this direction.

Assignment of funds from the surplus fund of the state budget in 2002-2003 for reimbursement of losses of agricultural manufacturers, which suffered from the natural disasters on March-July of 2002, has been performed with violations of requirements of standard acts too. 2.4 million UAH have been received from the surplus fund of the state budget without provision of necessary economic and juridical grounds.

One of the results of illegal assignment of funds from the surplus fund is indebtedness that has arisen from the illegal provision of budget loans from the surplus fund. The examination of the employment of funds of the surplus fund has also revealed that the Cabinet of Ministers of Ukraine within 1997-2000, regardless current for that time Law of Ukraine "About budget system of Ukraine" and Provision about the surplus fund of the Cabinet of Ministers of Ukraine, which have not included budget loans from the surplus fund, has assigned 397.9 million UAH on terms of reimbursement. State Treasury of Ukraine has not taken appropriate measures for reimbursement of the mentioned funds to the state budget. 138.9 million UAH or 4.9% from the amount of assigned funds have been reimbursed as of the 01.01.2003. In 2002 the intake of the mentioned funds, has practically stopped and comprised only 3.7 million UAH. Total amount of indebtedness as of 01.01.2003 comprised 259 million UAH.

During fulfillment of the control measures by the specialists of the Accounting Chamber there have been revealed a number of losses of the State budget of Ukraine because of approval of illegal management decisions. Results of the audit of effectiveness of management of forest resources of Carpathian region of Ukraine testify that the mechanism of employment of the payment for the special utilization of forest resources, as a source of financing, is imperfect, because its amount does not cover more than half of the actual expenditures for creation of sawmills and is not bound with prices for logs and exceed its size by 10-100 times. Thus, in 2002 temporary users (commercial structures) have not covered the actual expenditures of the State for creation of sawmills in the amount of 8.5 million UAH. In case of sale of the felled wood through the state auction, the State could have received about 100 million UAH of the additional revenues, which is an important reserve for financing.

Results of the examination of provision and employment of subvention from the State budget of Ukraine for the social and economic development of the city of Sevastopol in 2001 and 2002 have led to conclusion that in case of legislative unadjustment of the order of payment of taxes from the material stocks and capital equipment to the budget and their employment for spending of funds from the state budget as well as employment of provisions of the Law of Ukraine "About the value added tax", the State has not received revenues in the amount of 20.4 million UAH.

In course of realization of two control measures, there were also discovered facts of direct losses to state budget due to irrational and illegal allocation of state property.

Thus, in case of implementation of market, not subvention, prices and competitive conditions while realization of natural gas, transferred to the Sevastopol city council in lieu of subvention, the State could have received over 40 mln UAH of revenue.

Because of allotment of part of logging fund for the year 2003 by Chernivtsi and Ivano-Frankivsk oblstateadministrations to subjects of economy, who do not possess the right of permanent utilization of land areas of the forestry fund (commercial structures), in defiance of Article 9 of the Forestry Code, Rules of timber allotment for stumps and failure to comply with requirements of the Decree of the Verkhovna Rada of Ukraine as of 15.03.2001 № 2290-ІІІ "About emergency measures connected with catastrophic floods in Zakarpattia", the State, according to preliminary calculations, will not receive about 15.6 mln UAH of additional revenue (in 2001-2002 - over 65 mln UAH).

The State budget of Ukraine also suffered losses because of failure to implement the principle of Integrated Treasury Account. Inspection of implementation of funds of the State Budget of Ukraine, assigned for provision of functional activity of the State Customs Service revealed the fact, that existing system of administration of taxes and customs duties while transportation of goods over customs border is not correlated with this norm of the law.

Taxes, duties (compulsory payments) and other income is accumulated at accounts  № 2603 (opened for the State Customs Service in "Aval" bank, as of a subject of economic activity) are not considered as included into the budget, since they are not being included directly into the Integrated Treasury Account of the State Budget.

As the result, the State suffers significant losses to budget funds. During 2002 and nine months of 2003 there were charged to, for customs registration of goods, but not paid, according to court  decisions, 1.6 billion UAH of taxes, duties and other compulsory payments by subjects of external economic activity, which accumulated on accounts of the commercial bank. In case of transfer of these payments to the Integrated Treasury Account, compulsory procurement of these payments based on court decision would have been impossible without appropriate decision of the State Treasury.

After provision of this information to the State Treasury of Ukraine, the latter announced that, since taxes, duties (compulsory payments) and other income of the State Budget in the process of customs registration are transferred by subjects of external economic activity not to Treasury but bank accounts, the State Treasury of Ukraine does not relate to them in any way.

But the problem, addressed by the Accounting Chamber, is much wider: first of all it concerns inclusion of these funds, according to requirements of paragraphs 4, 5 of Article 50 of the Budget Code of Ukraine. This regulation provides their inclusion directly into the Integrated Treasury Account and forbids their accumulation at accounts of procuring bodies.

Having forwarded information on the issue to the Cabinet of Ministers of Ukraine on 19.12.2003 and a proper letter to the Central State Treasury of Ukraine, the Accounting Chamber was hoping to meet understanding of importance of such a valuable source of budget income for the country. But, considering letters of the Central State Treasury of Ukraine to the Accounting Chamber the proper reaction, including on execution of paragraph 4 of the Instruction of the First Vice-Prime Minister, Azarov M. J., as of 15.01.2004, it seems that 1.6 billion UAH are simply not needed for the budget of the country, and their inclusion is deemed too problematic.

That is why the Chairman of the Accounting Chamber, Symonenko V.K., on 19.04.2004 forwarded a letter to the Prime Minister of Ukraine, Yanukovich V.F., addressing issue of fulfillment of our proposals.

There are also have not been noticed any changes for better in the system of planning and compilation of budgets. The practice of provision of budget requests, which exceed real needs, and subsequent improvement  of excessive budgets, lead to continuous existence of such kind of budget violation, as excessive assignments and excessive received funds, due to unjustified estimate allocations. Such facts were revealed by employees of the Accounting Chamber and comprise 73.8 mln UAH.

Considerable amounts of violations, connected with excessive planning of budget allocations, are discovered in the course of analysis and inspection of financial provision of raise of wages in budget sphere in 2003, connected with introduction of new amount of minimal wage. While estimation of amounts of additional allocations in 2003, according to the Decree of the Cabinet of Ministers of Ukraine as of 19.05.1003 № 740 "About raise of official salaries (rates of wages) of employees of institution, bodies and organizations of budget sphere", for advancement of official salaries (rates of wages) for budget sphere employees, the Ministry of Finance did not adjust their calculations with chief fund allocators, which resulted in excessive amounts of such allocations. Thus, more precise calculations of data of the State Budget of Ukraine concerning raise of official salaries in 2003 only for Ministry of Science and Education of Ukraine revealed 25 mln UAH of excess allocations. As the result of introduction by the Ministry of Finance of Ukraine of unjustified changes to monthly estimate of state budget allocations, in July-August of 2003 over 30 mln UAH were assigned groundlessly for raise of official salaries for employees of executive authorities, while official salaries were introduced in such authorities starting from September 1^st of the previous year according to the Decree of the Cabinet of Ministers of Ukraine as of 06.08.2003 № 1207.

Absence of proper control on behalf of the chief allocator of funds - Ministry of Agrarian Policy of Ukraine - over implementation of state budget funds, errors of the State Department of veterinarian medicine, as a responsible executive of budget programs in the sphere of veterinarian medicine, while planning and distribution of budget funds, caused unreasonable excess of assignments in budget request for labour payment in the amount of 9 mln UAH. It was revealed in the process of inspection of usage of state budget funds by the  State Department of veterinarian medicine in 2003 for management in the sphere of veterinarian medicine and organization of activity of institutions of the indicated sphere.

Analysis of implementation of state budget funds by executive authorities in 2002 testifies, that the existing system of financial provision of executive authorities does not provide transparency of budget process. The Ministry of Finance of Ukraine, while estimation of amounts of funds for financial provision of management programs in a certain sphere of activity, in the State Budget Project for the year 2002 did not provide execution of proper  analysis of budget requests  from chief funds allocators, judging from the point of view of their aim correspondence, priority and efficiency of usage of budget funds. Estimation of allocations was performed by a separate central body of executive power without appropriate reasoning and grounds. As the result, the State Material Reserve Committee of Ukraine received over 0.4 mln UAH of excessive allocations, Taras Shevchenko National Award Committee - over 0.1 mln UAH. State Customs Service of Ukraine received 6 mln UAH of excessive assignments for transportation services.

Similar violations are detected in the course of inspection of usage of Reserve Fund of the State Budget of Ukraine, assigned in 2002-2003 for reimbursement of losses to formers, caused due to natural disasters of 2002. Thus, the Ministry of Agrarian Policy of Ukraine in their estimates of loss reimbursement did not use the Method of estimation of losses caused by emergency situations of natural or man-caused character, approved by the Decree of the Cabinet of Ministers of Ukraine as of 15.02.2002 № 175, which led to excess of expenditures and, as a result, unreasonable allocation of money from the Reserve Fund of the State Budget. In particular, only Kherson, Kirovograd and Rivno oblstateadministrations received unjustified 2.4 mln UAH.

Due to control measures, performed by the Accounting Chamber in the reported year, there were detected cases of expenses, which exceed approved limits for a certain period.

Analysis and inspection of financial provision of salary raise in budget sphere in 2003 due to introduction of new amount of minimal wage confirmed, that at expense of the general fund of the State Budget there is still supported excessive number of research and educational and other personnel in higher educational institutions of 3-4^th levels of accreditation, subordinated to the Ministry of Science and Education of Ukraine. Only in 20 institutions of higher education in 2003 there were registered 870 over-normative wages, which required additional 8.6 mln UAH.

To the same kind of budget violations can be referred expenses in the amount of 53 mln UAH for reimbursement of internal state debt over amounts, approved by the Law About State Budget, which resulted in failure to comply with all the necessary procedures of introduction of changes to the State Budget of Ukraine,  presupposed by the Budget Code of Ukraine. It was detected in the course of inspection of expenses of the State Budget of Ukraine for maintenance and repayment of the state debt and its management in 2002.

Actual expenses of the National Television Company of Ukraine, compared to the approved by the budget amount of special fund allocations, comprise 10.2 mln UAH. In addition, actual expenses from the general fund exceeded the approved budget assignments for 0.2 mln UAH, which contradicts the requirements of the Article 51 of the Budget Code of Ukraine and paragraph 5 of the Procedure of creation, consideration, approval and basic requirements for compliance with budgets of budgets institutions, approved by the Decree of the Cabinet of Ministers as of 28.02.2002 № 228.

In the reported year there were revealed numerous cases of off-purpose usage of budget funds, assigned for execution of governmental programs. Specialists of the Accounting Chamber, in course of inspection of allocation of State Budget funds, assigned to the Ministry of Health of Ukraine for provision of insulin to people with diabetes discovered, that in violation of the Decree of the Cabinet of Ministers of Ukraine as of 06.03.2002 № 261 "About state order for purchase of goods, execution of work and provision of services for state needs in 2002", funds of the State Budget, assigned for fulfillment of state order of insulin supply in 2002 in the amount of 13.8 mln UAH were used not according to the purpose, but for repayment of bill payable for supplied insulin medications in 2001.

Financing of objects, not defined in the Program "Ukrainian Coal", which consumed 13 mln UAH of state budget funds, was illegal. Instead of concentration of funds on execution of works, defined in the Program, for the most important and with high level of readiness objects of the Ministry of Fuel and Energy of Ukraine, increasing the number of objects under construction, dispersing the state budget funds. The indicated violations were detected in the course of inspection and analysis of usage of state budget funds, assigned to the Ministry of Fuel and Energy of Ukraine in 2002-2003 for state support of construction at coal-, lignite (brown coal), and peat mining enterprises.

Under conditions of serious lack of financing of measures of National Program of protection of environments of the Azov and Black Seas in 2001-2002, inspection of usage of budget funds, assigned for execution of the mentioned above Program, revealed a series of budget violations on behalf of the Ministry of Ecology and Natural Resources of Ukraine while implementation of state budget funds assigned for its realization, in the amount of 2.7 mln UAH.

Off-purpose allocation of budget funds due to financing of agreements, which are not presupposed by state programs are also to be considered budget violations.

Specialists of the Accounting Chamber have revealed the fact of purchase of insulin by the Ministry of Health of Ukraine from the OJSC "Farmak", which actually realizes insulin produced by the  "Eli Lilli" company (USA). Thus, The Ministry of Health used 12 mln UAH, assigned by the Law of Ukraine "About State Budget of Ukraine for the year 2002" for purchase of domestic insulin, not according to the purpose, but for purchase of foreign insulin.

The indicated violations were also discovered in the course of inspection of usage of State Budget funds assigned in 2002 to the State Family and Youth Committee of Ukraine. In particular, absence of control of state budget funds allocation by the State Committee, assigned for execution of national programs, resulted in off-purpose usage of 4.8 mln UAH for realization of own programs of public organizations and their maintenance, which is a violation of the Article 87 of the Budget Code of Ukraine. Instead of planned creation of National Resource Center of Youth Public Organizations and Youth-Student Hotel, the funds were spent for construction works, purchase of office apartment and office equipment. So, the Center and the Hotel were not actually created. Thus, with support of the State Committee, the indicated amount of money was lost for the budget and illegally stays in possession of public organizations, which makes it an off-purpose usage of state budget funds.

Off-purpose usage of state budget funds was revealed in the course of inspection and analysis of allocation of state budget funds assigned in 2002-2003 to the State Committee of Water Industry for exploitation of state melioration systems, for execution of programs of protection of settlements from damaging influence of waters and anti-flood protection. This, funds assigned from the State Budget of Ukraine for exploitation of state melioration systems in the amount of 4.4 mln UAH were actually used for pumping of waste waters of the city of Kyiv by the Bortnichi pumping station.

3.4 mln UAH of budget funds were used for purposes, which are not connected with information projects and do not comply with the national program of informatization, that is for current expenses (renovation, technical service, purchase of consumption materials). For example, the State Tax Administration of Ukraine performed current expenditures for maintenance of computer equipment (purchase of materials, spare parts, service, support of the legal "League" system) in the amount of 2 mln UAH. These facts were revealed by specialists of the Accounting Chamber in the process of inspection of usage of state budget funds, assigned in 2002 and 9 months of 2003 for fulfillment of tasks (projects) of the National Informatization Program.

In 2003, there were revealed facts of inter-accounting, in a concealed form, even though it has been prohibited. During the year there are discovered facts of such settlements for the amount of 25.8 mln UAH.

Thus, due to analysis of creation, transfer and implementation of subventions from state budgets to local budgets, provided for by paragraphs 4, 5 of the Article 34 of the Law of Ukraine "About State Budget of Ukraine for the year 2002"  it has been discovered, that failure of the Ministry of Finance of Ukraine and of the State Treasury of Ukraine to comply with requirements of the Budget Code of Ukraine and other normative-legal acts created conditions for provision of subventions by way of transfer of natural gas from storage vaults of the  Ministry of Finance of Ukraine to the Council of Ministers of the Autonomous Republic of the Crimea and to the city of Sevastopol in the amounts of 14 mln UAH and 9.6 mln UAH respectively, and forced them to perform realization of this product.

Payment in the form of gas transfer lead to violation of the Article 39 of the Law of Ukraine "About State Budget of Ukraine for the year 2002", according to which the only source of financing of subventions and benefits to people for provision of payments for electric energy, natural gas, services of heat and water supply and sewage, and communication services, can only be in-payments to the general fund of the State Budget and  budget funds which were not used according to assignments for more than one month.

In the process of inspection of usage of state budget funds, assigned to the Ministry of Health of Ukraine for provision of insulin for patients with diabetes there was revealed the fact of inter-accounting settlements. As the result of improper control on behalf of the Ministry of Health of Ukraine, CJSC "Indar" performed such settlement of debt before local budgets for supplied insulin to separate health departments of oblstateadminstrations instead of insulin preparations, purchased for state budget funds and supplied, according to distribution scheme of the Ministry, to these departments. In such manner there was performed hidden subvention to local budgets in the amount of 2.2 mln UAH.

In 2003 in the course of control measures there was revealed such budget violation, as illegal usage of the Special Fund of the State Budget of Ukraine. Such violations were allowed in significant amounts by the State motor licensing and inspection Department of the Ministry of Internal Affairs of Ukraine, which was inspected by specialists of the Accounting Chamber regarding usage of the general and special funds of the State Budget of Ukraine for provision of traffic safety, registration and keeping record of means of transportation. As the result of failure to comply with requirements of the Article 23 of the Budget Code of Ukraine, which specifies, that allocations of the special budget fund have constant budget purpose, which allows to perform them exclusively within limits and on account of respective incomes to the special fund, the mentioned above funds lost their target purpose, were deprived of personal responsibility, which caused their uncontrolled usage. In general in the system of the State motor licensing and inspection Department during the year 2002 according to instructions of the Ministry of Internal Affairs of Ukraine  and regional departments of militia, dealing with the program of "Provision of safe traffic, registration and keeping record of means of transportation", there were re-distributed resources of the special fund of the State Budget and material resources in the  amount of 111.9 mln UAH for purposes, which are not connected with execution of this program. 

Facts of significant amounts of illegal usage of the special fund of the State Budget were revealed by analysis and inspection of financial provision of salary raise in budget sphere in 2003 due to introduction of the new amount of minimal salary. In violation of requirements of the  Article 48 of the Budget Code of Ukraine some institutions of higher education of 3-4^th levels of accreditation of the Ministry of Science and Education of Ukraine performed operations of allocation of resources of the special fund  beyond control of authorities of the State Treasury of Ukraine. As of 01.07.2003 these institutions performed such allocations for the amount of 61.2 mln UAH, of them for labour payment - 30.2 mln UAH.

The Ministry of Finance of Ukraine, being de jure a guarantor of legal execution of the State Budget of Ukraine, de facto in many cases violated current legislation regarding execution of the state budget, in particular, allowed illegal under-financing of the protected entries of the State Budget of Ukraine. Thus, in violation of the Article 111 of the Budget Code of Ukraine, it was not performing control of compliance with budget legislation, and as the result, allocations for purchase of insulin were underfinanced in 2002 for the total amount of 29.8 mln UAH. The indicated fact was proved by the results of inspection of usage of State Budget funds assigned to the Ministry of Health of Ukraine for provision of patients with diabetes with insulin.

Improper bookkeeping, underestimation of capital assets and other inventory holdings, non-posting of the amount of cost of real assets, according to results of control measures, undertaken by specialists of the Accounting Chamber have become a standard. Total amount of indicated budget violations in the reported year comprised 278.5 mln UAH.

Thus, inspection of the state of provision and implementation of subventions from the State Budget of Ukraine for social and economical development of Sevastopol in 2001 and 2002 revealed, that the Ministry of Finance of Ukraine during 1999-2002 has not settled the discrepancy regarding the amounts of natural gas, received from NJSC "Naftogaz of Ukraine" and its remainder, stored at SC "Ukrtransgaz" in the amount of 100 mln UAH. Up till now the NJSC "Naftogaz of Ukraine" has not proved the fact of transmission of natural gas in 1999 to the Ministry of Finance of Ukraine (for budget debt repayment) for the indicated amount. Agreements for responsible storage of gas are absent, and common verification of gas remainders at place of its storage was not performed.

Besides, there took place discrepancy between the amount of subvention actually received by the Sevastopol city state administration (CSA) with data of the State Treasury of Ukraine regarding amounts of the provided subvention and data, depicted in the report on execution of the State Budget of Ukraine. Out of the total amount of provided subvention 25.3 mln UAH, Sevastopol CSA does not confirm reception of 13.4 mln UAH. Data of the Statement about fulfillment of the State Budget of Ukraine for the 3^rd quarter of 2002 on allocations in the amount of 13.4 mln UAH is not authentic.

Result of the analysis confirmed creation and implementation of subventions from the state budget to local budgets for provision of benefits to the people, who suffered because of the Chernobyl disaster, provided for by paragraph 10 of the Article 40 of the of the Law of Ukraine "About State Budget of Ukraine for the year 2003", and unaccounted, conformed by verification acts, state budget debt for provided benefits in accounting registries of enterprises - providers of service for the amount of 7.2 mln UAH.

Specialists of the Accounting Chamber based on the results of inspection of usage of state budget funds, assigned to the Ministry of Health of Ukraine for provision of insulin for people ill with diabetes came to the conclusion that the current mechanism of centralized provision of insulin for people with diabetes makes it impossible for the Ministry of Health of Ukraine, as the chief allocator, to control actual consumption of insulin preparations. Totally in 2002 the Ministry has unreasonably allocated insulin preparation usage in the amount of 13.3 mln UAH, which, actually, are accounted at balances of medical institutions, which constitutes a budget violation.

Results of the inspection of usage of the state budget funds, assigned to the Ministry of Culture and Arts of Ukraine for the year 2002 and 1^st half-year of 2003 for circus industry testify that regardless of the requirements of the Law of Ukraine "About enterprises in Ukraine", annual financial plans were not composed by the state circus enterprises and were not forwarded for approval to the Ministry of Culture of Ukraine. In the process of planning of income for circus enterprises, the Ministry insufficiently considered the achieved level of income received in the previous years and real conditions of functioning in the current year, which resulted in planning of additional assignments from the State Budget for coverage of losses. As the result, in 2002 planned income by the two circuses was understated for 2.2 mln UAH.

Results of the inspection of usage of the state budget funds, assigned for provision of functional activity of the State Customs Service of Ukraine testify presence of multiple instances of the indicated kinds of violations. Thus, significant understatement by state executive authorities of the cost of confiscated property, in the process of its realization caused loss of additional income to budget only in 2002 and the first half-year of 2003 approximately 19 mln UAH.

Besides, violating requirements of current legislation, state executives for a long period of time (up to seven months) were not accepting confiscated property, as the result within the indicated period of time customs authorities carried out expenses in the amount of almost 0.7 mln UAH, connected with storage of the property.

In course of the indicated inspection there was also discovered the fact of underpayment to the budget, according to the results of financial and economical activity of subjects of economy. Creation by the Law of Ukraine "About introduction of changes to some legislative acts of Ukraine regarding state support of automobile industry" of the norm, according to which sales of cars, confiscated by court decision, is performed with calculation of taxes and duties, caused loss of budget income in 2002 and 1^st half-year of 2003 in the amount of almost 7.7. mln UAH.

Facts of illegal change of form of property was registered in the course of execution of the following two control measures - inspection of usage of funds of the State Budget of Ukraine for  construction of the "Emergency Ambulance" and of the "Fitness Center" in Odessa and compliance with legislation in the process of privatization and analysis of usage of state budget funds, assigned to the Ministry of Fuel and Energy of Ukraine for  state support of construction works at enterprises of coal-, lignite (brown coal) and peat mining industry.

The State Property Fund of Ukraine and its regional departments in Odessa oblast performed privatization of objects of unfinished construction of the "Emergency Ambulance" (balance cost - 17.1 mln UAH, sales cost - 1.1 mln) and of the "Fitness Center" (balance cost - 2.9 mln UAH, sales cost - 870 thousand UAH) with violation of requirements of current legislation, which resulted in loss by the city of two important social and cultural objects at total cost of 20 mln UAH.

Also, with violation of the current legislation, the Ministry of Fuel and Energy of Ukraine issued permission for transfer into shared property and to other owners  objects of unfinished construction for the total amount of 14.7 mln UAH.

In 2003 specialists of the Accounting Chamber continued revealing cases of hidden financing of superior (parent) organization at cost of funds of subordinated organizations. In particular, in course of inspection of usage of state budget funds, assigned to the State Border Protection Committee of Ukraine in 2002 and the 1^st half of 2003  by the program "State Border Protection" it was revealed, that the military unit 2428 in 2002 performed allocation of funds for maintenance of the State Border Protection Committee in the amount of over 3.5 mln UAH. The funds were used for capital renovation of offices, exploited by the central apparatus of the State Border Protection Committee of Ukraine; purchase of cars "Shkoda Octavia", "Opel Omega", "Toyota Landcruiser"; payment for the TV program "Border"; repairs and maintenance of cars; purchase of home equipment and kitchen devices, furniture, mobile phones; other allocations for maintenance of central apparatus.

Analysis of usage of state budget funds by executive authorities in 2002 also brought evidence that State Standartization, Metrology and Certification Committee of Ukraine violated the Laws of Ukraine "About source of financing of executive power" and "About bookkeeping and financial accounting in Ukraine" in the sphere of hidden allocation of funds of subordinated institutions for maintenance of the mentioned Committee in the amount of 1.9 mln UAH without their inclusion into the special fund of the State Budget.

Resources of the special fund of subordinated institutions in the amount of 0.4 mln UAH were also illegally used in 2003 for maintenance of the State Department of veterinarian medicine and its territorial bodies.

Facts of illegal concurrent allocation for financing of budget institutions from different budgets was detected by inspection of usage of State Budget funds  assigned to the Ministry of Health of Ukraine for provision of insulin for people with diabetes. While planning of insulin purchases the Ministry did not take into consideration actual needs of patients, taking insulin of foreign production, and planned provision only of insulin of domestic production. Neglecting the fact of prohibition, stated in the Article 85 of the Budget Code of Ukraine, to perform concurrent allocations during the budget period for financing of budget institutions from different budgets, only during 8 months of 2003 at cost of local budgets there were purchased insulin preparations of foreign production for the total amount of over 10.3 mln UAH.

Audit of efficiency of management of local resources of the Carpathian region of Ukraine, conducted by specialists of the Accounting Chamber in the reported year, revealed also such kind of budget violation as illegal losses and deficiency of material stock due to improper control of their storage. Because of absence of strict coordination of activity of the state forest protection institutions, local authorities, law-enforcement forces, ecology, tax and customs services, illegal felling of woods caused the State losses in the amount of 15.9 mln UAH.

There also still exists such kind of budget violation as off-purpose allocation of budget funds assigned for current expenses.

Thus, inspection of allocation of state budget funds and analysis of interdepartmental accounting in Kyiv oblast revealed, that in violation of the Article 52 of the Budget Code of Ukraine, at cost of subventions from the state budget for assistance to families with children, handicapped from birth and handicapped children there financed allocations in the amount of 2.3 mln UAH, provided by the Law of Ukraine "About state social support of families with insufficient provision". Besides, at cost of state budget funds there was performed acquittance of accounts payable for works, performed in previous years for the amount of 0.2 mln UAH.

Similar violations were discovered in course of analysis of creation, transfer and implementation of subventions from state budget fund to local budgets, provided by paragraphs 4, 5 of the Article 34 of the Law of Ukraine "About State Budget of Ukraine of the year 2002". It means, that state budget funds were forwarded for acquittance of accounts payable for works, performed in previous years, which was not taken into consideration in estimate calculations of assignment needs and was used not according to target purpose.

In the Autonomous Republic of the Crimea at cost of subventions from the State budget for provision of benefits to the people for payment of electricity, natural gas, heat-, water supply, sewage and communications services, based on protocol-registries there was performed acquittance of debt for condensed gas, which had formed by 01.01.2002, while, according to the Law of Ukraine "About State Budget of Ukraine for the year 2002", such allocations are to be financed at cost of subventions for provision of benefits and subsidies to the people for payment for solid and liquid fuel, condensed gas, rent, waste disposal. Thus, the funds assigned for provision of allocations by one subvention were directed for financing of another one, that is off-purpose.

Similar cases of subvention usage were discovered in course of analysis of formation and usage of subventions from the State Budget to local budgets for provision of benefits to the people, who suffered in the result of the Chernobyl disaster. Thus, at cost of subventions there was performed acquittance of debt for provided benefits, which had created by 01.01.2003, and payment for benefits provided in previous years, which are not indicated as part of the debt, and which constitutes its illegal usage in the amount of over 0.6 mln UAH. Such cases were registered in Desnianskiy region of Kyiv, Khmelnytsk and Poltava oblasts.

In violation of the Article 17 of the Law of Ukraine "About State Budget of Ukraine for the year 2002", capital allocations were financed at cost of current allocations in the amount of 1.2 mln UAH, which means the funds were used off purpose. It was discovered in the result of inspection of usage of State Budget funds in 2002 for support of ecologically safe state in the alienation zone and in the zone of unconditional (compulsory) resettlement.

Absolutely similar budget violation for the amount of 1 mln UAH was performed by the UkrStateFund, which was discovered in the result of inspection and analysis of allocation of funds of the State Budget of Ukraine, assigned for state support of agriculture (farming) in 2002.

Specialists of the Accounting Chamber have also registered budget violations connected with placement and execution of the state order. State Committee of Ukraine on Land Resources has entered into agreements for production of forms of certificates and of state acts for the amount, which exceeds the amount, proved by the state order for 4 mln UAH. It was verified by inspection and analysis of legality and efficiency of usage of state budget funds, assigned for execution of land reform, issuance of state acts for the right of private property and protection and rational use of lands in 2000-2002 and the first quarter of 2003.

Analysis of formation and usage of subventions from the State Budget to local budgets, provided for by paragraphs 4, 5 of the Article 34 of the Law of Ukraine "About State Budget of Ukraine for the year 2002" revealed such budget violation as illegal failure to include funds into bills payable. The amount of unused coupons, distributed among the people for reception of solid fuel  in previous budget periods, in not included into the amount of bills payable and in calculations of required funds in the planning process.

In the Autonomous Republic of the Crimea in 2001 the amount by unused coupons, which is not included into bills payable, comprises 9.2 mln UAH, in 2002 - 6.7. mln UAH.

Inspection of usage of budget  funds and analysis of inter-budget accounting in Kyiv oblast has also revealed the fact of  illegal overstating of the amount of additional subvention for oblast budget for the amount of 9.7 mln UAH.

Specialists of the Accounting Chamber have also registered budget losses due to improper control of reception taxes and payments. Results of the analysis of usage of state budget funds by executive authorities in 2002 testifies, that a number of payments, included into the special fund of the Sate Budget of Ukraine are not included into the list of national taxes and duties (obligatory payments) set by the Law of Ukraine "About taxation system" and other laws of Ukraine about taxation. Control over correctness and timeliness of their handling by state taxation or other bodies is not being performed, which allows some taxpayers to avoid fulfillment of such transfers, and in the result of which the State Budget experiences significant losses.

Due to improper control on behalf of the State Committee of Ukraine of technical regulation and consumer policy over execution of paragraph 6 of the Article 21 of the Law of Ukraine "About Advertising", losses of the special fund of the State Budget comprised about 8.4 mln UAH per year.

State off-budget funds were also used with budget violations. Specialists of the Accounting Chamber, based on the results of analysis and inspection of creation and execution of the budget of the  Fund of Social insurance against temporary loss of working ability in 2002 came to the conclusion, that creation and usage of the Fund's resources beyond the state budget limits and weakens state control over its implementation.

In 2002, due to legislatively established amortization and restructuring of debts of insurants and placements of funds into stocks of enterprises and organizations, losses of the Fund comprised 24.4 mln UAH.

By decision of the Board of Directors of the Fund and based on approved normative documents, 34.3 mln UAH were used not according to target purpose. In particular,  8.1 mln UAH were illegally used for provision of financial assistance in case of uninsured births; for maintenance of employees of trade-unions - 5.7 mln UAH; awarding bonuses of insurable assets - 2.3 mln UAH. Illegal creation of development fund by the Board of Directors at cost of passive income resulted in off-purpose usage of funds for creation of material-and-technical basis of health-improving and healing institutions and other measures - 5 mln UAH. Provision of the Social Insurance Committee (by paragraph 2.2.9. of the Instruction of the procedure of creation and execution of the Fund budget, approved by the decree of the Board of Directors as of 26.01.2001 № 15) with the right  to provide tour passes for sanatorium-and-spa treatment to unemployed veterans of war and labour does not comply with the Article 4 of the Law of Ukraine "About compulsory state social insurance due to temporary loss of working ability and expenses, connected with births  and funerals" and resulted in off-purpose usage of funds in the amount of 10.7 mln UAH. Due to definition in the paragraph 3.13 of the Instruction, in defiance of the Article 48 of the mentioned Law, one of the main directions of allocation of Fund resources  - salary for governing bodies of sport societies - consumed 2.4 mln UAH as off-purpose allocations.

2.1. mln UAH of the Fund of Social Insurance against accidents at work and professional illnesses were spent for purposes not provided by current legislation. Thus, for allocations, which are supposed to be made at cost of state budget funds and enterprises (purchase of cars, computers, medical equipment, working clothes etc) - over 1.9 mln UAH, there were performed excessive payments for unperformed medical consultations, cost of living for people, who accompanied 1^st group invalids in the amount of 0.1 mln UAH, payments for works and services in the amount of 0.1 mln UAH, acts of performed works being absent.

Each year usage of State Budget funds is marked by violation of one of the main principles of budget system of Ukraine - principle of efficiency.

Ineffective usage of state budget funds and resources of target budget and off-budget funds became the systematic violation of the budget process.

Control-analytical measures, conducted by the Accounting Chamber in 2003, revealed numerous facts of such usage of budget funds. Total amount, as it was already indicated, equal over 2.8 billion UAH.

Most considerable amounts of violations are connected with ineffective usage of state budget funds due to unreasonable management decisions.

According to the results of inspection of usage of state budget funds by the State Department of veterinarian medicine in 2003 for management in the sphere of veterinarian medicine and organization of activity of institutions in the indicated sphere there is made the conclusion, that usage of state budget funds by the State Department for implementation of budget programs "Management in the sphere of veterinarian medicine" and "Organization and regulation of activity of institutions in the system of veterinarian medicine" was performed inefficiently, with violations of requirements of the Budget Code of Ukraine and of the Law of Ukraine "About veterinarian medicine". As the result, state budget funds, assigned in 2003 for realization of the budget program "Management in the sphere of veterinarian medicine" for regional (town) departments of veterinarian medicine in the amount of 33.6 mln UAH were used ineffectively.

The State Department also doe not undertake any proper measures in order to decrease the burden of the general fund of the State Budget. Own intakes for services, provided by state veterinary clinics, considerably exceed resources of the general fund of the State Budget, which are assigned for their maintenance. It testifies of the possibility to maintain the clinics exclusively at their own cost, and allocate funds at cost of appropriate budget program only for anti-epizootic measures.

Ineffective usage of funds is also discovered in course of analysis of usage of state budget funds by executive authorities in 2002. Creation and liquidation of bodies of executive power without any system, change of their status, re-creation of  earlier liquidated bodies resulted in parallelism of their work, doubling of functions, and, in the end, in ineffective and irresponsible usage of budget funds.

Thus, reorganizations consumed additional ineffective expenses of budget funds in the amount of 6.5 mln UAH. In particular, structural modifications in the Ministry of Economy of Ukraine took 1.4 mln UAH; organizational changes in Держбуду of Ukraine - 2.6 mln UAH; of the Public Service of Export Control of Ukraine - 0.8 ml UAH; for creation of territorial bankruptcy bodies of the Ministry of Economy and European Integration of Ukraine - 1.7 mln UAH.

The Cabinet of Ministers of Ukraine also used resources of the reserve fund of the State Budget of Ukraine ineffectively. Actually they became the additional source of financing of state centralized capital investments. In 2002 at cost of the reserve fund there were assigned 14.9 mln UAH for financing of those objects, which were supposed to be financed by the Cabinet of Ministers of Ukraine at cost of state centralized capital investments.

In the result of inconsistent and irresponsible actions there was allowed ineffective usage of state budget funds for provision of functional activity of the State Customs Service of Ukraine. In July of 1999 the State Customs Service of Ukraine signed a contract for execution of work of development and construction of the "Poliscan-3" complex at total cost of 16 mln UAH, while the decision of its future location was accepted only in March of 2001. Besides, this decision was not coordinated with management of the enterprise on the territory of which the complex was supposed to be built (Illichivsk Port). So far the construction works haven't even started yet, while 11.5 mln UAH of budget funds have already been spent.

Inspection of provision and employment of subventions from the State Budget of Ukraine for social and economic development of the town of Sevastopol in 2001 and 2002 revealed, that in the result of failure of the Cabinet of Ministers of Ukraine to determine and approve directions of subvention allocations in 2002, Sevastopol town administration made their own decisions regarding this issue , which led to inefficient usage of 25.3 mln UAH.

Inefficient allocation of budget funds due to groundless administrative decisions was revealed in course of inspection of allocation of state budget funds, assigned for fulfillment of tasks (projects) of the National Informatization Program in 2002 and 9 months of 2003. State Tax Administration of Ukraine (STAU) in 2002-2003 the major amount of allocations (76.7%), assigned from the state budget for informatization, was used for acquittance of commodity credit by the contract with the Joint Stock Company OPTIMUS S.A. (Poland) for supply of semi-finished products and component parts for working stations OPTIMUS S.A. and mounting of ready products in Ukraine for needs of the STAU for the total amount of 12 mln USD. According to the conclusion of the State Information-Analytical Center of monitoring of external commodity markets, complex of equipment offered by the JSC OPTIMUS S.A., exceeds the average level of retail prices in Ukraine by 1.8. Accordingly, Отже, the STAU entered into agreement, in which the amount of excessive cost of equipment and component parts, otherwise inefficiently used funds, comprised 5.3 mln USD or 28.1 mln UAH according to the exchange rate of the National Bank of Ukraine.

Results of the inspection and analysis of usage of the state budget funds, assigned in 2002-2003 to the State Committee of Water Industry for exploitation of state melioration systems, for execution of programs of protection of settlements from damaging influence of waters and anti-flood protection testify of ineffective usage of funds in the amount of 6.3 mln UAH due to groundless decisions. Thus, due to dispersion of financing for a great number of unfinished objects of anti-flood measures over 1 mln UAH was used inefficiently; due to discard of 33 unfinished anti-flood objects by Zakarpattia oblast water industry on river Tisa, which were destroyed by floods of 1998 and 2001 - 5.3 mln UAH.

Inspection of allocation of funds of the State Budget of Ukraine by the Ministry of Science and Education of Ukraine for provision of educational institutions with study books and manuals, performed by specialists of the Accounting Chamber revealed, that in the result of approval by the Ministry of the decision to present textbooks "Bukvar", issued in 2001, for students of the 1^st grades without introduction of any changes to the Procedure of provision of students of institutions of secondary education and technical schools with textbooks and manuals, in 2002 there were spent over 2.6 mln UAH of budget funds for printing of this textbook, which was ineffective usage of the funds.

Besides, under unsatisfactory state of textbook issuance and minimal satisfaction of the need, the Central Department of Science and Education of the Kyiv city state administration and Department of Science and Education of the Kyiv oblast state administration have received excessive number of textbooks - 350.6 thousand copies for the total cost of 1.9 mln UAH, of which, as revealed by selective inspections, 44.4 thousand copies for the total cost of 0.3 mln UAH are kept in library vaults of educational institutions, which resulted in their inefficient usage.

Selective inspections at six state circus enterprises revealed, that in the result of unprofitable agreements with foreign and private enterprises for execution of circus performances, there were experienced losses for the total amount of over 0.9 mln UAH, which constitutes ineffective usage of state budget funds.

According to the results of activity in 2002 four circuses, having received budget funds for coverage of losses in the amount of 4.3 mln UAH, were actually receiving profits. The amount of income tax paid by them constitutes almost 0.5 mln UAH, which also should be considered ineffective usage of budget assignments.

Numerous facts of groundless administrative decisions, which resulted in inefficient usage of budget funds, were also revealed in course of inspection of usage of State Budget funds in 2002, assigned for provision of invalids with cars and orthopedic products. In the result of purchase in 2002 of prosthetic devices from enterprises of non-governmental form of property towards execution of the state order by PE "Ukrprotez" for prices, which exceed by 2-5 times the prices of analogues, produced by public and state enterprises, 1.8 mln UAH were used ineffectively.

Unlawful delegation of function of formation of state order by the Ministry of Labour and Social Policy of Ukraine to the Producing Enterprise "Ukrprotez" and its provision, in violation of the Budget Code of Ukraine, with the authority if allocator of budget funds in the sphere of distribution of wheelchairs to regions and improper execution of these functions resulted in inefficient usage of budget funds in the amount of 2.9 mln UAH and caused groundless, under condition of presence of financial resources, failure to provide 2653 handicapped people with wheelchairs of needed modifications.

Performance of payments by PE "Ukrprotez" with state and public enterprises for supplied products at actual prices, unrelated to contract prices, resulted in inefficient usage of budget funds in the amount of almost 2.7 mln UAH, assigned for prosthesis.

Besides, under condition of sufficient number of domestic producers able to execute the state order of wheelchair production in full amount based on the Contract, signed between Lviv State Experimental Enterprise of Means of Transportation and Prosthesis and Limited Liability Company "Slajg", starting with 2002 there were purchased and brought into Ukraine, with assistance of three agents, 6180 wheelchairs of foreign production, which resulted in inefficient usage of budget funds in amount of 1.7 mln UAH.

Considerable amounts of inefficient usage of budget funds are connected with service of untimely acquitted foreign loan.

Analysis of reasons and financial consequences of restructuring of foreign liabilities of Ukraine before governing bodies of foreign countries - members of the Paris Creditors Association testified, that in the result of agreements, entered into by the Cabinet of Ministers of Ukraine, about restructuring of debts and due to activation of state guarantees, direct responsibility for repayment of these funds is placed on the State, which means reprocessing of the liabilities of subjects of economic activity into direct state debt.

According to the conditions, additional allocations on service of restructured debts during 12 years will comprise over 209 mln USD or over 1.1. billion UAH, according to current exchange rate, of which 38.5 mln USD, or over 200 mln UAH according to the official exchange rate of the National Bank of Ukraine, have already been  paid off.

Inefficient usage of sate budget funds was also verified by inspection of the state of realization of conclusions and proposals of the Accounting Chamber according to inspection of implementation of the loan of IBRD by the Project of Development of the Market of Electric Energy. Thus, during 2003 according to this loan IBRD has received 7.4 mln USD, or 39.5 mln UAH according to official exchange rate of the National Bank of Ukraine,  at cost of the State Budget of Ukraine. It is to be noted, that this project was annulled as of 23.09.1999. The state of payments from the generating companies to the state budget for actually received in 1997 part of the IBRD loan in the amount of 76.4 mln USD is unsatisfactory. During 1997-2003 overdue debt kept growing and by 01.01.2004 reached 33.2 mln USD. It results in transfer of liabilities of generating companies - participants of the Project to the state debt.

Decision of the Ministry of Finance of Ukraine about cessation, as of 24.01.2000, of payments for maintenance and acquittance of guaranteed liabilities before countries-members of the Paris Creditors Association, was hasty, organizationally unprepared, economically non-calculated and resulted in inefficient usage of budget funds due to payment of interests by debt credits and penalty provisions.

The indicated decision was made under conditions of realization of the Program of Government of Ukraine coordinated with the International Currency Fund, even though execution of the program is one of the main conditions of acceptance of the decision of debt restructuring by the Paris Creditors Association. In the result official negotiations with creditors of Ukraine started only in March of 2001, or 14 months after cessation of payments.

It resulted in employment of punitive measures against Ukraine for failure to perform payments for creditors' benefit in the amount of over 16 mln USD or over 80 mln UAH during 2000.

In addition, the Ministry of Finance of Ukraine turned out incapable with their own forces and with assistance of specialists from other state economic and legal organizations to prepare and conduct negotiation regarding restructuring, that is why foreign companies were included into the process. Additional, actually ineffective allocations of state budget funds for attraction of foreign consultants comprised 2.4 mln USD or 12.7 mln UAH, which were fully paid regardless of their failure to fulfill provisions of the agreement in full amount and in indicated terms.

Numerous facts of ineffective usage of funds were discovered by specialist of the Accounting Chamber in course of annual inspection of budget of expenses of the National Bank of Ukraine.

In general there were detected ineffective and in violation of current legislation allocations in the amount of 51 mln UAH.

During 10 years the issue of employment of objects of unfinished construction for reconstruction of paper-making machine № 12 of the former State Enterprise "Malin Paper Plant" of the Manufacturing Association "Ukrpapirprom" (now - OJSC "Malin Paper Plant") remains unsolved. Back in 1991 it was planned to re-equip and rebuild it in order to create facilities for production of special paper for issuance of national currency. Total amount of ineffective allocations connected with reconstruction of this machine equals almost 5.2 mln UAH.

Out of 60 objects which were under construction and reconstruction in 2002, 30 were included into the plan only on 30.12.2002. 8.2 mln UAH were spent for their constriction and reconstruction. Additional inclusion of some objects into the plan of capital investments was not reasonably justified, since they are not connected with provision of main tasks and functions of the national Bank of Ukraine defined by current legislation.

In 2002 additional 0.8 mln UAH were ineffectively used for substitution of 12 serviceable cars "Opel Vectra", which were in service only for two years, with new cars "Opel Omega", which cost at least twice as much.

National Bank of Ukraine also referred to expenses operations, connected with payment of commission for reservation of funds,  which were not reimbursed due to failure of the Government of Ukraine to fulfill its obligations and cessation of the program of extended crediting from IMF. In 2002 such allocations comprised 20.7 mln UAH and totally since 1998 - 34 mln UAH, which constitute direct losses of the State.

In 2002 the National Bank of Ukraine performed allocations in violation of current legislation and of its own normative acts.

As in previous years, the National Bank of Ukraine performed sponsorship activity, which was not provided for by current legislation. In 2002 it constituted over 3 mln UAH and was aimed mostly at modernization of material-and-technical base of the Verkhovna Rada of Ukraine. At the same time provision of financial assistance to the Verkhovna Rada of Ukraine violates the Law of Ukraine "About sources of financing of government bodies", which verifies that government bodies shall perform their activities only at cost of budget financing within the limits provided by the Law of Ukraine about the State Budget of Ukraine for the corresponding year.

National Bank of Ukraine had also violated the procedure of goods purchase. Thus, the Banknote paper plant performed purchase of products from the "Sojuz and C ltd" (Kyiv) and from Private Industrial Trading Company "Yusi" (Kharkiv) without tenders and signing of contracts, and payments were performed based on suppliers' invoices. Payment for one and the same products was performed through numerous transfers, which allowed the Plant to avoid tender procedures in violation of the Regulations about tender procedures in the process of purchase of products, works and services by the National Bank of Ukraine. Totally in 2002 there performed such purchases for the amount of 0.1 mln UAH, since the Banknote Paper Plant performed purchases for the amount of 90 thousand UAH.

There was discovered the fact of violation of the Regulations about long-term crediting of employees of the National Bank of Ukraine for construction and purchase of accommodations for the period of 20 years at the amount of almost 0.1 mln UAH. Interest-free beneficiary long-term credit for construction of housing was provided to the employee, who had no appropriate record of service and did not relate to the category of employees who had the right to receive benefits at cost of the bank. After his retirement from the bank at his own will he received the possibility to repay the credit and the interests within 20 years, even though according to the Regulations such borrower was supposed to repay all existing credit debts at the moment of his retirement.

During 2003 there were revealed numerous facts of inefficient usage of budget funds by means of its long-term retention without usage on registration accounts of budget funds allocators, which also can be considered ineffective management of budget funds.

Results of inspection of completeness of financing and effective usage of state budget funds assigned in 2002 for provision of social services, material provision of unemployed and re-grouping of labour forces  of Donbass  revealed that during 2002 allocations for material provision and provision of social services to unemployed uninsured people was performed at cost of the Fund of compulsory state social insurance for case of unemployment, and funds of the State Budget of Ukraine remained untouched at the budget account of the State Employment Center and were not included into the Fund's account due to long-term inconsistency of positions between the the State Treasury of Ukraine, Ministry of Labour of Ukraine and the State Employment Center. Funds in the amount of 40 mln UAH were actually transferred to the Fund's account only in December of 2002.

Violation of the Article 108 of the Budget Code of Ukraine and the Procedure of Subvention Transfers, approved by the Cabinet of Ministers of Ukraine as of  11.04.2002 № 490 at the stage of state budget allocations caused to ineffective usage of 31.7 mln UAH of subventions for social and economic development of the town of Sevastopol in 2001 and 2002.

Inspection of the state of provision, lawfulness and effectiveness of usage of subventions from the state budget for execution of investment projects, aimed at development of social infrastructure of the Autonomous Republic of the Crimea in 2003 testifies of the low level of management of financial resources. Subvention allocators did not provide for their timely and effective implementation. Permanent remainders of funds at account , under conditions of limited budget financing, comprise over 3 mln UAH.

Ineffective management of budget funds, assigned for management if the sphere of veterinarian medicine ad organization of activity of organizations of the indicated sphere was allowed by the State Department of Veterinarian Medicine in 2003. Miscalculations in the process of planning and distribution of budget funds and attraction of resources of the special funds for financing of measures, which were supposed to be financed by the general fund, resulted in  creation of considerable remainders of funds, which as of 01.10.2003 comprised 25.6 mln UAH.

Facts of ineffective management of budget funds was revealed in the result of analysis and inspection of financial provision of salary raise in the budget sphere in 2003 due to introduction of new amount of minimal wage. The Ministry of Agrarian Policy of Ukraine issued orders about introduction of new amount of official salaries only on 12.08.2003 and revision of manning tables of budget institutions within the system of the Ministry started only in the second half of August. As the result, over 50 thousand employees started receiving raised salaries only starting with the end of September and beginning of October of 2003. Due to this, remainders of funds, unused during the two months for the assigned purpose as of 01.09.2003 comprised over 10 mln UAH.

Ineffective management and usage of state budget funds has also been revealed due to analysis of the state of execution of complex measures aimed at thorough development of the Ukraine language, planning and implementation of funds of the State  Budget of Ukraine and their introduction.  In the process of creation of the state order for 2002 for the State Committee of Television and Broadcasting of Ukraine there was defined production of TV and radio programs in the Ukrainian language in the amount of 203276.2 a year, and for the State Communications Committee of Ukraine - broadcasting of TV and radio programs in the amount of 111955.9 hours. Actually the State Committee of Television and Broadcasting of Ukraine executed the state order in full amount, while the State Communications Committee of Ukraine executed the order only in the amount of 169749.5 hours. Which means that 33526.6 hours of produced programs for the amount of 17.7 mln UAH remained unused. In the result of violation of requirements of normative-legislative acts by the Ministry of Economy and European Integration of Ukraine in the process of creation of the state order for production and broadcasting of TV and radio programs for 2002, the State suffered 17.7 mln UAH of direct losses.

Inspection of usage of state budget funds assigned in 2002 and 9 months of 2003 for execution of tasks (projects) of the National Informatization Program  revealed the facts of inefficient usage  of budget funds by means of their freezing at registration account in the amount of 14.1 mln UAH.

Inefficient usage of funds by means long-term non-usage of financing from the state budget can also be referred to ineffective management of budget funds.

Inspection of usage of budget funds, assigned in 2001-2002 for execution of the state order of accumulation of mineral resources, performed by specialist of the Accounting Chamber verified, that the existing scheme of financing of geological surveys does not provide for effective control over rational usage of budget funds.

In the result of delay of acceptance by the Cabinet of Ministers of Ukraine of the decision of settlement of the amounts of state order, the State Treasury of Ukraine  during January-February of 2001 accumulated 72.2 mln UAH, which remained without movements regardless of accumulation of debt for performance of geological surveys.

During 9 months of 2003 the Ministry if Finance of Ukraine was receiving funds, assigned for the National Informatization Program, in the amounts, which exactly corresponded with the planned allocations. Total amount of received funds comprised 13.5 mln UAH, which as of 01.10.2003 remained at the account of the allocator unused (taken out of turnover). At the same time separate organizations - Ministry of Labour of Ukraine, Ministry of Science and Education of Ukraine, Ministry of Justice of Ukraine, State Committee of Consumers' Standards of Ukraine  during this period of time received financing  for execution of their tasks in the amount of one third of the year assignment.  During this period 12 organizations within the list of tasks of the national Informatization Program, defined by the regulation of the Cabinet of Ministers of Ukraine, were not financed at all.

There were also discovered considerable amount of ineffective allocation of funds of the Fund of Social Insurance against temporary loss of working ability. In 2002 the Fund ineffectively used almost 68 mln UAH due to placement of insurable funds in stocks of enterprises and organizations in the amount of 66.4 mln UAH and untimely and insufficient transfer of funds in the amount of 1.6 mln UAH by the Ministry of Ukraine on Emergency Issues and People's protection from the consequences of the Chernobyl disaster to the Fund for reimbursement of  actual expenses for provision of state benefits to insured persons.

In the reported year there was revealed ineffective usage of resources of the Fund of Social Insurance against accidents at work and professional illnesses. Board of Directors of the Fund and its executive bodies at places did not provide for full normalization, effective planning an usage of resources of the Fund, state control of the Ministry of Labour and Social Policy of Ukraine  over activity of the  Fund was insufficient. As the result 7.8 mln UAH were used ineffectively, including 7.7 mln UAH were prepaid to performers of works, funds not being mastered, almost 0.1 mln UAH - for education of handicapped people without their future employment.

Specialists of the Accounting Chamber have also discovered facts of ineffective usage of budget funds connected with conversion. Inspection of usage of funds of the State Budget of Ukraine for external political activity in 2002 by the Ministry of External Affairs of Ukraine revealed, that the State Treasury of Ukraine did not provide execution of decision of the Government regarding allocations for international activity in foreign currency, and , in violation of the Article 487 of the Budget Code of Ukraine, did not provide fiscal execution of the five budget programs. It resulted in ineffective allocation of target budget funds in the amount of almost 1.5 mln UAH, which is connected with the necessity  of conversion of hryvna into foreign currency and favoured distraction of considerable amounts of budget funds (2.8 to 7.1 mln UAH) for a prolonged period of time to banking accounts.

0.7 mln UAH of additional allocations of the state budget, connected with purchase of foreign currency for settlement of arbitration case in the sphere of owner's rights, detected by inspection of allocations of the stet Budget funds for maintenance and acquittance of state debt and its management in 2002 are also not repaid.

1.3.1. Analysis of fulfillment of the State Budget of Ukraine for the year 2002, 1^st quarter, 1^st half-year and 9 months of 2003.

According to current legislation, in particular to the Article 98 of the Constitution of Ukraine, Articles 2, 6, 7, 22 and 30 of the Law of Ukraine "About the Accounting Chamber" there was performed analysis of fulfillment of the Law of Ukraine "About the State Budget of Ukraine for the year 2002" and allocation of state budget funds in 2003.

According to the data of performed control and analytical measures regarding fulfillment of the state budget in 2002 and 2003, there were prepared Conclusions about fulfillment of the State Budget of Ukraine for the year 2002; Conclusion based on results of analysis of fulfillment of the State Budget of Ukraine for the first quarter of 2003; Conclusion based on results of analysis of fulfillment of the State Budget of Ukraine for the first half-year of 2003; Conclusion about fulfillment of the income part of the State Budget of Ukraine according to results of three quarters of 2003; Conclusion based on results of analysis of fulfillment of the State Budget of Ukraine for nine months of 2003.

According to the results of analysis of fulfillment of the State Budget of Ukraine for the year 2002, the Board of the Accounting Chamber has made a whole set of systematic conclusions. The main conclusion is the following: the Cabinet of Ministers of Ukraine and the Ministry of Finance of Ukraine have not provided proper execution of the Law of Ukraine "About the State Budget of Ukraine for the year 2002". In spite of real possibilities for successful execution, the general funds of the State Budget of Ukraine has not been fulfilled in the income part (94.1%) as well as in the allocations part (85.2%). Fulfillment of approved amounts of financing of the state budget was also not provided for.

Execution of the State Budget of Ukraine in 2002 was being performed under conditions of slowing down of economical development. Forecast of macro-economical data, according to which the budget was created and approved, mostly turned out not be true, which negatively influenced execution of the income part of budgets. Real Gross Domestic Product increased only for 4.8 % against 9.2 % in 2001, nominal GDP reached 220.9 billion UAH and in calculation per head constituted 4583 UAH, which is 483 UAH less than expected.

Due to weak control and economical performance of the State Tax Administration of Ukraine and other central executive authorities, responsible for reception of income, annual plan of income has not been fulfilled by 34 sources, and in the result the State Budget has not received over 5 billion UAH, including 3.5 billion UAH by payments, reception of which was provided by the State Tax Administration; 0.3 billion UAH - by the State Property Fund of Ukraine; 0.2 billion UAH - by the State Customs Service of Ukraine.

In the result of unsatisfactory administration f income, tax debt in 2002 increased per 7.9 billion UAH and by 01.01.2003 reached the amount of 14.2 billion UAH, which comprises one fifth part of the total amount of income of the brought budget. A large number of major debtors belonged were solvent. Thus, the OJSC "Dniprovskiy metallurgical plant named after Dzerzhinskiy", having the debt befroew the state budgte in the amount of 64.6 mln UAH, in 2002 received 289.6 mln UAH of income. OJSC "Nikopol plant of ferroalloys", having received income in the amount of 18.4 mln UAH according to results of financial and economic activity in 2002, owes state budget 4.9 mln UAH.

Miscalculations in administration of Value Added Tax resulted in considerable narrowing of taxation basis and its loss of budget-forming meaning, having unreasonably aggravated the problem of its reimbursement. Budget debt on reimbursement of VAT in 2002 increased per 1.4 billion UAH and by 01.01.2003 reached the amount of 7.2 billion UAH, which constitutes 53.3 % of the annually paid tax amount. The amount of overdue debt increased during the year per 800 mln UAH and by the beginning of 2003 comprised 2.9 billion UAH. The State Treasury of Ukraine in 2002 paid 36 mln UAH at cost of the state budget as punitive measure for untimely reimbursement of VAT.

The existing system of beneficiary taxation resulted in loss of income by budgets of all levels in the amount of 56.3 billion UAH, including direct losses in the amount of 32 billion UAH only by nine types of payments, accounted by the State Tax Administration.

Privatization processes were unsatisfactory, and in the result almost 2.7 billion UAH were not received for financing of the state budget. As the Accounting Chamber warned in the process of expertise of the projects of the state budget for the year 2002, exclusion of privatization income from the income part of the state budget resulted in weakening of control on behalf of the Government and reduction of responsibility of the State Property Fund of Ukraine for performed privatization activities.

While execution of the expense part of the budget, in violation of requirements of the Budget Code of Ukraine and the Law of Ukraine "About the State Budget of Ukraine for the year 2002", the Ministry of Finance of Ukraine and the State Treasury of Ukraine in 2002 executed the state budget according to allocations and management of the budget funds in the "manual" mode. It is verified by numerous facts of restriction by the Ministry of Finance of Ukraine of allocations, approved by legislation, execution of excessive and off-purpose allocations.

Failure to fulfill the State Budget negatively influenced fulfillment of primary objectives in social sphere, in particular, increase of expenses for education, health protection, social compensations, as well as reduction of the poverty level and improvement of the quality of life of the people.

Allocations for education, health issues and social compensations were performed in the amounts, which are considerably lower compared to amounts approved by the Law of Ukraine "About the State Budget of Ukraine for the year 2002", salary debt for budget employees as of 01.01.2003 comprised 54.8 mln UAH, debt on payment of compensations and financial support for the people, who suffered in the result of the Chernobyl disaster during 2002 increased per 41.9 mln UAH and by 01.01.2003 reached the amount of 646.6 mln UAH.

Limitation of assignments was performed regarding 35 chief allocators of budget funds, including the Ministry of Health of Ukraine - their allocations were reduced per 212.9 mln UAH; the Ministry of Science and Education of Ukraine - per 72.2 mln UAH; the Ministry of Culture and Arts of Ukraine - per 36.4 mln UAH; the Ministry of Agrarian Policy of Ukraine - per 167.7 mln UAH; the Ministry of Labour and Social Policy of Ukraine - per 40 mln UAH; the Ministry of Ecology and natural Resources of Ukraine - per 57.8 mln UAH.

In course of 2002 there were assigned 292.6 mln UAH from the state budget for capital investments, or only 59.7 % of the planned funds for the year. The main reason o low level of financing was introduction of temporary restriction of assignments according to the Order of the Ministry of Finance of Ukraine as of 09.08.2002 № 626, which limited the state capital investments per 375 mln UAH, under approved annual allocations in the amount of 490 mln UAH.

Article 95 of the Constitution of Ukraine states, that any allocations of the state for public needs, amounts and target assignment of these allocations are determined exclusively by the Law about the State Budget of Ukraine. Article 39 of the Budget Code of Ukraine provides for consideration of the main directions of the budget policy for the successive budget year in the State Budget. Thus, taking into account that changes to the law of the state budget can be introduced only by the Verkhovna Rada of Ukraine, acceptance within the course of the budget year of any decisions regarding increase (reduction) of budget assignments and changes of target purpose of allocations, which are already approved in the state budget, is unlawful.  

Regardless of this fact and insufficient provision of allocations, approved by the state budget, with funds, the Cabinet of Ministers of Ukraine during 2002 accepted 16 regulations about raise of salaries in the systems of separate ministries, organizations and several budget institutions, raise of salaries for which was not provided by the Law of Ukraine "About the State Budget of Ukraine for the year 2002". Additional allocations of budget funds for salaries, resulted by acceptance of such regulations, according to expert estimates in 2002 comprised at least 400 mln UAH. 

The State Treasury of Ukraine, Ministries, organization, other central bodies of executive power failed to provide proper control of the state of accounts receivable and accounts payable. In course of 2002 accounts payable of organizations, maintained at cost of the state budget, increased per 298.9 mln UAH and as of 01.01.2003 comprised 3 billion 708.6 mln UAH.

By the end of 2002 allocators of budget funds allowed distraction of 5 billion 68.8 mln UAH into accounts receivable, which constitutes 11.4% of the state budget. The amount of accounts receivable exceeded the amount of accounts payable by 1.4 times, which testifies of the low level of discipline of payments of budget organizations and of possibilities to liquidate the debt. Creation of creditor's indebtedness was caused due to wide-spread practice of preliminary payments by allocators of budget funds for purchases of equipment, other inventory holdings and execution of hidden advance payments for received services; provision of services by budget institutions without proper payment, untimely (overdue) reception of rental payments; uneven financing of activity of budget institutions and allocation of considerable funds only in last months and days of a budget year.

The Cabinet of Ministers of Ukraine failed to provide effective legal support of execution of the Law of Ukraine "About State Budget of Ukraine for the year 2002". Realization of 18 articles of the law presupposed obligatory acceptance of the necessary legal acts by the Government. But requirements of some articles of the Law are still out of the scope of attention of the Government or are fulfilled with violation of the set terms.

Analysis of fulfillment of the State Budget of Ukraine for the 1^st quarter of 2003 makes it possible to come to the following conclusions.

In the 1^st quarter of 2003 the State Budget of Ukraine is fulfilled with income exceeding the allocations in the amount of 1billion 343.2 mln UAH, including the general fund - 891.6 and the special fund - 451.5 mln UAH, contrary to the fact that estimates of execution of the general fund of the State Budget predicted deficit in the amount of  252.7 mln UAH.

Fulfillment of the income part of the general fund of the State Budget was achieved due to reduction of the amount of the planned sum, and due to incomplete VAT reimbursement. Augmentation of the State Budget income, compared to January-March of 2002, was achieved due to actual expansion of taxation base conditioned by changes introduced to existing laws on taxation issues.

Planned assignments according allocations of the general fund of the State Budget were not fulfilled by the Ministry of Finance of Ukraine and by the State Treasury of Ukraine. So the Ministry of Finance of Ukraine introduced changes to the budget and changed planned allocations of the general fund per 203.1 mln UAH.

Fulfillment of the State Budget in January-March of 2003 was happening under conditions of activation of economic activity and renewal of inflation processes.  Main factors of augmentation were external demand for main export products of metallurgical and chemical industries and basis effect.

Government measures regarding provision of income reception to the State Budget did not provide expected results. Regardless of economic growth, tax indebtedness continued to increase and as of 01.04.2003 comprised 15.2 billion UAH.

The Law of Ukraine "About State Budget of Ukraine for the year 2002" provided development of 17 normative documents - Procedures of execution of allocations by separate directions. In the 1^st quarter requirements of the Law and Instruction of the Prime Minister of Ukraine as of 10.01.2003 regarding timely development and approval of the indicated Procedures were not fulfilled. During the period of time from January through March the Government approved only 8 of them, which negatively influenced fulfillment of the budget.

The Ministry of Finance of Ukraine and the State Treasury of Ukraine exceeded their authorities having limited allocations of chief allocators of budget funds with the aim of 10%-saving of budget assignments.

During the 1^st quarter the Government was also making separate decisions, which were changing target assignments of state budget funds, and were violating not only current legislation of Ukraine but also its own earlier decrees and orders.

The Board of the Accounting Chamber, having reviewed the state of fulfillment of the State Budget of Ukraine for the 1^st half-year of 2003, came to the following conclusion.

Execution of the income part of the general fund of the State Budget in the first half-year was achieved, mainly, due to numerous corrections of the accepted planned estimate of income reception, attraction of additional sources and incomplete VAT reimbursement.

In the result of multiple changes of the budget, the planned amount of income in the 1^st half-year was reduced by the Ministry of Finance of Ukraine per 456.7 mln UAH. Actual income of the general fund constituted 19 billion 244.2 mln UAH, or 102 % of the corrected planned amount and 99.7 % of the originally planned amount, considering the introduced changes to the Law about the State Budget.

Results of the analysis present convincing evidence that during the reported period Value Added Tax was basically used as instrument for adjustment of the level of fulfillment of the State Budget. Failure to return VAT to taxpayers in set terms makes state budget income overstated per almost 1.1 billion UAH. At the same time overdue budget debt by this tax increased to 4 billion UAH. Under conditions of economic growth and taking into account the necessity to reimburse the indicated debt, compared to the corresponding period of the previous year income intake, actually, decreased per 0.7 billion UAH or per 4.1 %.

Administration of taxes, duties and payments to the state budget practically did not improve in the analyzed period. Under conditions of general overfulfillment  of the planed amount of income part of the general fund, almost 758 mln UAH of income was not received from some spheres, of it 472.5 mln UAH or 62.3 % - income, administered by the State Tax Administration of Ukraine. Tax and duty payments debt increased, compared to the previous year, per 4.8 billion UAH, and for the first half of the current year - per 0.5 billion UAH and reached the amount of 14.7 billion UAH. And this is taking into consideration the fact that, according to current legislation, the State Tax Administration of Ukraine wrote off 1.5 billion UAH of hopeless debts.

Under conditions of overfulfillment of planned income data of the general fund of the State Budget per 379 mln UAH, the Ministry of Finance of Ukraine and the State Treasury of Ukraine did not provide its fulfillment by allocations. Considering the adjustments introduced by the Ministry of Finance of Ukraine and transfer of some allocations from the first  half-year to the second one, the adjusted plan comprised 19 billion 911 mln UAH. Actually, allocations of the general fund are posted in the amount of 18 billion 341.2 mln UAH, which is 1 billion 569.8 mln UAH less than the adjusted plan, and 903 mln UAH less than the received income.

The task as for the main priorities, set by the Government while approval of the State Budget for 2003 - provision of allocations of social direction, in particular social guarantees, social protection and free medical help, are also not being fulfilled.

Social allocations have not been posted at target assignments in the amount of 620.9 mln UAH or 16.4 %. Due to insufficient control on behalf of the Ministry of Finance of Ukraine and the State Treasury of Ukraine, assignments set for allocations by protected articles were used untimely and not in full amount. In January-March of the current year 390.4 mln UAH were not used for salary payments; 65.5 mln UAH - for provision of transfers to the people; 62 mln UAH -  for purchase of medications and bandages; 55.3 mln UAH - for construction (purchase) of housing for military servants.

The Ministry of Finance of Ukraine, with the aim of successful fulfillment of the general fund of the State budget in the first half of the year, adjusted planned data of state budget financing and  service of the state debt, having reduced them to the level of actual data.

Fulfillment of the State Budget in general with proficit in the amount of 1 billion 692 mln UAH allowed the government and the Ministry of Finance of Ukraine to use the resource as the main source of acquittance of the state debt. But, as of 01.07.2003 the indicated funds are recreated at cost of income from state loans and privatization of state property. External loans in the amount of 4 billion 266.4 mln UAH, received in June of the current year, allowed to perform payments for reimbursement of the external debt in the amount of 119.9 mln UAH. The remaining currency funds increased the remainder of the resources of the general fund, which as of 01.07.2003 comprised 5 billion 748.2 mln UAH.

On execution of requirements of the second part of the Article 53 of the Budget Code of Ukraine the Board of the Accounting Chamber reviewed the operative report about fulfillment of income part of the State Budget of Ukraine as of 01.10.2003 and made the Conclusion about fulfillment of the income part of the State Budget of Ukraine according to results of three quarters of 2003, which is verified by the Order of the Board of the Accounting Chamber as of 21.10.2003.

In particular, the document states that the Law of Ukraine "About the State Budget of Ukraine for the year 2003" approves the income part of the State Budget in amount of 50 billion 20.9 mln UAH. The general fund of the State Budget is set to be equal 39 billion 511.4 mln UAH, and the special fund - 10 billion 509.5 mln UAH.

In the result of approval by the Verkhovna Rada of Ukraine of Laws of Ukraine as of 06.03.2003 № 630-ІV "About introduction of amendments to the Law of Ukraine "About the State Budget of Ukraine for the year 2003", as of 22.05.2003 № 849-IV "About introduction of amendments to the Law of Ukraine "About the State Budget of Ukraine for the year 2003" and some other legislative acts", as of 09.07.2003 № 1068-ІУ "About introduction of amendments to the Law of Ukraine "About the State Budget of Ukraine for the year 2003" and some other Laws of Ukraine" and as of 09.07.2003 № 1069-ІУ "About introduction of amendments to the Law of Ukraine "About the State Budget of Ukraine for the year 2003" there has been increased  the planned income part of the State Budget for the year 2003 and set in the amount of 53 billion 228.5 mln UAH, including of the general fund - 42 billion 185.9 mln UAH and of the special fund - 11 billion 42.6 mln UAH.

According to the Table of the State Budget of Ukraine for the year 2003, approved by the Minister of Finance of Ukraine as of 20.02.2003, with consideration of all introduced changes and amendments, the income plan of the general fund of the State Budget for January-September of the current year is established in the amount of 29 billion 616 mln UAH or 70.2 % of the yearly amount, and income part of the special fund is set in yearly amounts without monthly division.

Actual income of the genera fund of the state budget, according to results of three quarters of 2003 equals 30 billion 282.8 mln UAH or 102.3 % of the plan, assumed by the Budget Table. Overfulfillment of planned amounts was achieved due to tax income - 1 billion 393.8 mln UAH or 6.1 %, income from operations with capital - 9.1 mln UAH or 9.2 %, and official transfers - 74 mln UAH or 4.3 %. Non-tax income was 810.1 mln UAH or 15.9 % less than planned.

Total of 39 billion 280.6 mln UAH arrived to income part of the State Budget during from January through September of the current year, which comprised 73.8 % of the amount approved by the law. Compared to analogous period of the previous year, state budget income increased per 7 billion 317.2 mln UAH or 22.9%, of it income of the general fund comprises 5 billion 636.5 mln UAH or 22.9%.

Under compared conditions nominal  income of the state budget in general increased per 6.8%, income of the general fund - per 4.2%. Under conditions of GDP increase per 6.5% real income of the State Budget increased per 1.6%, but income of the general fund decreased per 0.9%.

Article 49 of the Budget Code of Ukraine states that the State Budget of Ukraine is fulfilled according to the Table, approved by the Minister of Finance of Ukraine according to budget assignments.This legislative norm does not set any exclusions for component parts of the budget - general or special funds. But the Ministry of Finance of Ukraine composes the Budget Table with monthly distribution of plan data only for the general fund of the Budget. Budget Table of the special fund of the State Budget, which was established in 2002, with monthly breakdown is not being composed by the Ministry.

At the same time level of fulfillment of the State Budget each year has much higher income rate than the special fund. Yearly plan of income to the general fund of the State Budget in 2000 was fulfilled per 95.3%, and the approved amount of income of the special fund of the State Budget was overfulfilled by 1.8. In 2002 this data constituted, accordingly, 85.6 and 129.5%, in 2002 - 94.1 and 126.7%. During January-September of the current year special fund of the State Budget received 8 billion 997.8 mln UAH or 81.5% of the approved yearly amount.

In order to provide effective control over execution of the State Budget of Ukraine, the Board of the Accounting Chamber considers it appropriate to oblige the Ministry of Finance of Ukraine to compose monthly budget  table for the special fund of the State Budget as well.

Further it is proposed to introduce appropriate changes to the part one of paragraph 1 of the Article 49 of the Budget Code of Ukraine, stating in such wording: "The State Budget of Ukraine shall be fulfilled according to the table wit monthly breakdown of income and allocations of the general and special funds, which shall be approved by the Minister of Finance of Ukraine according to budget assignments in one-month period from the moment, when it comes into force according to the Law of the State Budget of Ukraine".

Data of the analysis of fulfillment of the Stat Budget of Ukraine for nine months of 2003 give the reasons for the Board of the Accounting Chamber to come to the following conclusions.

In January-September of 2003 the State Budget was fulfilled with income prevailing over allocations (proficit) in the amount of 1 billion 424.9 mln UAH,  of it of the general fund - 1 billion 27.8 mln UAH (under planned deficit in the amount of 1 billion 384.9 mln UAH) and of the special fund - 1 billiuon 397.1 mln UAH. But the Law of Ukraine "About the State Budget of Ukraine for the year 2003" has approved the stat budget deficit in the amount of 2 billion 634.9 mln UAH, of it of the general fund - 1 billion 510 mln UAH and of the special fund - 1 billion 124.9 mln UAH, and the budget table assumes fulfillment of the general fund of the nine months of the current year with the deficit in the amount of 1 billion 384.9 mln UAH.

The general fund of the State Budget has received 30 billion 282.8 mln UAH or 102.3% of the adjusted planned amount during January-September of the current year. Overfulfillment per 666.8 mln UAH or 2.3% is achieved, mainly, due to adjustment of the planned amount.

Amount of the Value Added Tax, reimbursed to taxpayers during January-September of the current year comprised 6 billion 239.9 mln UAH and, compared to the analogous period of the previous year, increased per 2.1 billion UAH or 52.4%. Regardless of considerable amount of reimbursement, overdue budget debt kept increasing. During January-September of the current year overdue budget VAT debt  increased per 0.4 billion UAH and as of 01.09.2003 comprised 3.3 billion UAH, and the total un-reimbursed amount - 7.4 billion UAH.

At the same time tax debt of taxpayers also kept increasing. During January-September of 2003 taxpayers debt before the budget increased per 943.6 mln UAH and by October 1^st of the reported year comprised 15 billion 115.6 mln UAH.

Expenditure part of the general fund of the State Budget of Ukraine for January-September of the current year was not fulfilled. Allocations were fulfilled in the amount of 29 billion 255 mln UAH, which comprises 94.4% of the planned allocations for the period (that is 1 billion 746 mln UAH less than planned) and 67% of yearly allocations. In the result of multiple adjustments of the Budget Table a considerable amount of allocations was put off until the 4^th quarter of 2003, which resulted in ungrounded overloading of the State Budget in the indicated period. Allocations of the special fund were posted in the amount of 7 billion 711.1 mln UAH, which comprises 54% of yearly amount.

Total amount of the stat debt from the beginning of the year reduced per 174.8 mln UAH and as of 01.10.2003 comprised 75 billion 554.3 mln UAH, including internal state debt, which reduced per 907.6 mln UAH and comprised 20 billion 479.4 mln UAH. External debt increased per 732.8 mln UAH and comprised 55 billion 74.9 mln UAH.

1.3.2. Conclusions and proposals to the draft Law of Ukraine "About the State budget of Ukraine for 2004"

The Accounting Chamber according to the Articles 40 and 41 of the Budget codex of Ukraine and Articles 7 and 27 of the Law of Ukraine "About Accounting Chamber" has performed analysis and examination of the draft Law of Ukraine "About the State budget of Ukraine for 2004".

Analysis and examination have been performed taking into account the provisions of the Constitution of Ukraine, Budget codex of Ukraine and number of laws and standard acts in questions of tax policy and budget expenditures.

Messages of the President of Ukraine to Verkhovna Rada of Ukraine "European choice. Conceptual prerequisites of the strategy of economical and social development of Ukraine in 2001-2011" and "Ukraine: step to the 21^st century. Strategy of economical and social development of Ukraine in 2001-2011", "Basic direction of the budget policy for 2004", Governmental program "Openness, efficacy and effectiveness", "Basic principles of the monetary management for 2004", analytical materials and calculations to the project of the state budget, reports and analytical data, have been used in the process of analysis of the project of Law. The actual state of financing of subjects of departmental classification, divisions and subdivisions of the functional classification of expenditures, income part of the state budget, external and internal debts, inter-budget relationships etc.

Performed analysis and examination have testified that presented by the Cabinet of Ministers of Ukraine draft Law of Ukraine "About the State budget of Ukraine for 2004" is imperfect from the point of the chosen state strategy of the social and economic development and does not provide solution of the accumulated problems, achievement of the determined by the Government for the next year priorities of the budget policy and possesses numerous methodological and technical deficiencies. 

Augmentation of the income is expected to be achieved not by the economical growth, but by employment of administrative instruments - increase of taxation, additional sources of income, withholding of the force of certain tax laws. Underdeclaration of the amount of certain incomes and ungrounded determination of expenditures have not provide with the possibility to make the draft state budget without deficit.

Separate articles of the draft law contradict the provisions of the Constitution of Ukraine and number of standard acts.

Results of analysis and examination of calculations of intakes to the state budget have established that because of mistakes and faults in the number of indicators, the income of the state budget is underdeclarated for 11.6 billions UAH.

Conclusions of the Accounting Chamber have testified the possibility to increase the intake of income tax from the enterprises for the amount of 1 billion UAH; value added tax - for 6.2 billions UAH; dividends from the subjects of economy - for 0.9 billions UAH; tax duties - for 0.5 billions UAH; funds from realization of the surplus arms, military and special machines, other property of the Armed Forces of Ukraine and other military units, established in compliance with the current legislation due to offset of debts of NJSC "Naftogaz of Ukraine" towards the Ministry of Defense of Ukraine - for 0.3 billions UAH; funds from privatization of the property at the expense of reserved by the Government intakes from privatization of Oblenergo and OJSC "Ukrtelecom" - for 1 billion UAH.

The Accounting Chamber has mentioned that because of the violations of requirements of the Budget codex of Ukraine and other standard acts, 1.8 billions UAH have been groundless included to the list of expenditures of separate directions of the state budget.

The Accounting Chamber has submitted a number of offers concerning other questions, having relation to the draft law.

In general, the Board of the Accounting Chamber has made a conclusion, that the Draft Budget of Ukraine for 2004 does not correspond to the strategic goals of the state, supposes deceleration of the achieved rates of the economic development, does not solve the question of tax reform and does not fulfill the announced social priorities. Mistakes and faults during preparation of the draft state budget, in particular, concerning determination of the financial resources of the state and local budgets, limitation of the expenditures for social needs, especially of the local budgets in case of economical growth, are ungrounded.

1.4. Results of audit of the separate directions of employment of budget funds

In the process of implementation of modern standards of audit to the methods of the Accounting Chamber, the majority of Conclusions of analytic measures and examinations made by the Board of the Accounting Chamber within 2003 have been based on the generalized evaluation of the system and mechanism of financing of the certain direction of employment of state budget funds, evaluation of management decisions, which have been approved by the Cabinet of Ministers of Ukraine and chief managers of budget funds concerning certain fields of spending of state budget funds.

Control measures, performed by the Accounting Chamber within 2002-2003 concerning employment of State budget funds, assigned for financing of measures, connected with reimbursement of indebtedness for domestic agricultural machinery, partial compensation of the value of elaboration and construction of domestic machinery and support of domestic mechanical engineering for the agroindustrial complex have provided reasons to the Board of the Accounting Chamber to make a number of systematic, generalized conclusions.

Thus, the analysis of employment of state budget funds in junction "producer of agricultural machinery - consumer of agricultural machinery (the farmer)"  allows making a conclusion about a number of deficiencies and abuses in solving of the critical problem of provision of food independence and capability to export of the Ukrainian state.

Negligent and irresponsible relation of the Cabinet of Ministers of Ukraine, Ministry of Industrial Policy of Ukraine and Ministry of Agricultural Policy of Ukraine to management of budget funds, which are provided to the farmer as financial help, have led to greater complication of state of affairs in the agroindustrial sector of national economy, aggravation of the financial situation of the farmer. Low level of technical management and scientific elaborations of agricultural machinery caused greater gap of the technical level of domestic agricultural mechanical engineering in comparison with the level of best world examples of equipment by both technical-exploitation parameters and corresponding price indexes.

Cabinet of Ministers of Ukraine and the Ministry of Industrial Policy of Ukraine have not provided the necessary conditions for development and state support of the domestic mechanical engineering for agroindustrial complex.

Schedule of the state (financial) support of domestic mechanical engineering for the agroindustrial complex, compiled by the Cabinet of Ministers of Ukraine and realized by the Ministry of Industrial Policy, is ineffective and non-transparent. It does not provide considerable augmentation of machinery production, which could be bought by the rural economy, which is currently reforming. Unsatisfactory level of management of these processes can be characterized by the fact, that the major part of the produced at the expense of state (financial) support agricultural machinery stays not negotiated, i.e. unclaimed. 

Ministry of Industrial Policy of Ukraine has not provided the most optimal and effective employment of state budget funds while signing of agreements of financial support with enterprises-producers of machinery.

The policy of the Ministry in provision of the state support for enterprises is inadmissible and leads to artificially created conditions for impossibility of further control of the target and effective employment of budget funds, taking into account the State interests.

Starting from 1998, the government has taken measures for provision of producer of agricultural machinery with equipment by implementation of the mechanism of financial leasing. These measures appeared to be insufficient and imperfect, first of all because of their non-transparence, difficultness, unreality of the sources of funds intake to the special fond of the state budget and complexity of such mechanism for producers of agricultural machinery. In general, farmers have been provided with equipment on terms of financial leasing within 2000-2001 just for 2% of their needs.   

Further actions of the Government in the field of search and implementation of new, more effective mechanisms of state support in technical reequipment have not led to positive changes because of their inconsistency and partial solving of a problem. Thus, as a result of implementation, starting from 2002, of the mechanism of village support by the partial compensation of the value of heavy agricultural machinery of domestic production, the real needs of farmers have been satisfied just for 0.2%.

Established by the Government unreal sources of intake of funds to the special fund of the state budget, which has been consequently accomplished just for 3%, are the main cause of such situation.

So, the state policy, directed nowadays for support of the domestic producer of agricultural machinery by assignment of funds from the State budget of Ukraine for the purchase of domestic agricultural machinery on terms of financial leasing and for the partial compensation of the value of domestic heavy agricultural machinery, in a way it's being implemented and in such amount of financing, has practically failed.

Besides, residual approach and underfinancing of the elaboration of new machinery for the village and total neglect by the state of such problem as control of implementation of new elaborations into production leads to the absence of expected effect from the spending of money for elaboration of the new machinery. Under these circumstances, domestic producers of agricultural machinery are forced to buy more qualitative foreign machinery at their own expense.

Analysis of administrative and technical side of formation and performance of measures in the field of support of domestic mechanical engineering for agroindustrial complex testifies that there are considerable differences between Ukrainian "science of management" and real practice of management, complexes of interrelated actions, aimed to reach a final result are not approved. It's necessary to change radically the attitude to financing and performance of measures for provision of support to domestic farmer and to provide him with effective, competitive, available machinery of domestic production, taking into consideration the strategic state interests, its economic safety and independence.  

State of cultural and natural heritage of Ukraine is disturbing because of the destructive processes, happening to it. Solution of the accumulated problems requires system approach and, certainly, close attention from the national, regional and local authorities, as well as institutions, services or associations, having relation to these fields.

The Accounting Chamber has performed a complex of analytical and expert measures, separate examinations of subjects of economy in the field of protection of cultural and natural heritage. Analysis of the mentioned above measures testifies that the system of their management acquired mostly a negative character.

Rule-proclaiming activity of the Cabinet of Ministers of Ukraine has led to the fact, that the actual management in this complicated social and economic sphere as protection of the natural reserve fund and cultural heritage is carried by the number of subjects of management. Interaction in this system between Government and central bodies of the executive power doe not provide the national effect.

To provide fulfillment of target budget programs for protection of cultural and natural heritage, the Law of Ukraine about the State budget of Ukraine as of the certain financial year determines a number of central bodies of executive power as main managers of the budget funds. The mentioned above situation facilitates dispersal of the budget funds, assigned for realization of the targets, stated in the state programs and does not provide a possibility to concentrate them for employment by the basic directions, implied by the legislative acts for solution of the current problems.

Cultural and natural heritage is in danger of being destructed, caused not only by traditional reasons of decline, but also by evolution of social and economic life, which aggravate these reasons by the dangerous events of deformation and destruction. In the current situation, the State is obliged to formulate and to make more specific national, regional and local policy as for the distribution of authorities between national, regional and local bodies and social measures, directed on protection and adjustment to the requirements of the modern life of historical or traditional ensembles and their environment.

Results of the examination of employment of state budget funds by internal forces of the Ministry of Internal Affairs have allowed to make a conclusion that the system of management and employment of financial and material resources by headquarters of the Central administrative board of internal forces of the Ministry of Internal affairs is ineffective. There have happened budget violations for the amount of 13.4 millions UAH.

The existing system of employment of investor funds, who receive benefits in taxation for construction (purchase) of lodgings for military workers and members of their families - is ineffective. Building of lodging in such a manner is inexpedient - provision of benefits in payment of income tax leads to the double losses of the State: absence of intakes to the budget and depreciation of the "invested" funds. Building of lodgings in the mentioned above manner results in considerable increase of its price, including, by the way of overpricing and slowdown of solution of the basic problem - provision with lodgings of military workers and members of their families. Besides, funds are withdrawn for a long time (are used by contractors) and are considered as accounts receivable.

Analysis of results of control measures, performed by the Accounting Chamber while examining the legal, financial and administrative provision of fulfillment by education institutions of Ukraine of the state order for training of specialists and examination of employment of state budget funds, assigned to institutions of higher education and vocational schools for this purpose, testifies that the system of administrative and economical management in the sphere of state order for the training of specialists-workers and specialists with higher education does not provide the effective employment of budget funds and does not contribute to unification of the state and public control.

Absence of the state agreement made impossible the determination of the real need of the State in training of the necessary amount of specialists-workers and specialists with higher education; created conditions when education institutions do not bear responsibility for the quality of training as well as legal, financial and other liabilities for the ineffective and no-target spending of budget funds.

Legally unregulated, unclear and non-transparent, contradicting the current legislation is a system of financing of the State budget of Ukraine for provision of subventions for rendering of benefits and subsidies to population for payment of electricity bills, natural gas, heat- and water supply, drainage system, communication services, solid and liquid stove fuel, liquefied gas, rent, removal of domestic waste.

Despite the fact that subventions from the State budget of Ukraine to the local budgets for provision of benefits and subsidies for payment of housing and communal services, electricity and communication services belong to transfers, which are, according the Article 21 of the Law of Ukraine "About State budget of Ukraine for the year 2002", protected articles, expenditures on these articles have a social directivity, fulfillment of these indexes for the year 2002 has not been provided in a full range.

Acting system of the social protection does not provide in a proper way guaranteed by the Constitution of Ukraine rights of citizens for their acquisition.  The Ministry of Labor and Social Policy of Ukraine, which is obliged to control realization of the state policy of social protection of population, does not cover the whole system of social payments concerning housing and communal services  and does not control the question of rendering of benefits (except benefits for participants of war operations). Besides, the Ministry has not provided the necessary administrative measures and the State Committee of Ukraine in housing and communal services, correspondingly, elaboration of the social standards of consumption of housing and communal services.

Provision of people with disabilities with means of transportation, prosthetics, provision of cars, wheelchairs, orthopedic manufacture, are the possible ways of social protection of people with disabilities, rendered by the State.

The Ministry of Labor and Social Policy of Ukraine is the main body of the central executive authorities for provision of the State policy in the field of social protection of population, especially of people with disabilities. 

The Board of the Accounting Chamber, basing on the results of examination  of employment in the year 2002 of state budget funds, assigned for provision of invalids with cars and orthopedic manufacture, has made a conclusion that because of the too complicated structure of the bodies in the system of the Ministry of Labor, which possess a power to fulfill the duties of lower level manager of the budget funds, assigned for provision of invalids with cars and orthopedic manufacture, it does not provide the transparent and full control of target and effective employment of budget funds.  

The fund for the social protection of people with disabilities, designated by the Law of Ukraine "About State budget of Ukraine for the year 2002" to be executor of the budget program for provision of people with disabilities with orthopedic manufacture, has not practically fulfilled its duties, violating the Article 21 of the Budget codex of Ukraine.  

Ministry of Labor of Ukraine delegated to the production association "Ukrprotez" a part of its duties in management of budget funds, assigned for these purposes, has not provided the necessary control of their fulfillment. 

According to the results of examination of employment of state budget funds, assigned in 2002 to the State Committee of Ukraine of family and youth affairs, it has not developed the mechanism of realization of target national programs concerning children, youth, women and family, and a system approach in planning and carrying out of specific measures for realization of the state programs. State Committee has practically withdrew itself from determination of the priority measures of realization of the state programs and does not fulfill economic calculations of expenditures, necessary for their realization. The analysis of fulfillment of target national programs and achievement of social-economic purpose, determined by the programs, is also absent.

By results of the examination of employment of the budget funds in the years 2001-2002 for fulfillment of measures of the National program for protection of environment of the Black and  Azov seas, the Board of the Accountancy Chamber has made a conclusion that the Cabinet of Ministers of Ukraine, the Ministry of Ecology and Nature resources of Ukraine have not launched within 2001-2002 the mechanism of the National program of protection of the environment of Black and Azov seas. Because of the absence of the system approach in organization of fulfillment of the Program, its main targets have not been reached.

Financing of actions of the Program within 2001-2002 have been performed irregularly. The Cabinet of Ministers of Ukraine and the Ministry of Ecological resources of Ukraine have not provided coordination of activity of the ministries and departments, local executive power authorities, separate enterprises and organizations in employment of the funds of state and local budgets, additional sources of financing.

As a matter of fact, the Program requires improvement of its scientific background; its separate provisions need to be revised for improvement and specification.

According to the results of the performed by the Accounting Chamber analysis of fulfillment of the Complex measures for comprehensive development of Ukrainian language, planning and employment of State budget funds for their implementation, the State, on behalf of central executive authorities, the Cabinet of Ministers of Ukraine and subordinated departments and organizations, has not fulfilled provisions of Articles 10 and 12 of the Constitution of Ukraine about provision of the comprehensive development and functioning of Ukrainian language in all fields of public life on the whole territory of Ukraine and satisfaction of national, cultural language needs of Ukrainians, which live out of the borders of the country.

Deadline for the Complex measures expired in 2002. They have not been fulfilled.  Extremely important cultural and ethical needs of the majority of population of Ukraine and Ukrainians abroad remain not in the scope of attention of the State. Having analyzed the state of legal regulation by the Cabinet of Ministers of Ukraine, the Ministry of Finances of Ukraine, State Treasury of Ukraine, other executive power authorities of relationships that arise from the requirements of the Budget codex of Ukraine during compilation and execution of the State budget of Ukraine, the Board of the Accounting Chamber has concluded, that non-fulfillment or untimely execution by the Cabinet of Ministers of Ukraine of its duties, determined by the Budget codex of Ukraine, which lie in legal regulation of the budget process, lead to ineffective management of the state financial resources, loss of transparence of funds transfer, complicate the control of their proper employment.

Results of the control measures of the Accounting Chamber testify of the numerous budget violations, performed by the main managers of state budget funds, while executing decisions, approved despite the violation of standards of budget codex. The mentioned above is caused by imperfection of the separate provisions of the Budget codex of Ukraine, lack of their coordination with requirements of other laws, existence of legal standards, which could be understood in different ways, providing a possibility to use them by the individual choice of participant of the budget process.

Analysis of employment of state budget funds by the executive power authorities in the year 2002 have led to conclusion that the regular reorganization of the system of central authorities of executive power, started in 1999, has not resulted in improvement of the structure of these structures, optimization of expenditures for their maintenance and increase of the efficacy of state management system.  Instead, while changing this system, a number of executive power authorities, number of their employees and expenditures of the State budget for their maintenance have only increased. 

Appearance and liquidation of authorities of executive power change of their status, restoration of earlier liquidated authorities have not been systematic, have led to parallel fulfillment of their duties, doubling of their functions and, finally, to irresponsibility and ineffective employment of budget funds.

Implementation from 2002 of the target method of budget formation was not properly prepared by the Ministry of Finances of Ukraine and, actually, has not changed the system of employment of state budget funds by the authorities of executive power, assigned for realization of their designated duties. 

Budget funds, assigned for the budget program "Supervision and management in a certain field", have been used, as always, for the maintenance of staff, without establishment of interaction between resources and specific results of activity, that have led to ineffective and uneconomical employment of budget funds.

Unsatisfactory fulfillment by separate central executive power authorities of the tasks, for execution of which the corresponding budget assignments are approved, is a consequence of unsatisfactory management in the corresponding sphere of activity and management of processes, which happen in it.   

The existing system of financial provision of executive power authorities also does not provide the transparence of the budget process. Ministry of Finances of Ukraine, while determining in the draft State budget of Ukraine for the year 2002 of amount of funds for financing of supervision and management programs in a certain field of activity has not provided the necessary analysis of the budget inquires from the main managers of funds from the point of view of their correspondence to the goal, priority and efficacy of employment of budget funds. Determination of the amount of expenditures by the separate bodies of executive power has been performed without necessary grounds.

Results of examination of employment of state budget funds of the surplus fund of the State budget of Ukraine, testify that the Cabinet of Ministers of Ukraine every year violates the requirements of the current legislation, which regulates the employment of funds from the surplus fund of the budget. Periodicity and stability of violations, which acquired a system character, testify about deliberate non-fulfillment by the Cabinet of Ministers of Ukraine of these requirements. Surplus fund has become and example of ineffective employment of state budget funds and their "manual" management.

The Cabinet of Ministers of Ukraine, violating paragraphs 22,24, approved by the resolution as of 29.03.2001 № 415 of the Order of employment of funds of the surplus fund, in 2002 approves nearly each fourth resolution about assignment of funds from the surplus fund without conclusion of the Ministry of Economy and European integration of Ukraine, which is responsible for preparation and submission of draft resolutions about assignment of funds from the mentioned fund, each fifth - with comments of this Ministry about violations of the legal base.

The Cabinet of Ministers of Ukraine has used the surplus fund as additional source of financing of the state centralized capital investments.

Management of funds of the surplus fund and control of their employment has been performed unsatisfactory.

Average free remains of funds of the surplus fund on accounts of payee comprised in 2002 16 mln UAH per month, and sometimes exceeded 50 mln UAH.

Besides, the Board of the Accounting Chamber according to results of the examination of employment of funds of the surplus fund of the State budget of Ukraine, assigned in 2002-2003 for reimbursement of losses of farmers, who suffered from the natural disasters in 2002 there was made a conclusion that the functioning system of reimbursement of losses to producers of agricultural machinery on irrevocable basis at the expense of surplus fund of the State budget of Ukraine, does not correspond to the market and contradict provisions of the paragraph 11 of the Order of employment of funds of the surplus fund, approved by the resolution of the Cabinet of Ministers of Ukraine as of  29.03.2002 № 415.

Standard uncertainty of the mechanism of reimbursement of funds creates conditions for subjective approach in distribution of funds. The Ministry of Agricultural policy of Ukraine has not developed the Order of employment of funds, assigned from the surplus fund of the budget for the partial reimbursement of losses, suffered by farmers because of the natural disasters. Regional public administrations also have not approved standard acts about the order of employment of funds for a certain purpose. As a result, single farms of the non-governmental type of property at the expense of the budget funds acquired more favorable economical conditions. Ministry of the Agricultural policy of Ukraine has not determined priorities of assignment of funds, which have been assigned from the surplus fund of the state budget for reimbursement of farmers losses, only to those farms, which cultivate only those cultures, which are strategically important for the food safety of the country.

According to results of examination of the employment of state budget funds, assigned for construction and reconstruction of highways of the general, the Board of the Accounting Chamber has made a conclusion that the system budget financing, directed on solution of problems of development of network and maintenance of highways of the general use, is not legally regulated, unclear and does not provide the transparent effective employment of budget funds. 

State service of highways of Ukraine (Ukravtodor) has not provided the effective management of budget funds, because it was performed in conditions of imperfect organization of the system of road management and its legal unadjustment. This have led to budget violations at the stage of planning, assignment, transfer and spending of budget funds, as well as their ineffective and irrational employment.  

System of budget financing of the mineral exploration at the expense of charges from the earlier fulfilled exploration works, created during soviet times, also requires reforming. Even 100% employment of the mentioned charges could not provide financing of exploration works, especially taking into account that the amount of charges decrease because of decrease of financed from the budget exploration works.

Current system of financing of exploration works does not provide the effective control of the rational employment of budget funds.  

From the beginning of its activity the Accounting Chamber, according to the Law of Ukraine "About the Accounting Chamber", fulfills annually the analysis of reports of the Fund of state property of Ukraine and monitoring of privatization processes in Ukraine.

Information and analytical base of the problems of privatization, accumulated by the Accounting Chamber during the years of its activity, gives grounds to make a conclusion, that the existing system of distribution and spending of funds for fulfillment of the State program of privatization has not provided their economical and rational employment by the Fund of state property of Ukraine.

Control of the actual spending of funds in certain directions has been performed by the Fund only in comparison with general norms of expenditures for fulfillment of the Program of privatization, and with maximum level of employment of funds, but not with determined in advance problems according to approved budgets. 

The Fund has received more possibilities for management of funds at its own discretion with approvement of the State program of privatization for 2000-2002, the paragraph 126 permits redistribution of funds from the Off-budget state privatization fund between directions of their spending for fulfillment of this program. With rendering of such permission, norms of expenditures, approved by the Program, have lost their sense and have become a cover of the uncontrolled employment of funds.

Processes of reforming of the property are accompanied by the structural reconstruction of economy and cause creation of the stock market (market of capital issues), as a part of market relations, that provide free turnover of funds in capital issues.

According to the results of legal and administrative provision of functioning of the stock market examination of employment of state budget funds by the State Commission of capital issues and stock market of Ukraine, the Accounting Chamber have made a conclusion that the State Commission of capital issues and stock market of Ukraine, as a body, which performs state regulation of the stock market, for seven years of its activity could not provide foundation in the country of the organized stock market, with institutions, which could guarantee transparency, openness and liquidity of the national stock market, determination of the fair price for the capital issues and created conditions for effective mobilization and distribution o financial resources by participants of the stock market.

Currently, a common national system of storing and management of capital issues turnover, having as a basic body a full-scale National depositary, is absent in Ukraine. 

According to the results of analysis of reasons and financial consequences of restructure of external debts of Ukraine towards government of the countries-members of the Paris club of creditors, the Accounting Chamber has made the following conclusions.

One of the main reasons, which caused the debt crisis and the necessity of restructuring of the external debt of Ukraine, have become economically groundless and uncontrolled decisions of the Government within 1992-1999 concerning attraction of foreign credits on security of the state and in favor of insolvent enterprises, which have led to the mass non-fulfillment by them of financial liabilities by the received loans and their displace on the state budget.

The debt crisis, which Ukraine experienced at the end of 1999, was a result of the absence of legally determined strategy of management of the national debt, critical indexes of its size, as well as ineffective measures of the Cabinet of Ministers of Ukraine and of the Ministry of Finances of Ukraine towards enterprises-debtors concerning fulfillment by them of financial liabilities towards the State by external loans.

Calculations indicate that provision by the executive power authorities of reimbursement by debtors of at least 30% of overdue debt or provision of the current payments in a full measure, in case of restructuring of the overdue debt, could allow Ukraine not to perform restructuring of this part of external debt.

But these possibilities have not been used by the Government and the Ministry of Finances

Decision of the former Minister of Finances of Ukraine, Mityukov I.O. concerning termination as of 24.01.2000 of payments for service and clearance of the guaranteed debt liabilities towards countries - members of the Paris club of creditors, was too fast, administratively not prepared and economically not calculated, and have led to the fall in 2000 to the lowest level of international credit rating of Ukraine and closed an access to credit resources at the international capital markets for almost three years.

Besides, the decision have been approved during processes of termination of the program of the Government of Ukraine, approved by the International currency reserves, while fulfillment of the program was one of the main conditions of decision of the Paris club of creditors to restructure the debts.

Non-fulfillment of the State budget of Ukraine within 2000-2002 in the articles concerning provision of financing from external loans has become the consequence of this decision. 

The Board of the Accounting Chamber have made a summary conclusion on the basis of results of examination of expenditures of the State budget of Ukraine for servicing and clearance of the state debt and its management in 2002 in the questions of system of budget financing of expenditures for servicing and clearance of the state debt - it is imperfect and does not provide the transparent, legal and effective employment of budget funds. 

The integral system of legislative regulation of expenditures for servicing and clearance of the state debt, which exceed 20% of the total expenditures of the State budget of Ukraine, has not been created.

The order of appearance and clearance of the state internal and external debt, as it is stipulated by the Constitution of Ukraine, is not regulated by the current legislation, because the special base law about the state debt has not been approved till now.

The current legislation does not regulate at all the order of spending of funds of the State budget of Ukraine for the management of the state debt.

The foreign policy was not a priority direction of the budget policy for the Cabinet of Ministers of Ukraine in 2002. System of its financing is imperfect. The Cabinet of Ministers of Ukraine, the Ministry of Foreign Affairs of Ukraine have not standardized the separate directions of financial and material provision of the foreign policy, that influences negatively the efficacy of management of budget funds and their rational use. These conclusions have been made on the basis of examination of employment of state budget funds for the foreign policy in 2002 by the Ministry of Foreign Affairs of Ukraine.

2. Analysis of reaction of the central executive authorities, bodies and organizations on the conclusions and proposals of the Accounting Chamber prepared by the results of the control measures

Obligatory field of activity of the Accounting Chamber is following of the measures of reaction on information and Conclusions of the Accounting Chamber performed by supervisors of the higher executive power authorities, ministries, bodies, objects, which have been examined.  

Remarks and proposals of the Accounting Chamber by the materials of conclusions concerning fulfillment of the budgets and examination of the draft law about the state budget have been considered by the Verkhovna Rada of Ukraine and the Government while taking decisions concerning improvement of execution of the state budget and budget in geenral.

In the course of consideration of the draft Law of Ukraine "About State budget of Ukraine for the year 2004" in the first reading and preparation of the Budget conclusions to the mentioned draft Law of Ukraine, conclusions and proposals of the Accounting Chamber have been considered by the Budget Committee of Verkhovna Rada of Ukraine and almost completely used. From the main questions, conclusions and proposals of the Accounting Chamber have been included to the Budget conclusions of Verkhovna Rada of Ukraine, approved by the resolution of Verkhovna Rada of Ukraine as of 23.10.2003
№ 1238 "About approvement of Conclusions and proposals to the draft law about the State budget of Ukraine for the year 2004".

From 50 proposals of the Accounting Chamber, which have been submitted to the draft law, 31 proposals have been considered in the draft law about the State budget of Ukraine for the year 2004.

In particular, draft law about the State budget of Ukraine for 2004 includes increase of the amount of intake against the governmental draft law of income tax; value added tax; funds, received for fulfillment of consul duties; import duty; part of the revenue (profit) economical organizations, which are raised to the budget; dividends, accumulated on the shares of economical associations; customs duties for the total amount of 5.3 billion UAH.

Remarks of the Accounting Chamber concerning the necessity of removal from the State budget of Ukraine of the separate articles of expenditures in the amount of 223 mln UAH have also been considered.  

Besides, a number of proposals, presented by the Accounting Chamber are realized in the Budget conclusions of Verkhovna Rada of Ukraine to the draft law about the State budget of Ukraine for the year 2004. The Cabinet of Ministers was entrusted to calculate the amount of intakes from the payments for property rent, which belong to the budget institutions; to consider the question of increase of the income part of the state budget from realization of the surplus weapon; to submit the Program of the state loan of Ukraine for the year 2004 in the separate amendment and to separate in a single budget program expenditures for management of the state debt from expenditures for servicing and clearance of the state budget; to improve the order of removal of part of the income (profit) of the state enterprises to the state budget.

The Board of the Accounting Chamber has remarked, that in calculations of the draft state budget the own revenues of the local budgets have been groundless increased by 1.6 billion UAH because of overstating of the fund of remuneration of labor and, correspondingly, of the amounts of income taxes from the physical bodies. Verkhovna Rada of Ukraine supported this proposition and entrusted the Cabinet of Ministers of Ukraine, in order to establish the real indexes of income tax from the physical bodies, to make the final decisions concerning legislative regulation of supplementation of the profit part of the local budgets in the year 2004.

In passed by Verkhovna Rada of Ukraine Law of Ukraine as of 27.11.2003 № 1344-ІV "About the State budget of Ukraine for the year 2004" finally of partially have been included 20 proposals of the Accounting Chamber.

The Law was passed with the increase of income for 3 billions UAH. Besides, the Article 13 of the Law has obliged the State tax administration of Ukraine to perform measures concerning decrease of the tax debt and to demand 1.5 billions UAH of arrears. In general, income of the state budget has been increased for 4.5 billions UAH due to proposals of the Accounting Chamber.  

Intake of the following payments has been increased in the current draft budget: income tax from enterprises - 0.6 billion UAH; value added tax - 1.3 billion UAH; import duty - 0.3 billion UAH; dividends of economic associations - 0.1 billion UAH; customs duties - 0.6 billion UAH.

Separate remarks of the Accounting Chamber concerning the necessity of removal from the State budget of some of expenditures for the total amount of 0.8 billions UAH have also been considered.

Remarks of the Accounting Chamber concerning the necessity of completion and approvement of monthly schedule of the special fund of the state budget have also been realized. The Article 99 of the Law postulates that the Ministry of Finances of Ukraine, in one month from taking into effect of the Law of Ukraine "About the State budget of Ukraine for the year 2004", prepares and approves the monthly schedule of the special fund of the state budget (except own intakes of budget institutions and corresponding expenditures).

The question of payment by agricultural enterprises-payers of the fixed agricultural tax of insurance fee for the obligatory pension insurance has also been regulated. The Law has extended for the year 2004 payment of insurance fees by these enterprises in the amount and order, established by the Law of Ukraine "About the fixed agricultural tax".

Proposal concerning the amount of revenues of the local budgets, which was decreased for 66 mln UAH has also been established. The Article 68 of the Law has established, that 50% of the revenues, which are fixed with corresponding local budgets and are considered in determination of the amount of interbudget transfers, which will be received over the annual estimated amounts, determined in the Attachment № 5 to the Law "Indexes of interbudget transfers (leveling subsidies and funds, which are transferred to the state budget) between state and local budgets for the year 2004", are accumulated at the accounts of the State Treasury for their further transfer to local budgets, which revenues are not received in a full measure, in the order determined by the Cabinet of Ministers of Ukraine.

Besides, the Law of Ukraine "About the State budget of Ukraine for the year 2004" includes conclusions of the Accounting chamber concerning the necessity to increase the expenditures for social sphere for 1.1 billion UAH, and insufficient validity of approvement of the minimal wages in amount of 237 UAH by the mechanism of additional payment, without restoration of correlations in labor remuneration for the employees of budget institutions, for that purpose expenditures have been increased for 1 billion UAH.

During parliament hearings in Verkhovna Rada of Ukraine with participation of the Cabinet of Ministers of Ukraine and the Accounting Chamber, conducted as an execution of resolution of Verkhovna Rada of Ukraine as of 11.09.2003 № 1149 "About parliament hearings", "State budget of Ukraine: actual sources of replenishment and extension of restoration of financial resources of the state" there was considered a question concerning fulfillment of the State budget of Ukraine of 2003, key problems of replenishment of the profit part of the state budget have been analyzed, improvement of interbudget relations and extended replenishment of financial resources of the state.  

Materials of the Accounting Chamber have been used during preparation of other parliament hearings as well. Thus, on 26.02.2003 there have happened parliament hearings about the state of privatization in Ukraine in the subject "Consequences and perspectives of privatization in Ukraine". Chairman of the Accounting Chamber has made a report during these hearings. Special information bulletin for people's deputies has been prepared for this event.

Results of examination, performed by the Accounting Chamber have been employed during hearings in Verkhovna Rada of Ukraine of information of the Cabinet of Ministers of Ukraine about compliance to the requirements of nature protection legislation during activities, connected with minerals use, providing grounds for the resolution of Verkhovna Rada of Ukraine as of 20.11.2003 № 1310 "About the state of compliance to the requirements of nature protection legislation, during activities, connected with minerals use in Ukraine".

In preparation of parliament hearings for the subjects "Moral crisis of society and the ways of its overcoming", which have taken place on 05.11.2003, were used the results of the analysis of fulfillment of the Complex measures for comprehensive development of Ukrainian language, planning and employment of State budget funds for their implementation.  of the Accounting Chamber, Simonenko V.K., made a report during these hearings.

Remarks and proposals, prepared as Conclusions of the Accounting Chamber on the basis of results of the control measure, have been revealed also in the laws, approved by Verkhovna Rada of Ukraine, have been considered in preparation of resolutions of Verkhovna Rada f Ukraine, have been discussed at the meetings of its committees.

Thus, taking into consideration the propositions of the Accounting Chamber by the Article 74 of the Law of Ukraine "About the State budget of Ukraine for the year 2004" it is prohibited in 2004 to fulfill restructuring or write-off of the debt (arrears) of subjects of economic activity by the taxes, charges (obligatory payments), to provide delays as for terms of their payment, as well as to write-off the indebtedness of subjects of economic activity by the credits, received by the state or under the state guarantees, budget loans, financial assistance on the opposite basis of the budget.

In order to investigate and summarize the experience of the functioning of special (free) economic zones and territories of priority development with the special regimen of investment activity, by the order of Verkhovna Rada of Ukraine as of 22.05.2003 № 848-IV there was created a special parliament-governmental commission.  

This commission is obliged to fulfill the systematic control of the adherence to the legislation of Ukraine concerning creation and functioning of the special (free) economic zones and implementation of the special regimes of investment activity in Ukraine.

Thus, results of examination of employment of funds of the State budget of Ukraine for provision of the safety of the road traffic, registration and accounting of means of transportation by Department of the State Car Inspection of the Ministry of the Internal Affairs of Ukraine, have been reflected in the approved by Verkhovna Rada of Ukraine Law of Ukraine "About the local militia". Changes to some of the legislative acts of Ukraine, including the Budget codex of Ukraine, have also been made.

It is necessary to emphasize that information about reaction on the materials, sent by the Accounting Chamber to Verkhovna Rada of Ukraine, have been rendered for the first time in 2003.

Special privatization control commission having considered the analysis of the Report of the Fund of state property of Ukraine about fulfillment of the "State privatization program for the years 2000-2002" in 2002 have sent its decision to the Accounting Chamber concerning examination of employment of budget funds by the Fund of state property.

Budget committee has considered the information of the Accounting Chamber concerning examination of employment of state budget funds, assigned to the Ministry of Health Protection of Ukraine for provision with insulin of diabetic patients. In the process of consideration there have arisen additional questions and the Committee approved a decision about the necessity of rendering of additional information. The Accounting Chamber has sent this information.

Working groups with participation of people's deputies - members of the Budget Committee on 11.06.2003 had a meeting in order to discuss the following: "About employment of state budget funds by the State highway service by the budget programs in 2002 and first quarter of 2003 and directions of spending of funds in the current and next year", during the meeting a number of propositions of the Accounting Chamber have been supported.

Committee of ecological policy, nature management and liquidation of the consequences of Chernobyl disaster has considered the information about results of the examination of efficacy of management of forest resources of Carpathian region. Decision № 451 "About results of the examination of efficacy of management of forest resources of Carpathian region on the basis of information rendered by the Accounting Chamber" has been approved. Propositions of the Accounting Chamber have been supported in this decision and the Cabinet of Ministers of Ukraine has been entrusted to provide their fulfillment. Besides, changes to the new edition of the Forest codex have also been made.  

Committee of fuel and energy complex, nuclear policy and nuclear safety has considered the execution of the Law of Ukraine as of 18.12.96 № 612/96-VR "About ratification of the Agreement between Ukraine and IBRD about provision of the loan for the project of development of power industry market". The Committee supported proposals of the Accounting Chamber, which relate to solution of problems with settlement of accounts of electrogenerating companies due to the loan of IMRD and has approved the draft resolution of Verkhovna Rada of Ukraine about creation of the temporary investigative commission to clear out the reasons of appearance of the accounts payable.

Committee of financial and bank activity having processed the information from the Accounting Chamber concerning examination of employment of state budget funds, assigned in 2002 and 1^st half of 2003 for provision of functional activity of the State customs service of Ukraine, informed about creation of the working group for preparation of consideration of this question at the meeting of the Committee.  

According to results of examination of employment of State budget funds by the institutions of reserve fund, on 16.04.2003 the Committee of Verkhovna Rada of culture and spirituality has carried out a meeting.

By the results of examination of employment of state budget funds for sanatorium treatment and recovery of people with disabilities and war veterans, to discuss the problems of their social protection on 21.10.2003 took place a meeting of the Committee of Verkhovna Rada of Ukraine of pensioner, veteran and invalid affairs, on 11.12.2003 - parliament hearings "About provision in Ukraine of social, economic, legal and constitutional guarantees in the sphere of social protection of war veterans, determined by the current legislation", which resulted in approval of the resolution of Verkhovna Rada of Ukraine as of 11.12.2003 № 1390-ІV.

There have been prepared a number of materials for the Temporary investigative commission of Verkhovna Rada of Ukraine dealing with effective employment and return of the foreign credits, received under the guarantees of the Government of Ukraine, and clarification of the reasons of indebtedness by the credits, received by the State or under the state guarantees.

Proposals of the Accounting Chamber concerning correction of disadvantages and increase of the efficacy of employment of state budget funds have been considered not only by Verkhovna Rada of Ukraine in approvement of lawmaking documents for a financial year, but have also been taken into consideration in preparation of the Edicts of President of Ukraine.

Thus, the Conclusions of execution of the State budget of Ukraine for the first half of 2003 postulate that approvement by the Government of the certain decisions concerning changes of assignment of state budget funds creates conditions for their illegal and groundless employment. The Cabinet of Ministers of Ukraine by its order as of 13.06.2003 № 355 "About the offset of debt for import of corn seeds of the company "Pioneer Hi-Bred International, inc" changed the direction of employment of funds and entrusted the Ministry of Agricultural Policy of Ukraine to transfer 461 thousand USD (about 2.4 mln UAH) for the offset of debt, which appeared in 1993 in connection with non-fulfillment by the State association "Ukragrohim" of its liabilities by the agreement for the delivered corn seeds. Thus, budget funds are directed for the measures, not provided by the Program "Grain - 2000-2004".

The same Order, the Cabinet of Ministers of Ukraine has approved on 17.07.2003, № 423-р "About offset of debt towards the firm "Industrialexport S.A.", by which agreed with the proposition of the Ministry of Fuel and Energetic to transfer 5.5 mln USD according to the official rate of exchange, established by the National bank of Ukraine for the previous of the day of payment day, for the offset of debt towards the firm "Industrialexport S.A." (Romania) for the pumps, which have been received by enterprises of coalmining industry within 1992-1993, as a part of assignments by the budget program "State support of construction and technical reequipment of coal mining enterprises, brown coal and peat".

By the Order of the President of Ukraine as of 18.09.2003 № 1049, the Order of the Cabinet of Ministers of Ukraine as of  17.07.2003 № 423-р is cancelled as those, which was approved by the Government violating the general principles of execution of the State budget of Ukraine, determined by the Budget codex of Ukraine, stipulating that budget funds are to be employed only for purposes, determined by the corresponding budget assignments and by the Law of Ukraine "About the State budget of Ukraine for the year 2003", which does not provide funds for the purposes, mentioned in the order of the Cabinet of Ministers of Ukraine.  

By results of examination and analysis of legality and efficacy of employment of state budget funds, performed by the Accounting Chamber, assigned for fulfillment of land reform, delivery of the state acts for the right of property for land and protection and rational use of lands within the years 2000-2002 and 1^st quarter of  2003, there has issued the Order of President of Ukraine as of 06.06.2003
№ 485 "About decision of the Council of the national safety and defense of Ukraine as of 6 June, 2003 "About the urgent measures concerning increase of the efficacy of minerals exploitation in Ukraine".

Basing on the Conclusions of the Accounting Chamber concerning examination of employment of the budget funds within 2001-2002, assigned for fulfillment of measures of the National program of restoration of environment of Azov and Black seas, President of Ukraine, by the Order as of 17.12.2003 № 1456/2003 "About the urgent measures concerning improvement of protection and exploitation of land in Autonomous Republic of Crimea", entrusted the Cabinet of Ministers of Ukraine to take appropriate measures concerning target employment of land in Autonomous Republic of Crimea, especially of natural reserves, lands of sanitary and recreation appropriation, and to develop a draft law about the special regimen of exploitation and protection of the lands of the Southern coast of Crimea and created Commission for examination of the state of protection and rational use of land in Autonomous Republic of Crimea.

President of Ukraine, according to results of the audit of efficacy of management of forest resources of Carpathian region, fulfilled by the Accounting Chamber, signed to Orders - as of 05.01.2004 № 1 "About the measures of strengthening of the state control in the sphere of protection, defense, exploitation and restoration of forests" and as of 07.02.2004 № 171 "About additional measures for development of forestry".

Materials of examination performed by the Accounting Chamber have been employed in preparation for the meetings of the Council of national security and defense (CNSD) of Ukraine.

Thus, materials of the Accounting chamber concerning efficacy of employment of budget funds, assigned for accumulation of minerals, have been used in preparation to the meeting of CNSD, which has taken place on 06.06.2003 "About the urgent measures concerning increase of the efficacy of minerals exploitation in Ukraine". At the meeting of CNSD there was decided to dismiss the Minister of defense of Ukraine Shkidchenko V.P. Chairman of the Accounting Chamber, Simonenko V.K., took part in this meeting.

The Accounting Chamber have prepared materials about employment of budget funds, assigned for the needs of agriculture within the years 2002-2003, in particular, for the purchase of food in the system of state reserve for the meeting of CNSD as of 21.10.2003. First Deputy of Chairman of the Accounting Chamber, Malikov V.V., took part in this meeting.  

Materials of the Accounting Chamber have been considered and provided grounds for the Cabinet of Ministers of Ukraine to approve a number of resolutions and orders concerning the course of budget process.

Thus, by the resolutions as of 16.01.2003 № 39 "About the measures concerning mobilization of revenues to the state budget in 1^st quarter of 2003" and as of 17.07.2003 № 1093 "About measures concerning mobilization of revenues to the state budget in 3^rd and 4^th quarters of 2003", in order to provide execution of the revenue part of the state debt in 2003, are confirmed the tasks of mobilization of taxes, charges (obligatory payments) and offset of the tax debt.

The Government has entrusted:

- Ministers, heads of the other central executive power authorities to consider urgently and to approve for the year 2003 financial plans of the state enterprises, which are under jurisdiction of the Ministries, other central executive power authorities and open joint stock companies, with the state share of stocks of the statutory fund comprising 50% plus 1 stock and to submit generalized materials concerning approvement of the annual financial plans to the Ministry of Economy and European Integration of Ukraine till 01.02.2003;

- State tax administration of Ukraine to submit weekly the information concerning mobilization of revenues to the state budget and offset of the tax debt and monthly - personified indexes of intakes to the state budget and offset of the tax debt of gross tax payers to the Ministry of Finances of Ukraine and other central executive power authorities, as well as to consider at the meetings of the working group the coordination of activities of the central executive power authorities concerning provision of tax and other intakes, provided by the state budget, the state of execution of the approved amounts of intake of  taxes, charges (obligatory payments), and to inform concerning the results of their consideration the Cabinet of Ministers of Ukraine and to make proposal concerning possible measures of mobilization of revenues to the state budget;

- Fund of the State property of Ukraine, State committee of statistics of Ukraine, State tax administration of Ukraine, Ministry of Economy and European Integration of Ukraine to fulfill in a month term the work concerning ordering of the accounting of enterprises with a part of state property, of the ministries (other central executive power authorities) and local executive power authorities;

- State tax administration of Ukraine to work more intensively for provision of intakes of funds to the state budget, acquisition of taxes, charges (obligatory payments) by means of employment of the procedure of bankruptcy according to regulations of the current legislation, to inform each month about results of the Cabinet of Ministries of Ukraine and to provide submission till 25th of each month, which follows the accounting month, to the Ministry of Finances of Ukraine of information about the state of charges and taxes, charges (obligatory payments) payment, to the budget by the kinds of taxes, by different districts, gross tax payers, ministries, by kinds of economic activity, which is controlled by the State tax administration and State tax service of Ukraine.

The new working group for coordination of activities of the central executive power authorities concerning provision of tax and other kinds of intakes to the state budget is created according the Order of the Government as of 26.03.2003 № 383 "Some aspects of coordination of activities of executive power authorities concerning provision of tax and other kinds of intakes to the state budget".

To increase the efficacy of management of the corporative rights of the State by the Cabinet of Ministries of Ukraine, taking into consideration remarks and proposals made by the Accounting Chamber by the results of analysis of efficacy of management of the state property and compliance with the current legislation while creation and  management of state (national) joint stock and holding companies, there was developed a set of normative acts, which define respective powers for management of corporate rights of the State, in particular:

- Decree as of 07.03.2003 № 301 "About declaration of some Acts of the Cabinet of Ministers of Ukraine as such, that lost their powers", according to which the functions of management of the state corporate rights of central and local bodies of executive power are imposed on the Fund of the State Property of Ukraine;

- Decree as of 31.03.2003 № 415 "About provision of authorities to Ukrzaliznitsya for management of the state corporate rights of open joint stock companies";

- Decree as of 02.06.2003 № 818 "About introduction of changes to the list of acts of the Cabinet of Ministries of Ukraine, that lost their powers", which deprived the local state administrations of powers to manage the state corporate rights concerning management of state share holding of some of the enterprises, because of their low efficiency.

- Regulation as of 06.08.2003 № 479-р "About transfer of authority to manage state corporate rights of OJSC "Equipment-producing plant "Sokil" to NSAU.

By the Order of the Government as of 28.03.2003 № 175-р to obligate the State Communications Committee of Ukraine to provide and transfer in a two day term to the dollar account of the State Treasury of Ukraine 100% of the funds from selling of part of the statutory fund of of Joint Enterprise "Ukrainian mobile communication", which belong to OJSC "Ukrtelecom".

By the Order of the Government as of 27.06.2003 № 973 "About changes to the certain orders of the Cabinet of Ministers of Ukraine" there was reviewed the list of the priority kinds of economic activity in special economic zones and territories with a special regiment of investment activity.

A number of standard acts of Cabinet of Ministers of Ukraine concerning regulation of the problem of clearance by the credits acquired by the State or under the state guarantees have been approved. These are the following:

By the order of the Cabinet of Ministers of Ukraine as of 26.11.2003 № 1826 there has been approved the list of gas-main pipelines and their branches for gasification of the villages, which are being built on account of clearance of the past debts of NJSC "Naftogaz Ukrajiny" by the payments to the State budget of Ukraine.

By the resolution of the Cabinet of Ministers of Ukraine as of 10.12.2003 № 762-р "About approvement of the Program of contraction of the tax debt for the year 2004" the ministries, other central and local executive power authorities are obligated to provide the intake of all taxes and charges (obligatory payments) to the state budget from enterprises, institutions and organizations, which are under their jurisdiction, as well as to submit developed administrative measures concerning contraction of the tax debt.

Meeting of the Governmental committee on reforming of the agrarian sector of Ukraine of the Cabinet of Ministers of Ukraine took place on 07.04.2003, basing on the results of the examination of employment of funds of the State budget of Ukraine, assigned for the purchase of domestic agriculture machinery under conditions of financial leasing and measures, connected with reimbursement of indebtedness for it in the years 2000-2002. The question of employment of state budget funds, assigned for the purchase of domestic agriculture machinery under conditions of financial leasing has been considered during this meeting.

Considering the remarks of the Accounting Chamber, prepared on the basis of results of examination, performed in 2002, of correspondence of the actions of Ministry of Economics and European Integration to the requirements of the current legislation concerning concordance of others than advertised bidding procedures of purchase of goods and services at the expense of the budget funds and regulating of the mentioned above procedures, the Cabinet of Ministers of Ukraine has issued a resolution as of 02.06.2003 № 819 "About making of alterations and considering as those, which lost their validity, to some of the resolutions of the Cabinet of Ministers of Ukraine concerning state purchases".

By resolution of the Cabinet of Ministers of Ukraine as of 04.06.2003 № 846 "About making of alterations to the list of documents, which are attached to application for issue of the license for the special field of economy", production of medicines, wholesale and retail of medicines are considered as license activity.

Taking into consideration the existing state of affairs and proposals of the Accounting Chamber concerning improvement of provision of people with disabilities with cars and prosthetic devices, the Government of Ukraine has issues a resolution as of 04.06.2003 № 866 "About making of alterations to the Order of provision of invalids with cars".

Resolutions of the Cabinet of Ministers of Ukraine as of 06.08.2003 № 1221 "Some aspects of road complex management" and as of 05.11.2003 № 1731 "About approvement of the Order of direction of funds of the surplus fund of the state budget, assigned for financing of development of road network and its maintenance" include all the propositions of the Accounting Chamber based on the results of examination of employment of State budget funds of Ukraine for the year 2002, connected with construction and reconstruction of public highways.

Despite the President Decree as of 18.09.2003 № 1049, issuance by the Cabinet of Ministers of Ukraine of resolutions as of 26.03.2003 № 385 "About purchase of services, connected with performance of the state foreign loans, servicing and clearance of the state debt" and as of 27.08.2003 № 1354 "About approvement of Agreement between the Cabinet of Ministers of Ukraine and Government of Turkmenistan about restructure of the debt of Ukraine towards Turkmenistan" and resolution as of 25.07.2003 № 462-р "About additional measures concerning clearance of indebtedness by the credits, acquired by the state or under the state guarantees" has become a consequence of examination, performed by the Accounting Chamber, of expenditures of the State budget of Ukraine for the year 2002 for servicing, clearance and management of the state debt.

The mentioned above resolution of the Cabinet of Ministers of Ukraine № 385, which regulate the services of servicing and clearance of the state debt, could be considered a result of analysis, performed by the Accounting Chamber of reasons and financial consequences of restructure of foreign debt instruments of Ukraine towards governing bodies of foreign countries - members of the Paris Creditors Club.

The Government Committee has considered the questions, raised by the Accounting Chamber on thee basis of results of examination of employment of state budget funds, assigned for the partial compensation of the value of heavy machinery of domestic production and development of machinery for agriculture, on two sessions. Besides, for implementation of proposals of the Accounting Chamber concerning improvement of the mechanism of employment of budget funds, the Cabinet of Ministers of Ukraine has issued a resolution as of 21.08.2003 № 1314 "About approvement of the Order of employment of state budget funds, assigned for the partial compensation of the value of heavy agricultural machinery of domestic production".

In order to improve provision of pupils and students with textbooks and manuals, as of 28.08.2003 № 1378 the Cabinet of Ministers of Ukraine has issued the resolution "About improvement of work for provision of pupils and students with textbooks and manuals".

By the results of examination of employment of state budget funds for construction of lodging for military servants and investments, assigned for construction works, the Cabinet of Ministers of Ukraine by the resolution as of 17.09.2002
№ 1394 obligated the State Committee of Ukraine on construction and architecture to develop a draft Law of Ukraine "About the state financing and target long-term crediting of construction of lodging".

The Cabinet of Ministers of Ukraine, basing on the Conclusions of the Accounting Chamber concerning examination of employment of state budget funds by the program "Protection of the state border", have issued a draft law "About making of alterations to the Budget codex of Ukraine" to be considered by Verkhovna Rada of Ukraine, which provide more flexible mechanism of budget distribution on general and special funds, determination of sources of creation of special fund and mechanism of funds accounting.

Besides, propositions of the Accounting Chamber concerning financing of expenditures, connected with material support of Frontier troops, have been partially considered. In the Law of Ukraine "About the State budget of Ukraine for the year 2004" expenditures for material support of the State Frontier service of Ukraine (new program has been introduced instead of the program "Protection of the state border". Expenditures for the purchase of technical devices, necessary for protection of the border have been performed on account of this program) in comparison with the year 2003 have been increased for 28.4 mln UAH, that will partially solve the problem of equipment of the Frontier troops with modern security devices.  

In order to correct the disadvantages, revealed by the Accounting Chamber during analysis of employment in 2002 of the state budget funds by executive power bоdies, the Cabinet of Ministers of Ukraine has issued two resolutions - as of 04.06.2003 № 848 "About ordering of employment of cars by budget institutions and organizations", and as of 06.11.2003 № 1736 "About approvement of the Order of clearance of debt from benefits to population for the provided communication services, as well as for indebtedness and current payments for communication services, rendered to budget institutions", which determines the mechanism of clearance of debt from benefits to population for the provided communication services, as well as for indebtedness and current payments for communication services, rendered to budget institutions, on account of funds, which come into the general funds of the state budget from OJSC "Ukrtelecom" on account of clearance of indebtedness from the transfer of dividends on shares of this company, which are the property of the State.

Apart from the Governmentу, results of examinations, performed by the Accounting Chamber have been considered and have been taken into consideration by leaders of the executive power bodies - main distributors of the budget funds.

Thus, in order to react on the Conclusion of the Board of the Accounting Chamber based on the results of examination of employment of state budget funds in the year 2002, assigned for provision of invalids with cars and prosthetic devices, the Ministry of Labor and Social Policy of Ukraine has approved by the order as of 24.04.2003 № 104 the measures concerning correction of deficiencies and has issued an order as of 07.08.03 № 221 "About making of alterations to the Instruction on the order of provision of population of Ukraine with prosthetic devices", conducted personnel changes of leaders of the Fund of social protection of people with disabilities and Department of the policy of social protection of people with disabilities of the Ministry of Labor of Ukraine, prepared a draft resolution of the Cabinet of Ministers of Ukraine as of the changes to Provision about the Fund of social protection of people with disabilities, approved by the resolution as of 26.09.2002 № 1434, in its part concerning determination of the amount of financing of programs for social protection of people with disabilities and widening of Fund participation in management of budget funds, assigned for provisions of people with disabilities with prosthetic devices.

The ministry, on the basis of results of examination of the Fund of social insurance from the temporary loss of capability to work has prepared three draft laws (one of them together with people's deputy Hara V.G.) concerning employment of penal sanctions for non-submission and untimely submission of reports, clearance of indebtedness in rendering of assistance in case of temporary loss of capability to work, improvement of material well-being of insured families with children.

In order to correct the deficiencies, revealed by the Accounting Chamber during examination of employment of subventions from the state budget to local budgets, assigned according to paragraphs 4, 5 of the Article 34 of the Law of Ukraine "About the State budget of Ukraine for the year 2002", the Ministry of Labor of Ukraine has prepared the order "About approval of the Plan of measures for ordering of the system of financing of expenditures, provided by the State budget for provision of benefits and housing subsidies".

The Ministry of Ecology and Natural resources of Ukraine has developed the Plan of measures to liquidate violations and deficiencies, revealed during examination of employment of state budget funds in the years 2001-2002 for fulfillment of measures of the National program of restoration of environment of the Azov and Black Seas, and the draft resolution of Verkhovna Rada of Ukraine as of 08.07.2003, registr. № 3727 "About development of the National program of reinforcement of coasts of the surface water objects, seaside and their engineering protection".

The Ministry of Ukraine on Emergency situations and protection of population from the consequences of Chernobyl disaster on the basis of results of consideration of conclusions of the Board of the Accounting Chamber of the results of examination of employment of State budget funds in the year 2002 for support of ecologically safe condition at the zone of alienation and zone of absolute (obligatory) resettlement, has approved a decision as of 18.11.2003 № 20 "About taking of measures on the basis of results of examination performed by the Accounting Chamber of Ukraine", which provide the complex of measures concerning acceleration of removal of blank points in legislation and contradictions in the existing legal base in the field of overcoming of sequences of consequences of Chernobyl disaster at the zone of alienation. For the faults, done in the work, there were dismissed from the work positions the following people: first deputy of the Head of the state department - Administration of alienation and zone of absolute (obligatory) resettlement Rindenko V.M., chief accountant Pryshchepa V.K., a number of employees of the department and state enterprises have been called to account, four directors of enterprises have been fired. The draft resolution of Verkhovna Rada of Ukraine as of 24.11.2003, registr. № 4419 "About foundation of the Temporary Committee of Inquiry of Verkhovna Rada of Ukraine for examination of the efficacy of bodies of state administration concerning solving of problems, related to withdrawal of Chornoybyl power station, implementation of the Plan of measures at the object "Shelter" and at the zone of alienation connected with radioactive waste products" has been prepared.

The Ministry of Fuel and Energy of Ukraine has considered the Conclusion of the Accounting Chamber based on results of examination and analysis of employment of state budget funds, assigned to the Ministry in 2002 for the labor protection and improvement of safety engineering at the coalmining enterprises at the session of the Ministry and at the meeting of department "Coalmining industry" of the Scientific and technical Council of the Ministry, with participation of heads of the state enterprises, holding companies, production associations and mines. According to the results of consideration and in order to fulfill the corresponding resolution of the Government, the Ministry of Fuel and Energy of Ukraine has prepared the proposal of making changes and additions to approved by resolution of the Cabinet of Ministers of Ukraine as of 06.07.2002 № 939 "Programs for improvement of safety measures at coal mines", order as of 07.02.2003 № 57 "About approvement of distribution of coalmining enterprises by groups and amounts of budget assignments by the programs of financing from the State budget of Ukraine for the year 2003" and according to the order has developed the new order of rendering and employment of budget funds in 2003 by the program "Labor protection and improvement of safety measures at the coalmining enterprises".

For correction of deficiencies, revealed by the Accounting Chamber during performance of examination and analysis of employment of state budget funds, assigned to the Ministry of Fuel and Energy of Ukraine in 2002 and 1^st quartet of 2003 by the Article "Rescue operations at the coalmining enterprises", the Ministry has issued an order as of 23.06.2003 № 90 "About results of examination of the Central Headquarters of the State Militarized Mountain-Rescue Service in the coalmining industry by the Accounting Chamber", determined the terms and has begun the work on bringing in correspondence with requirements of legislation and standard acts having relation to the activity of of State Militarized Mountain-Rescue Service.

The board of the Ministry of Industrial Policy of Ukraine, on 26.06.2003 approved the Measures for realization of conclusions of the Board of the Accounting Chamber, based on the results of examination and analysis of the target employment of state budget funds, assigned for financial support of national mechanical engineering for the agroindustrial complex. For fulfillment of Conclusion of the Board of the Accounting Chamber based on results of examination and analysis of employment of state budget funds for financial support of domestic producer of potassium fertilizers there have been developed measures for development of the national production of potassium fertilizers, including restoration of activity of Stebnitskij State Mining and Chemical Enterprise "Polimineral". Head of the tender committee of the state enterprise "Potassium plant" Koval M.T. has got admonition.

The Ministry of Agrarian Policy of Ukraine to correct deficiencies, revealed during examination and analysis of employment of State budget funds, assigned in 2002 for the state support of peasant (farmers') economies, by its order as of 04.04.2003 № 35 has approved the corresponding measures, statute of Ukrainian State Fund has passed the legal examination in the Ministry of Justice of Ukraine, by another order as of 29.12.2002 № 674-к has approved the structure, list of staff members and designated the general director of Ukrainian State Fund. The Department of the Ministry for control and revision measures has strengthened the control over the transfer of funds of the reverse financial assistance, which return to the special fund of the State budget of Ukraine.

The report on the results of examination, performed by the Accounting Chamber, of employment of the funds of surplus fund of the State budget of Ukraine, assigned in 2002-2003 for reimbursement of losses of agricultural producers, which suffered from the natural disasters on March-July of 2002 have been transferred by the ministry of Agrarian Policy of Ukraine to the regions for consideration at the meetings of the boards of district state administrations.  

The Ministry of Culture and Art of Ukraine and the State Committee of Ukraine on construction and architecture, by the results of consideration of Conclusion of the Board of the Accounting Chamber based on the performed examination of employment of state budget funds, assigned in 2002 to the State Committee of construction and architecture for the objects of historical-architecture, architecture-historical heritage and nature reserves, have developed and submitted for the approvement the National Program of conservation and employment of immovable objects of cultural heritage. By the decision of the Board of the Ministry as of 25.04.2003 № 26 there were approved measures on correction of the revealed deficiencies and their further prevention.

The Board of the Ministry of Culture and Art of Ukraine, on 30.04.2003, by the results of examination of expediency and efficacy of spending of state budget funds in 2002, connected with preservation of the cultural heritage, has approved a decision on correction of deficiencies, revealed during examination. A working meeting with directors and chief accountant of reserves, subordinated the Ministry have been carried out for familiarization with consequences of examination and interpretation of standard acts. By the Order as of 12.06.2003 № 352 "About organization of works on restoration of memorials of the cultural heritage in 2003", nature reserves have received the information about amounts of state order for fulfillment of repairs and restoration works at the objects of cultural heritage, taking into consideration requirements of legislation. According to the resolution of the Board of the Ministry of Culture as of 30.04.2003 general director of the National reserve "Ancient Galich" has got admonition.

By the results of examination of employment of State budget funds, performed by the Accounting Chamber, assigned to the Ministry of Culture and Art of Ukraine for development of circus industry, the Ministry of Culture has issued an order "About realization of Conclusion of the Accounting Chamber of Ukraine by the results of examination of employment of state budget funds, assigned for the circus industry", which obligated the heads of the state circuses to take measures for correction of the revealed violations and deficiencies in employment of budget funds. The Ministry has taken into account the proposals concerning ordering of the administrative management of the circus branch, development of standard acts, provision of the necessary level of planning and financial discipline etc.

In order to correct deficiencies, revealed by the Accounting Chamber in the process of analysis of fulfillment of Complex measures on all-round development of Ukrainian language, planning and employment of State budget funds for their implementation, the Ministry of Culture and Art of Ukraine has prepared the draft resolution of the Cabinet of Ministers of Ukraine "About creation of the State department of language policy", approved cultural and art actions, assigned for the all-round development of Ukrainian language (order as of 19.08.2003 № 509). Another order of the Ministry as of 07.10.2003 № 635 has obligated the heads of Departments, while working on the draft State budget of Ukraine, to take appropriate measures for the comprehensive development of Ukrainian language and to develop the measures for effective employment of budget funds for the mentioned targets. In order to fulfill the State program of development and functioning of Ukrainian language for the years 2004-2010, the State committee of television and radio of Ukraine has developed their own measures, which are at the stage of approvement.

The Ministry of Health Protection of Ukraine on the basis of results of examination of employment of state budget funds, performed by the Accounting Chamber, assigned to the Ministry of Heath Protection of Ukraine for provision of diabetic patients with insulin, on 16.01.2003 had carried out the operative meeting with the State secretary and the meeting of Diabetic coordination council with participation of public organizations (20.01.2003). The Ministry has approved a decision on taking measures during planning, purchase, distribution and employment of insulin preparation.

The Ministry of Education and Science of Ukraine, for fulfillment of Conclusion of the Board of the Accounting Chamber based on the results of examination of employment of State budget funds for provision of educational institutions with textbooks and manuals, in order to improve the administrative management of the field of provision of educational institutions with textbooks, has issued the order as of 04.09.2003 № 594, which regulates creation of the scientific institution - Institute of educational literature on the basis of Methodical-publishing center of issue and delivery of education literature, which is being liquidated. Other orders as of 01.09.2003 № 587 approve the measures for correction of violations, revealed by the examination of the Accounting Chamber as of 16.09.2003 № 28, the Order of provision of students with textbooks and manual have been developed and approved. Main department of education and science of Kiev city state administration has also issued the order as of 15.05.2003 № 139 "About correction of deficiencies, revealed during examination, performed by the Accounting Chamber".

The Ministry of Defense of Ukraine to fulfill conclusions of the Board of the Accounting Chamber based on the results of examination of employment of State budget funds, assigned in 2002 for construction of lodging for military servants and investments, assigned for construction of housing, has developed the plan of measures for correction of deficiencies.

In order to increase the responsibility of distributors of funds and for correction of the revealed by the examination of employment of State budget funds deficiencies, assigned for fulfillment of measures on reforming of the Armed Forces of Ukraine in 2001-2002, the Ministry develops the Provision about the order of financial planning and employment of budget funds, with indication of authorities, rights and duties of the employees.

By the conclusion of the Accounting Chamber based on examination of employment of State budget funds in 2002 and 1^st quarter of 2003, assigned for provision of protection of rights and freedom of people, society and state from the illegal infringements, for protection of the public order, the Ministry of Internal Affairs of Ukraine has developed and approved "Measures of the Ministry of Internal Affairs of Ukraine on prevention of budget violations in financial-economic activity of subordinated subdivisionsв, reinforcement of financial and executive discipline". Official inquiries have been performed by the facts of revealed violations, guilty subjects have been called to material and disciplinary account.

The Ministry of Foreign Affairs of Ukraine, fulfilling the Conclusion of the Board of the Accountancy Chamber based on the results of employment of state budget funds for foreign policy in 2002 by its order as of 24.06.2003 № 127 developed the Rules of conditions of work of officials of foreign diplomatic institutions of Ukraine and the Order of creation, reorganization and liquidation of the foreign diplomatic institutions of Ukraine. By the Order as of 11.11.2003 № 217 the Ministry has approved the Order of planning and organization of official and working visits to Ukraine. The Diplomatic academy of Ukraine of the Ministry of Foreign Affairs of Ukraine, on 15.04.2003 has approved the Plan of affairs on liquidation of defects, revealed by the examination.

While taking measures on the results of examination of expenditures of the National Bank of Ukraine, performed by the Accounting Chamber in 2002, the National Bank of Ukraine has developed measures, directed for improvement of the budget process in the system of NBU (making of alterations to the Provision about the order of planning of receipts and expenditures in the system of NBU in the part, having relation to improvement of budget planning; development of standard acts, which regulate the organization of control over fulfillment of capital building and repair works according to requirements of the current legislation) and optimization of the structure of assets and reinforcement of control over the reserve of stocks of materials and capital equipment at the depositary of NBU.  In order to adjust the procedures of purchases by employment of tender procedures in accordance the current legislation of Ukraine, The Board of Directors of the National Bank of Ukraine has approved the Provision about tender procedures for the purchase of goods and services of the National Bank of Ukraine.

The monthly practice of submission of report to Verkhovna Rada of Ukraine and Cabinet of Ministers of Ukraine about employment of the funds of the surplus fund of the State budget of Ukraine by the Ministry of Economy and European Integration has become the consequence of systematic examinations, performed by the Accounting Chamber.

While taking measures on the conclusions of the Accountancy Chamber based on the results of examination of holding to the terms of the current legislation concerning concordance of other than advertised bidding procedures of purchase of goods and services at the state expense, the Ministry has issued the order as of 02.03.2003 № 141, approving the changes to the orders issued before as of 07.12.2000 № 268, as of 04.12.2000 № 264 as of 26.12.2000 № 280.

The Ministry of Justice of Ukraine, in order to liquidate the deficiencies, revealed by the Accountancy Chamber according to the results of examination of the state of legal regulation, relevancy of creation and employment of funds of the surplus fund of the State budget of Ukraine, correspondence to legislation on the state purchases, has taken a number of measures, directed on improvement of financial discipline as in the Ministry itself, so as in subordinated institutions. Thus, on 27.11.2003 the Board of the Ministry hold a meeting with heads of the financial services concerning fulfillment of requirements of legislation in the field of purchase of goods and services, renewed the staff of the tender committee of the central apparatus of the Ministry, within the current year it is planned to train specialists, who will be members of the tender committees, as in the central apparatus, so as in subordinated institutions.

The Board of the State committee on the land resources of Ukraine at its meeting as of 19.09.2003 has approved the measures concerning liquidation of deficiencies, revealed by the Accounting Chamber in the process of examination and analysis of legality and efficacy of employment of state budget funds, assigned for provision of the land reform, distribution of the state acts of the property right for land, protection and rational use of the land within 2000-2002 and 1^st quarter of 2003.

The State committee of Ukraine on the water industry, on 23.12.2003 has considered the question of liquidation of deficiencies, revealed by the Accounting Chamber in the proves of examination and analysis of employment of state budget funds for exploitation of the state reclamation projects, for fulfillment of programs for protection of settlements from the harmful substance, contained in water and flood protection. By the order as of 26.12.2003 № 360 measures concerning liquidation of deficiencies in the management of state budget funds have also been approved.

On the Conclusion of the Board of the Accounting Chamber of Ukraine, based on the results of analysis and examination of employment of state budget funds, assigned in 2002 - 9 months of 2003 for fulfillment of measures (projects) of the National program on informatization, the State committee of communication and informatization of Ukraine  by resolution of the Board of the Committee as of 03.02.2004 approved the Plan of measures concerning liquidation of deficiencies during fulfillment of measures (projects) of the National program on informatization, revealed by the Accounting Chamber.

On 06.05.2003, at the Board of the State committee of Ukraine of family and youth affairs there has been considered the Conclusion of the Board of the Accounting Chamber based on the results of examination of employment of state budget funds by the State committee of Ukraine of family and youth affairs, has been developed a plan of measures on liquidation of deficiencies, revealed by examination, performed by the Accounting Chamber, an order as of 13.05.2003 № 84-к "About announcement of admonition" has been issued to three officials.

At the Board meeting of the State committee of energy saving of Ukraine (24.04.2003), according to results of examination of the Accounting Chamber, there has been approved a decision concerning warning of the head of department of accounting and control-revision work Vakulenko Z.H. and head of the general service department  Dmitriev М.О.

The consequence of examination of employment of state budget funds, assigned to the State committee or protection of the state border in 2002 and 1^st half of 2003 by the program "Protection of the state border", is development and submission to the Ministry of Finances of Ukraine, for approvement by the general order, projects of budget programs. In this programs there have been taken into consideration the criteria of evaluation and analysis of effectiveness of the budget program concerning the amount of expenditures, final product, efficacy and quality, have been determined responsible executors of the budget programs. There has also been issued an order of the Committee as of 29.09.2003 № 131 "About bringing to material account of subjects, who committed budget violations".

By decision of the Board of the State Customs Service of Ukraine (SCSU) to execute the Conclusion of the Accounting Chamber made on the basis of results of examination of the State budget funds, assigned in 2002 and 1^st half of 2003 for provision of activities of SCSU, the measures for elimination of defects, revealed by the Accounting Chamber during the examination have been approved; they include the information about the specific terms of fulfillment of these measures and their executors. Execution of the measures is under control of the Head of SCSU. By the order of the Head of SCSU as of 31.12.2003 № 851-к "About bringing to disciplinary liability" of guilty in infringements subjects.

The State Commision on Capital Issues and Stock Market of Ukraine for removal of infringements revealed by Accounting Chamber during performance of examination of legal and administrative provision of Stock Market functioning and examination of employment of State budget funds by the State Commision on Capital Issues and Stock Market of Ukraine, issued the orders № 75 04.02.2003  "About use of motor transport" and № 47  28.01.2003 "About the problems during intercity and international telephone calls". By the decision №106 26.03.2003 the plan of measures for creating of the full-service central depositary of Ukraine has been approved.

The materials of analysis and examination of the budget of Fund of social insurance from the temporary loss of capacity to work have been considered at the meeting of Fund Administration (resolution of Administration as of 09.09.2003 № 66). It has been charged to the Executive Committee to take measures on elimination of defects and infringements revealed by the Accounting Chamber, and also to bring into accord with the base law all Fund's decrees.

Fund of social insurance from industrial accidents and professional diseases in the order of response on Conclusion of the Board of the Accounting Chamber according to results of analysis and examination of formation and execution of the budget of Fund of social insurance from industrial accidents and professional diseases in 2002, has elaborated the measures on correction of revealed by the Accounting Chamber infringements that have been approved at the meeting of Fund Administration.

Elaborated measures on removal of revealed defects and infringements have been approved by the order of the Fund as of 04.04.2003 №35.

Conclusions of the Board of the Accounting Chamber according to the results of examination of provision and employment of subvention from the State budget of Ukraine for social and economic development of Sevastopol city in 2001 and 2002 have been considered at the board meetings of City State Administration subdivisions.

Two materials have been sent for execution of the Article 26 of the Law of Ukraine "About the Accounting Chamber" and basing on decisions of the Board of the Accounting Chamber, according to the Order of submission by Main Inspection Commission of Ukraine, by State Tax Administration of Ukraine, and by the Accounting Chamber of inspection materials about the revealed violations to prosecutor bodies, internal affairs bodies, security service, and tax police, which has been approved by the heads of the mentioned departments within 2003 for making of decision in order of Article 97 of Punishment Juridical Code of Ukraine and taking of measures of prosecutor's response, to Public Prosecutor of Ukraine:

Besides, by inquiries of the Prosecutor of Ukraine there have been directed 11 materials:

By inquiries of the Ministry of Internal Affairs of Ukraine there have been sent 6 materials:

By inquiries to Security Service of Ukraine there have been sent 2 materials:

The results of examination of the mentioned materials have not been reported by law enforcement authorities, because it is not provided by the current legislation.

As a whole, it is necessary to mention that the response of the Cabinet of Ministers of Ukraine on information from the Accounting Chamber on financial year has become more constructive and efficient. The appeal of Head of the Accounting Chamber to Prime Minister of Ukraine with the letter "About improvement of collaboration with the Cabinet of Ministers of Ukraine for elimination of violations in employment of state budget funds, revealed by the Accounting Chamber", which was perceived positively by administration of the Cabinet of Ministers of Ukraine, contributed to this point of view.

The Cabinet of Ministers of Ukraine has created the efficient system of consideration of conclusions and proposals of the Accounting Chamber: in certain questions, responses are sent to the Accounting Chamber directly by the Ministers, copies of letters of attorney, the practice of participation of main controllers at the meetings of governmental committees over the consequences of consideration of results of examinations of the Accounting Chamber in especially important questions is being implemented.

39 Conclusions of the Accounting Chamber have been sent within the accounting period for consideration of the central executive power authorities, enterprises and organizations.

Answers for 36 Conclusions have been received, for 2 - term of reaction has not expired.

As of the date of 11.02.2004 reaction for the Conclusion of the Board of the Accounting Chamber by the results of examination of employment of state budget funds, assigned for partial compensation of the value of heavy machinery of domestic production and development of machinery for agriculture (considered by the Board on 04.02.2003) - from the Ministry of Agrarian Policy of Ukraine has not been received.

Besides, from the received responses only 5, that comprise 13%, have been received in accordance with the determined by the Law of Ukraine "About the Accounting Chamber" terms, others - with violation of termsв (from 1 week to 5 months).

All the responses, received on the Conclusions of the Board of the Accounting Chamber, are described by the careful attitude to the revealed by the Accounting Chamber violations. The majority of them contain information about the developed measures of elimination of deficiencies, approved orders about the taken measures. Further directions of solving of problems, revealed by the Board of the Accounting Chamber are determined in all the responses.

Analysis of reaction on conclusions and proposals of the Accounting Chamber of the central executive power bodies, enterprises and organizations for the accounting period provide a possibility to make a decision, that presented by the Accounting Chamber facts, based on the results of control measures, performed in the accounting year are of more distinct, demonstrative character and are necessarily substantiated.

Activity of the Accounting Chamber in 2003 concerning control of the realization of proposals, made in Conclusions of the Accounting Chamber on the basis of the results of analytical and expert measures, was one of the priorities. From year to year, this kind of activity acquires more systematic and effective character.

3. Development and Specification of Legal Regulations of Functioning of The Accounting Chamber

In 2003 work concerning processing of law projects and preparation of legislative proposals dealing with improvement of law projects of Ukraine and other normative Acts on issues of state budget and finances of Ukraine and also of legal regulation of activity of the Accounting Chamber was carried out by the Accounting Chamber.

The Accounting Chamber paid great attention to the issue of legislative formation of the system of state audit institutions. The law about the system of state audit institutions in Ukraine, which should ensure authority of the Accounting Chamber in full measure according to legislation, should become the basis for creation of the system of audit institutions.

During round-table discussion on the topic "Institutional Development of the Accounting Chamber in the System of Demands of International and European Standards" which took place at the Verkhovna Rada of Ukraine on June 4, of 2003, the Accounting Chamber laid stress on necessity of development of conception of the state financial control, passage on its basis of basic law about system of state financial control and specification of competence and regime of activity of audit institutions in sectoral laws basing only on its founding norms. Conception of the law of Ukraine about system of state financial control in Ukraine should consist in creating of integrated system of state audit institutions including determination of their juridical status, delimitation and prevention of duplication of functions and authorities, principles of co-operation between these institutions and also co-operation with other institutions of state power and local self-government, law machinery, status and guarantees of independence of its workers.

This issue was also touched by Accounting Chamber during the international conference "Role and Significance of Financial Control in the Improved System of Management of State Finances: Function of Parliament, Internal and External Audit" which took place on the 4^th and 5^th of April 2003 and during scientific and practical seminar "Problems of Practical Application and Improvement of Legislation of Ukraine with the Purpose of Prevention, Investigation and Legal Prosecution of Corruption Infringements of Law" from May 15, 2003.

Position concerning the necessity of working out of general conception of system of state financial control and to pass on its basis the founding legislative act and later on to work out other special laws with the purpose of development of its norms was stated by Accounting Chamber in its letter to Committee of the Verkhovna Rada on Issues of Finances and Bank Activity from June 12, 2003 №10-860.

Accounting Chamber also paid attention to necessity of legislative consolidation of system of internal and external control in Ukraine in the letter to the First Vice-Prime Minister of Ukraine and Minister of Finance of Ukraine M.Ya. Azarov from November 17, 2003. It concerned the Strategy of Development of System of State Financial Control.

On January 1, 2003 projects of laws concerning system of state financial control "About System of State Financial Control of Ukraine" (registration № 1131 from June 3, 2202) submitted by Peoples' Deputy of Ukraine Yu.A. Karmazin and "About Financial Control" (registration № 1131-1 from August 30, 2002) submitted by the Cabinet of Ministers of Ukraine were under consideration at the Verkhovna Rada of Ukraine. Bills studied by Accounting Chamber, observations and proposals to them were sent to the Committee of the Verkhovna Rada of Ukraine on Issues of Finances and Bank Activity.

On the whole Accounting Chamber supported the Bill of Ukraine "About System of State Financial Control in Ukraine" submitted by People's Deputy of Ukraine Yu.A. Karmazin and supposes that this bill can be taken as the background for working out of normative basis of system of state financial control in the country. This Bill determines system and structure of state audit institutions, competence and regime of their co-operation. Proposals as for some regulations of the Bill, sent to the Verkhovna Rada of Ukraine, deal with ensuring of authority for audit institutions, in particular for Accounting Chamber in full measure according to current legislation.

As the Bill of Ukraine "About Financial Control", submitted by the Cabinet of Ministers of Ukraine, includes number of regulation that contradict demands of the Constitution of Ukraine, first of all in the part dealing with role and position of Accounting Chamber in the system of financial control, Accounting Chamber voiced a proposal concerning rejection of the mentioned Bill by the Verkhovna Rada of Ukraine.

Mentioned law projects are included into the order of the day of the fifth session of the Verkhovna Rada of Ukraine of the fourth calling for consideration during full assemblies.

In 2003 Accounting Chamber continued work over legislative proposals to the Bill of Ukraine "About Introducing Changes to the Law of Ukraine "About State Control and Auditing Service in Ukraine" (registration № 0969 from May 14, 2002), passed on February 7, 2002 during the first reading by the Verkhovna Rada of Ukraine of the third calling.

Accounting Chamber insisted on necessity of working out of general conception of system of state financial control on the background of which basic law about system of financial control should be passed, and only after that to work out other special laws with the purpose of development of its norms.

The thought as for impossibility of introducing of the Bill concerning control and auditing service for consideration by the Verkhovna Rada of Ukraine without working out conception and basic law, which should regulate creation in Ukraine of integrated system of state audit institutions including determination of their juridical status, delimitation and prevention of duplication of functions and authorities of existing audit institutions, co-operation between them and with bodies of state power and local self-government, law machinery and other issues concerning carrying out of such control, were expressed.

Accounting Chamber repeatedly sent to the Verkhovna Rada of Ukraine observations concerning disagreement as for granting of the status of central body of state executive power to State Committee on Issues of Government Financial Control. Accounting Chamber insists upon suggested by it earlier determination of the status of State Committee on Issues of Government Financial Control as a special body of government financial control, activity of which is directed at ensuring of internal financial control in the system of executive power.

Proposals of Accounting Chamber are under processing at the Committee of the Verkhovna Rada of Ukraine on Issues of Finances and Bank Activity.

Special attention was paid to law projects about introducing changes to Budget Code of Ukraine. Resumptive table of changes suggested by Peoples' Deputies of Ukraine as for current Budget Code of Ukraine was made in Accounting Chamber and work concerning their consideration and introducing corresponding proposals was begun.

Proposals to the bill of Ukraine "About Introducing Changes and Additions to Budget Code of Ukraine" (registration № 2368 from November 4, 2002) concerning consolidation of definitions of internal and external state financial control in the Law were sent to the Verkhovna Rada of Ukraine on February 12, 2003. In particular it is mentioned that external financial control over fulfillment of State Budget of Ukraine on the basis of and within the framework of authorities and in the way envisaged by the law, is carried out by Accounting Chamber. Central Control and Auditing Board of Ukraine carries out internal control.

Sending of generalized results of accounts about carried out inspections to Accounting Chamber by State Control and Auditing Service was also suggested.

Proposals are under processing at the Committee of the Verkhovna Rada of Ukraine on Issues of Budget.

In connection with the thought of Accounting Chamber that suggested by the Bill of Ukraine "About Introducing Changes and Additions to Budget Code of Ukraine" (registration № 2139 from September 6, 2002) amendment of article 2 with paragraph 4A about budget of local budgets development is unjustified as long as current Budget Code of Ukraine includes article 71 "Budget of Local Budgets Development". It is impossible to agree with the proposal concerning changing of part 1 of article 13 which envisages that "budget may consist of general, special and reserve funds" with simultaneous exclusion of  article 24 "Reserve Fund of Budgets" from current version of Budget Code of Ukraine,

 On March 20, of 2003 the  Accounting Chamber sent a letter to the Committee of the Verkhovna Rada of Ukraine containing proposal about inexpediency of introducing of mentioned changes to Budget Code of Ukraine.

The Bill of Ukraine "About Introducing Changes and Additions to Budget Code of Ukraine" (registration № 1165 from November 21, 2002) concerning granting  the status of head manager of funds to centers of retraining and professional development of workers of bodies of state power, bodies of self-government, heads of public enterprises, establishments and organizations also was not supported, on March  20, 2003 the Accounting Chamber sent a letter to the Committee of the Verkhovna Rada of Ukraine on Issues of Budget containing proposal concerning rejection of the mentioned Bill by the Verkhovna Rada of Ukraine.

Observations concerning the Bill of Ukraine "About State Debt" dealing with introducing of additions concerning listening of reports by the Verkhovna Rada, information of Accounting Chamber about condition of control over state debt, informing by Agency of Management of State Debt of Accounting Chamber about facts of excess of limits of borrowing by bodies of self-government, sending bulletins concerning list of state debt, information of Ministry of Finance addressed to Accounting Chamber concerning volume and  structure of state debt and actions directed at its paying off and attendance were sent to the Verkhovna Rada of Ukraine by Accounting Chamber on June 17, 2003. It was also suggested to put definition of the term "state debt" according to Budget Code of Ukraine, to introduce new articles "Restructuring of the Debt" and "Program of State Borrowings", to put article "Authorities of Accounting Chamber" in a new version etc.

Proposals are under processing at the Committee of the Verkhovna Rada of Ukraine on Issues of Finances and Bank Activity.

Observations concerning project of decree of the Verkhovna Rada of Ukraine "About Passage of Regulation about the Committee of the Verkhovna Rada of Ukraine on Issues of Combating Organized Crime and Corruption" concerning necessity of working out in detail of forms of carrying out by Committee of Control over Expenditure of Budget Funds including secret outgoings having envisaged its carrying out by corresponding state audit institutions were prepared and sent.

On March 13, 2003 proposals were sent for processing to the Committee of the Verkhovna Rada of Ukraine on Issues of Combating Organized Crime and Corruption.

The process of legislative regulation of activity of Accounting Chamber is rather complicated and isn't accomplished at the moment. Impediment in passing of new version of article 98 of the Constitution of Ukraine according to which Accounting Chamber will carry out parliamentary control over forming and fulfillment of State Budget of Ukraine and local budgets in the part of financing of authorities of local state administrations and delegated to local self-government authorities of bodies of executive power regarding incomes and outgoings is to a considerable degree an obstacle to this.

The Verkhovna Rada of Ukraine passed the Law of Ukraine "About Introducing Changes to Article 98 of the Constitution of Ukraine" № 2983-III on January 17, 2002. After signing of the document by Chairman of the Verkhovna Rada the law was sent to the President of Ukraine and sent back by him to the Verkhovna Rada on May 14, 2002 for reconsideration.

On March 11, 2003 Constitutional Court of Ukraine made a decision in the case of 73 Peoples' Deputies appealing to the court concerning accordance of carried out by the President of Ukraine veto touching passed by the Verkhovna Rada Law of Ukraine "About Introducing Changes to Article 98 of the Constitution of Ukraine" and proposals to it (case concerning the veto to the law about introducing changes to the Constitution of Ukraine) to the Constitution of Ukraine.

Constitutional Court recognized that the veto interposed on the Law of Ukraine "About Introducing Changes to Article 98 of the Constitution of Ukraine" and sending it back for reconsideration to the Verkhovna Rada of Ukraine corresponds the Constitution of Ukraine.

The Mentioned Law wasn't reconsidered by the Verkhovna Rada of Ukraine.

For the present day the Bill of Ukraine "About introducing Changes and Additions to the Constitution of Ukraine" (registration № 4105 from September 4, 2003) which suggests to put article 98 of the Constitution of Ukraine in such a version: "Control over intake and use of funds of State Budget of Ukraine is carried out by Accounting Chamber of Ukraine on behalf of the Verkhovna Rada of Ukraine"  was sent for consideration to the Verkhovna Rada of Ukraine.

The Bill was previously passed by the Verkhovna Rada of Ukraine on December 24, 2003.

Completed Bill "About Time-Limit of the Verkhovna rada of Ukraine" (registration № 1039-dp from July 10, 2003) to which Accounting Chamber submitted observation concerning simplification of the procedure of spreading of materials of Accounting Chamber in the session hall of the Verkhovna Rada of Ukraine, necessary consideration by profile committees of the Verkhovna Rada of Ukraine of legislative proposals concerning changes and additions to the law projects on issues of budget submitted by Accounting Chamber, sending of conclusions on law projects which envisage or cause new incomes and outgoings in state or local budgets if it is necessary, expert examination of law projects, participating of leadership of Accounting Chamber in sittings of committees of the Verkhovna Rada of Ukraine etc. was submitted by Peoples' Deputies of Ukraine - members of Committee on Issues of Time-Limit, Deputy Ethics and Organization of Work of the Verkhovna Rada of Ukraine for consideration by the Verkhovna Rada of Ukraine.

Observations were sent for processing to the Committee of the Verkhovna Rada of Ukraine on issues of Time-Limit, Deputy Ethics and Organization of Work of the Verkhovna Rada of Ukraine.

Observations and proposals to the Bill of Ukraine "About Main Regulations of Carrying out of Control over Activity of Subjects of Management in Ukraine" concerning including of Accounting Chamber to the circle of subjects of control, ensuring authorities for Accounting Chamber as a parliamentary audit institution according to the Law of Ukraine "About Accounting Chamber" in full measure, and also putting the Bill in accordance with Budget Code of Ukraine were sent to the Verkhovna Rada of Ukraine on March 3, 2003.

Proposals are under processing at the Committee of the Verkhovna Rada on Issues of Finances and Bank Activity.

Proposals to the Bill of Ukraine "About Main Regulations of Parliamentary Control in Ukraine" deal with putting in order position and role of Accounting Chamber in the system of parliamentary control. In particular it is suggested to include Accounting Chamber in the circle of subjects of parliamentary control and also to add norms concerning juridical appealing of decisions of Accounting Chamber, co-operation between the Verkhovna Rada of Ukraine and the subject of special parliamentary control that is Accounting Chamber etc. to the Bill.

Proposals were sent for processing to the Committee of the Verkhovna Rada of Ukraine on Issues of Policy of Law on June 10, 2003.

Proposals to the Bill of Ukraine "About Carrying out of the Law of Legislative Initiative at the Verkhovna Rada of Ukraine" dealing with sending law projects to Accounting Chamber by Profile Committee of the Verkhovna Rada of Ukraine or by the Verkhovna Rada of Ukraine for carrying out of their expert examination from the point of view of their economic and financial foundation.

Proposals are under processing at the Committee of the Verkhovna Rada of Ukraine on Issues of Time-Limit, Deputy Ethics and Organization of Work of the Verkhovna Rada of Ukraine.

Proposals to the Bill of Ukraine "About Social Control over Use of Funds of State and Local Budgets" deal with exclusion of regulations concerning necessary carrying out of inspections using information of natural and juridical persons by Accounting Chamber from the Bill.

Proposals were sent for processing to the Committee of the Verkhovna Rada of Ukraine on Issues of Budget on November 6, 2003.

Proposals to the Verkhovna Rada of Ukraine about introducing changes to article 110 of the Budget Code of Ukraine concerning granting Accounting Chamber with the right to ensure assigned on it functions and authorities to form regional representative offices were initiated.

Proposals were sent for processing to the Committee of the Verkhovna Rada of Ukraine on Issues of Budget on August 2o, 2003.

Totally the Accounting Chamber submitted 91 legislative proposals to projects of laws of Ukraine on issues of state budget and finances of Ukraine and legal regulation of activity of Accounting Chamber.

4. International Cooperation

Following norms of the Law of Ukraine "About the Accounting Chamber of Ukraine", in 2003 complex of actions directed to the development of international cooperation of Accounting Chamber was carried out with the purpose of studying and further application of world's experience in the field of state audit to the activity of the Accounting Chamber.

During accounting period actions, aimed at effectiveness increase in international cooperation of the Accounting Chamber, were fulfilled according to the determined priorities in the following main directions:

1.   Development of bipartite cooperation with foreign Supreme Audit Institutions (hereafter - SAI).

2.   Activity within the framework of working teams and committees of International Organization of Supreme Audit Institutions (INTOSAI) and European Organization of Supreme Audit Institutions (EUROSAI).

3.   Actions within the framework of Council of Heads of Supreme Bodies of Financial Control of CIS countries.

4.   Improvement of cooperation with international projects of technical assistance (The Project of the United Nations Development "Respectability in Practice", TACIS project "Audit of State Finances", project of Swedish Institute of Public Administration (SIPU) "Support of the Reform of Public Administration in Ukraine").

 Within the framework of bipartite cooperation active development of cooperation with SAI of neighboring with Ukraine states took place namely with Hungary and Poland. Visits of official delegations of Supreme Control Bodies of these countries to Ukraine helped to begin bipartite relations between our institutions, and also to outline directions of future parallel actions in the field of audit, exchange of experience and information. Particularly the process of preparation for carrying out of parallel audits of Carpathian region environment was begun with mentioned SAI.

Consultations on issues of audit of environment were carried out during the meetings of auditors of the Accounting Chamber with Byelorussian and Russian colleagues. Particularly organization of carrying out of audit in the field of solving problems of liquidation of accident at Chernobyl Atom Electric Station consequences was discussed with the representatives of State Financial Control Committee of Byelorussia. Methodology of carrying out of parallel audit of the Azov and the Black Seas environment was co-ordinated with the Accounting Chamber of the Russian Federation.

During accounting period relations with State Control of the Lithuanian Republic became more substantial, especially regarding exchange of experience on issues of reforming of system of financial control of the countries of post-soviet territory in accordance with demands of EC. Mutual interest of institutions as for further development of bipartite relations resulted in Protocol of Intentions "About Cooperation between the Accounting Chamber of Ukraine and State Control of the Lithuanian Republic" signed by the parties.

The visit of National Audit Office of Bulgaria official delegation to Ukraine became logical continuation of development of partner relations between the institutions that had been formed during the last years.

Representatives of the Accounting Chamber took active part in actions, which were carried out within the framework of International Organization of Supreme Audit Institutions (INTOSAI) and European Organization of Supreme Audit Institutions (EUROSAI). Participation in conferences of working teams and committees of these authoritative international organizations gave specialists of the Accounting Chamber of Ukraine opportunity to become acquainted with the latest methods of state audit in the sphere of health protection, environment protection and system of internal control evaluation.

During the 4^th Council Session of Heads of Supreme Bodies of  Financial Control of CIS countries heads of SAI of CIS countries exchanged opinions while discussing the main theme of the session: "Necessity and problems of introduction of audit of effectiveness of usage of budget funds s as a form of state financial control (its legislative ensuring and frame standards of accomplishment of audit of effectiveness fulfillment)".

During accounting period cooperation between the Accounting Chamber, the Project of the United Nations Development "Respectability in Practice: On the Way to Social Accountability and Security of People's Rights" (founded in April 2002) and TACIS Project "Audit of State Finances" (founded in July 2002) continued. According to the Agreement between the Accounting Chamber and Swedish Institute of Public Administration (SIPU), in 2003 long-term cooperation with the project "Public Administration of Ukraine Reform Support" was completed; according to the results of studying 35 members of the Accounting Chamber received corresponding certificates.

An important evidence of effectiveness of cooperation with mentioned projects became international conference "Role and Significance of Financial Control in the Improved System of State Finance Management: Function of the Parliament, Interior and Exterior Audit" (on the 4 - 5^th of April 2003, supported by TACIS); international seminar of Swedish Institute of State Administration "Administration Oriented towards Results" (May 22, 2003); round-table discussion "Institutional Development of the Accounting Chamber in the System of Demands of International and European Standards" (June 4, 2003, supported by UNDP) with People's Deputies of Ukraine, officials of the central bodies of executive power, representatives of diplomatic corps and scientific institutions taking part.

Now one of the main tasks standing before the Accounting Chamber in the field of cooperation with foreign Supreme Control Bodies is working out of (in the process of bipartite consultations) constructive mechanism of realization of determined complex of parallel and joint control and analysis actions.

Direction of international cooperation of the Accounting Chamber and study of world's experience in control and analysis work, introduction of modern audit technologies into action, information product exchange and professional relations sphere expansion is staying priority.

5. Publicity in the Work of the Accounting Chamber

One of the priority directions of activity of the Accounting Chamber of Ukraine is organization of system-defined, timely and objective informing of general public about the state of budgetary discipline in Ukraine.

Striving for clarity of control in the system of purposeful, effective and legal usage of taxpayers' funds was first of all put into the basis of this principle. Each citizen of the state should know how and where funds paid by him in the form of tall age are directed and used, in which direction and in what way the process of ensuring of financial control in the field of budget is carried out.

Following article 98 of the Constitution of Ukraine and article 40 of the Law of Ukraine "About the Accounting Chamber", reasoning from the position of clarity, openness and publicity, during 2003 the Accounting Chamber constantly provided promulgation of materials about carried out control-analytical and expert actions. Considered by the Board issues found reflection in more than seven hundred publications on newspaper pages, in fascicles of  news agencies and broadcasts on radio and television channels.

These publications appeared on the pages of such newspapers: "Урядовий кур'єр"(Uriadovy Kuryer), "Голос України" (Golos Ukrayiny), "Бизнес"(Biznes), "Україна-BUSINESS" (Ukrayina-BIZNES), "Деловая Украина" (Delovaya Ukraina), "Аргументы и факты" (Argumenty i Fakty), Кіевскій телеграфъ" (Kiyevskiy Telegraf), "Дзеркало тижня" (Dzerkalo Tyzhnia), "День" (Den), "Хрещатик" (Khreshchatyk), "Вечірній Київ" (Vechirniy Kyiv), "Киевские ведомости" (Kiyevskiye Vedomosti), "Столичные новости" (Stolichnyye Novosti) and a lot of others. Materials about the results of activity of the Accounting Chamber were broadcasted by such channels: УТ-1 (UT-1), УТ-2 (UT-2), "Інтер" ("Inter"), ICTV, КДТРК (KDTRK), by the National Radio, were placed on the Committee on the Issues of Budget of the Verkhovna Rada web-site, were published by lots  of internet editions.

Use of technical opportunities of the project UNDP especially promoted delivering of the information about the results of control and analysis activity of the Accounting Chamber. Within the framework of this project a separate program "За великим рахунком" (Za Velykym Rakhunkom) was created by "Студія Плюс" (Studiya Plius) jointly with the Accounting Chamber. It began to come out first on the channel UT-1 and later, after broadcasting on the channel UT-2, was recorded on the cassettes and broadcasted by 25 regional TV studios. At the turn of the year channel UT-1 began to broadcast the program "За великим рахунком". Owing to promotion of the project UNDP in coming out of this broadcast the Accounting Chamber got permanent TV rostrum for promulgation of results of carried out inspections and analysis for general viewer public.

General public practically for the first time was in so much detail informed from the TV screen about the effectiveness of the use of funds on financing national defense, custom house, work in alienation zone of Chornobyl Nuclear Power Station, national preserves, health protection and about other issues, on which the Accounting Chamber carried out control and analysis actions. This telecast became permanent rostrum for leadership of the Accounting Chamber and its departments and gave the opportunity to deliver information about the institution's activity to general public.

Peoples' Deputies of Ukraine took part almost in every telecast "За великим рахунком". In their interviews they referred to results of inspections of the Accounting Chamber, informing in such a way their electors about use of budget funds in our country.

TV-versions of the broadcast "За великим рахунком" about activity of the Accounting Chamber promoted stirring up of work of journalists of printing mass media. Each telecast increased the number of their references to the materials of inspections of the Accounting Chamber with the purpose of developing themes in further publications. Even such sectoral editions as "Ваше здоров'я" (Vashe Zdorovya), "Ветеринарна газета" (Veterynarna Gazeta) and others placed publications about the results of carried out by the Accounting Chamber Inspections on their pages.

The visit of the Chairman of the Verkhovna Rada  to the Accounting Chamber promoted delivering of information about the activity of the Accounting Chamber to general public. Ukrainian leading TV channels, news agencies and printing agencies responded to this event.

Publications that appeared in such newspapers: "Голос України", "Демократична Україна"(Demokratychna Ukrayina), "Столичные новости", "День", "Сегодня"(Segodnia), "Україна BUSINESS", "Киевские ведомости" and in fascicles of news agencies "Інтерфакс-Україна" (Interfax-Ukrayina), УНІАН (UNIAN), "Українські новини" (Ukrayinski Novyny) were devoted to this theme.

Active participating of representatives of mass media in press conferences and briefings carried out by the Accounting Chamber of Ukraine became the evidence of growing interest in results of control and analysis activity. After the intercourse between auditors and journalists scores of urgent materials appeared in the press:" Illegal Felling of Trees in Carpathians Cost the State Almost 16 mln UAH"  ("Хрещатик"), "Counted and Became Confused. Concrete Facts of Abuse of Use of Funds assigned for Health Protection Were Promulgated by AC" ("Голос України"), " Sensitive Point of Budget" ("Аргументы и факты"), "Diabetes for the Ministry of Health" ("Столичные новости"), "Bitter Pill" ("Украинская инвестиционная газета") (Ukrainskaya Investitsionnaya Gazeta), "Where do Assignments Get to" ("Урядовий кур'єр"), "Reserve Fund as a Soaker" ("Україна-Business"), "Million UAH Every Day For Maintenance of Ministry of Internal Affairs" ("Закон і бізнес") (Zakon i Biznes), "The Accounting Chamber is Standing Guard Over Budget Funds" ("Євробюлетень") (Yevrobuleten), "State's Chief Auditor" ("Деловая Одесса") (Delovaya Odessa) etc.

Publications by the Chairman of the Accounting Chamber Valentyn Symonenko "Pain" ("Зеркало недели") (Zerkalo Niedieli), "My Party Is My Dignity" ("Столичные новости"), "Constitutional Auditor" ("Кіевскій телеграфъ") had great response in general public. They gave taxpayers the opportunity to get objective information about budget process in Ukraine and its peculiarities.

Mass media paid considerable attention to the Constitutional Court of Ukraine making Decision in the matter of seventy-three deputies appealing to the court regarding constitutionality of the veto performed by the President of Ukraine concerning adopted by the Verkhovna Rada of Ukraine the Law "About Introduction of Amendments to the Article 98 of the Constitution of Ukraine". A number of publications, particularly "The First Amendment to the Constitution is Not Adopted" ("День"), "The Veto is Recognized to Be Constitutional" ("Голос України"), "Calculator is Changed For Abacus" ("Деловая Украина"), "Nobody in the State Controls Profitable Part of Budget" ("Демократична Україна"), "The Parliament Postponed Consideration of the Law About Introduction of Amendments to the Constitution About Widening of Authorities of the Accounting Chamber) (Інтерфакс-Україна), appeared in periodicals. They once again attracted Ukrainian taxpayers' attention to the urgent issue - carrying out of control over profitable part of state budget.

During the year the Accounting Chamber continued to use opportunities of cooperation with different projects acting in Ukraine (UNDP, TACIS) for wider promulgation of its activity results.

Appropriate attitude to cooperation with representatives of international institutions in Ukraine is based first of all on striving to consolidate system of financial control in Ukraine taking into account international experience and introduction of the principles of confirmation of independent public and transparent control.

So with the help of Project UNDP round-table discussion "Institutional Development of the Accounting Chamber in the System of Demands of International and European Standards" was conducted by the Accounting Chamber. This round-table discussion with People's Deputies, Biard of the Accounting Chamber members, representatives of the projects UNDP and TACIS taking part was directed to comparative analysis of our and world practice in control over state finances.

It caused a lot of publications in mass media, leitmotif of which was the theme of widening of authority of the Accounting Chamber and creation of the mechanism of achievements of decisions of the Board of the Accounting Chamber taking into account carried out inspections. Almost each edition cited expressed by the Chairman of the Accounting Chamber thought: "Without having authority to carry out control over forming of profitable part of budget, off-budget funds, use of state property, one cannot have pretensions of thorough control over state funds.

Another round-table discussion on the subject "System of Parliamentary Financial Control" which had great response from the direction of general public was conducted by the Accounting chamber jointly with the Committee of the Verkhovna Rada on issues of finances and banking activity and TACIS Project "Audit of State Finances". Such forms of work promoted delivering of information about the activity of the Accounting Chamber to taxpayers of our state.

Preparation and spreading of control actions results among People's Deputies of Ukraine in the form of information bulletins is of extraordinary importance in organization of publicity in the work of the Accounting Chamber.

When People's Deputies had learned these documents, they were used by journalists of lots of editions. They based their publications on the basis of the results of carried out control and analysis actions.

Informational reason for the announcements of the Accounting Chamber which saw the light of the day on newspaper pages and on web pages of news agencies, were and are still staying materials of inspections and analysis carried out by specialists of the Accounting Chamber. In other words there is one subject and there are a lot of approaches of its results' promulgation, and the Accounting Chamber strives to use this diversity.

During the year of 2003 it continued to improve mechanism of publicity expansion. Besides conducting press conferences and briefings based on results of control and analysis activity and visits of foreign auditors, organization of meetings between the Chairman of the Accounting Chamber and "The Guild of Editors-In-Chief" was also practiced. During them open dialogue with chiefs of leading editions and TV-companies concerning results of control and analysis activity of the Accounting Chamber was carried on.

Information about the activity of the Accounting Chamber was systematically and promptly placed on the Accounting Chamber web site on which web page "News" was founded. Announcements concerning the activity of the Accounting Chamber and photo-reports about the events were placed on this page. It gave the opportunity to spread on-line information about the activity of the Accounting Chamber in the Internet.

Nowadays the Accounting Chamber continues system-defined introduction of the complex of modern forms and methods of work directed at prompt and objective promulgation of auditor activity among wide range of general public of Ukraine.

6. Provision  of performance of the Accounting Chamber

6.1. Human Resources

Work in the sphere of Human Resources of the Accounting Chamber in 2003 was carried out sticking to demands of the Laws of Ukraine "About Public Service" and "About Combating the Corruption". Its priority direction was organization of vacant seats sticking to the competition procedure by highly skilled experienced officials having economic and legal education with great experience of organizational, control-inspectional and analytic work. Selection of candidates for participating in the competition was carried out according to the typical professional and qualification characteristics of State employee seats. As a result of competition selection 29 persons were appointed. 26 persons were appointed from the employment reserve.

On December 31, 2003 actual number of workers of the Accounting Chamber was 316 persons; out of them 298 were State employees. It is 46 persons more than it was last year (55 persons were appointed and 13 left the service). Employee turnover during the year came to 4,1 per cent, that is 7 per cent lower than in 2002 and that is no doubt a positive tendency.

Step-up is one of the main stimulatory reasons and it has positive impact on decline of employee turnover. So 43 officials (14,4 per cent of the general number of State employees) as those who were in employment reserve and passed probation period were appointed to the higher posts. Work on involving of talented youth (graduates from higher educational establishments) in public service was carried out. On this purpose posts "specialist of the second category" were provided in the list of members of staff.

In 2003 high ranks of State employee were conferred to 125 officials (41,9 per cent), higher additions to salaries for fulfillment of especially important work were instituted to 63 officials (21 per cent) and official salaries of 36 officials were reconsidered and increased.

Qualitative staff of heads and specialists is characterized by such indicators:

- 98,7 per cent of State employees have complete higher education; 8 persons are studying at higher educational establishments and getting higher education;

- According to the qualification level 220 officials (73,8 per cent) have economic education, 33 officials (11,1 per cent) have legal education and education of 45 officials (15,1 per cent) is technical;

- 1 Doctor of Science and 11 candidates of science are involved in the work (4 per cent);

- 3 officials have honorary title "Honored Economist of Ukraine".

These facts are evidence that the Accounting Chamber has capable of functioning professional staff, which has high science and educational level.

Stable employment core has been formed during 7 years of existence of the Accounting Chamber. They are: 67 officials that are being working for six and more years (21 per cent of State employees' actual number), 94 officials having record of service in the Accounting Chamber from three to five years (30 per cent) and 96 officials having record of service of more than a year.

Organization of officials' qualification improvement still stayed one of the main tasks of employee service. 85 State employees studied at short-time seminars which were conducted in the Accounting Chamber; 12 State employees improved their qualification at seminars which were conducted at other organizations on the territory of Ukraine; 44 officials were on official journeys abroad with the purpose of improving qualification and learning advanced experience of the work of Supreme Audit Institutions (SAI) of the European countries. 29 out of them visited courses on the topic "Audit of State Finances" which was organized by TACIS project.

6.2. Condition of Information-Analytical System and Dataware of the Accounting Chamber

In 2003 works concerning creation of analytical constituent of Information-Analytical System of the Accounting Chamber (IAS AC) that is subsystems of on-line analysis and control over financial and economic rates of state budget of Ukraine (FER) and monitoring of macroeconomic rates (MER) were continued, improvement and further development of informational and reference constituent of (IAS AC) was carried out and preparation works concerning carrying out of modernization of local network of the Accounting Chamber were fulfilled.

IAS AC as a modern automated informational-analytical system gives officials of the Accounting Chamber the opportunity to receive in on-line mode information about execution stage of State Budget of Ukraine, materials of news and information-analytical agencies, to carry out monitoring of current legislation in a legal field of Ukraine, receive messages about earnings to information corpuses or to electronic informational resources and others in real time.

During 2003 development of information-analytical and informational and reference constituent of IAS AC went on. Complex of actions concerning modernization of the firmware complex of data warehouse servers was carried out. It allowed to increase operating speed of server devices (subsystems FER and MER, system of automation of office work and documents circulation (SAOWDC) "Дело-96" ("Dielo-96"), systems of Internet access to informational resources.

Scientific and research works on development of subsystems of monitoring of financial and economic and macroeconomic rates were carried out within the framework of the National Program of Information at the expense of costs, allotted from the State Budget of Ukraine for 2003 for its realization.  According to the direction of the Cabinet of Ministers from July 17, 2003 "About Approval of the List of Tasks (Projects) of the National Program of Information for 2003, their State Customers and the Amount of Financing" 150.000 UAH were allotted to the Accounting Chamber for fulfillment of the National Program of Information task. But the main burden of introduction and application of the informational technologies lies on account evaluation of the Accounting Chamber.

During 2003 research exploitation of the system "Кадри" ("Kadry") was completed. It allows to get different reference information concerning State employees in the electronic form or on paper carriers, form the majority of statistic forms, carry out inquiries follоwing free parameters, form information in the electronic form.

Condition of the operating local network of the Accounting Chamber (LN AC) was analyzed. Preparation and carrying out of auction aimed at purchase of modernization of LN AC was carried out on the basing of its results.

System of receiving of great amount of financial accounting, economic information, statistic information, corpuses and bulletins and also periodicals was put in order. Besides that information resources of the Accounting Chamber also include books, magazines, reference books and standard-legal acts. So on January 1, 2004 the amount of information resources ran up almost to 700.000 electronic documents, daily intake of which constitutes 5-7 MB or 480-520 documents. General number of titles of financial accounting, economic information, statistic information, corpuses and bulletins constitutes almost 600 titles. Periodicity of their receiving is from daily express bulletins to monthly, quarterly and annual corpuses. During 1997-2003 in the library of the Accounting Chamber over 31.700 units of financial and economic, statistic, bank and standard-legal materials were amounted. At the beginning of 2004 almost 140.000 units of materials of news and analytical agencies and periodicals, informational compilations of international centers of analysis of economy, finances and financial problems, Ukraine development assistance programs, compilations of materials of control bodies of the world's countries and also materials and documents of the Accounting Chamber were gathered in the library. It is reached in particular due to organization of informational cooperation and receiving of materials of financial, bookkeeping, statistic and bank accounting from the State Committee of Statistics, National Bank of Ukraine, State Fiscal Administration, the Treasury, Ministry of Finance, accounts of head managers of budget funds and other information of government bodies.

Number of visits to Web-server of the Accounting Chamber in the Internet, in which information about its activity is regularly placed, noticeably increased. The evidence of this is number of visits to it which at the end of December exceeded 550.000 (in other words it was 300.000 increase during a year).

Increasing number of placed materials concerning activity of the Accounting Chamber especially bulletins which are published on the basis of results of consideration of the materials concerning control and control-analytical actions by Board of the Accounting Chamber was conductive to this.

Bulk purchase of services concerning working out and introduction of Web-portal of the Accounting Chamber was carried out with financial support of TACIS program and participation of UNDP program. This working out should combine four-year experience of exploitation of Web-server by the Accounting Chamber, experience of other state institutions of Ukraine and foreign Supreme Control Bodies, demands of current legislation concerning presentation of activity of state institutions in the Internet, modern approaches to designing of Web-portals, total combination of new functional opportunities including interactive communication with users.

6.3. Financial Provision and Development of Material and Technical Resources

According to the Law of Ukraine "About State Budget of Ukraine for 2003" expenditures on maintenance of the Accounting Chamber were approved in the amount of 20.427.500 UAH.

Besides that according to the letter of the Verkhovna Rada of Ukraine from November 24, 2003 № 06-9/9-977 volumes of financing within the framework of the National Program of Information in the amount of 150.000 hryvnas for working out of information-analytical system of the Accounting Chamber were approved for the Accounting Chamber.

Outlays on maintenance of the Accounting Chamber of Ukraine were carried out following budget program 6511010 "Leadership and Management in the Field of Control over Fulfillment of State Budget".

Within the framework of fulfillment of the program outlays were carried out for such purposes:

1. Remuneration of labor for officials of the Accounting Chamber.

2. Outlays on business trips of officials of the Accounting Chamber.

3. Maintenance in a proper condition and expansion of material and technical resources of the Accounting Chamber.

Bulk purchase of material values and services for the needs of the Accounting Chamber was carried out according to the Law of Ukraine "About Bulk Purchase of Goods, Works and Services at the State Costs", applying proper tender procedures.

4.    Completion of reconstruction of office block of the Accounting Chamber on 7a, M.Kotsiubynsky Street.

5.   Carrying out of the Accounting Chamber international activity (dues payment to international Supreme Audit Insitutions INTOSAI and EUROSAI, business trips abroad in the network of agreements about cooperation and for participation in seminars, outlays on financing of translation of corresponding materials etc.)

6.   Information-analytical ensuring of the Accounting Chamber (purchase of literature, subscription for periodicals, electronic editions etc.), functioning of IAS AC (purchase of expenditure materials, repair work, setting up of active systems, installation of active software, payment for the Internet services, e-mail etc.)

Outlays on realization of the national Program of Information were carried out following budget program PDA 6511900 "Working out of Information-Analytical System of the Accounting Chamber".

Outlays on usage of research engineering and development effort on creating of the Accounting Chamber information-analytical system were carried out within the framework of program fulfillment.

Fulfillment of Account Evaluation of the Accounting Chamber for 2003

*- code of economic classification of outlays

Nevertheless monthly boundary amounts of assignments of state budget pool for 2003 sanctioned by the Ministry of Finance of Ukraine were scheduled by it with the "inclination" in allotment of assignments for the second half of the year. It noticeably complicated financial and economic activity of the Accounting Chamber at the beginning of the year. So for the first quarter only 13 per cent of annual assignments amount were provided whereas for the fourth quarter this figure constituted 32 per cent.

Such order of financing resulted in carrying out of the main part of purchases of material values for the needs of the Accounting Chamber in October - December 2003 which, according to the Law of Ukraine "About Bulk Purchase of Goods, Works and Services at the State Costs", were carried out with application to tender procedures which takes a lot of time.

Reinforcement of material and technical resources of the Accounting Chamber and improvement of working conditions of its specialists went on during financial year.

According to directions of the Cabinet of Ministers of Ukraine from October 20, 2000 № 414-r two-storied building on 7a, M. Kotsiubynsky Street was handed over to the day-to-day management of the Accounting Chamber. According to the Act from December 30, 2003 № 445 of the State Entrance Examination mentioned office block with its widening including two stories, underground car park and elevated pedestrian crossing between the buildings on 7a, M. Kotsiubynsky Street, storage and auxiliary facilities was placed in operation, which gave the opportunity to arrange 82 work places additionally.

Taking into account arduous duty of work of the Accounting Chamber attention was paid to the issues of medical care and sanitation of workers of the Accounting Chamber in health centers and preventive establishments.

In December 2003 health protection station which is providing urgent medical care now was inaugurated in the building of the Accounting Chamber.

* * *

Seven-year activity of the Accounting Chamber is evidence of great interest to it from the direction of all branches of power and society and increase of its authority in Ukraine and abroad.

Effective organization of state financial control is a multipronged task and a lot of departments are enlisted to its practical solution. Each of them has its powers and standards of responsibility. But altogether they should constitute an integral system of state financial control in our country.

Situation in management of budget funds compels to draw a conclusion that not only the law "About the Accounting Chamber" but also the law "About System of State Financial Control" is in need. It is necessary to subdue lawful nihilism in the field of budget and to create an integral system of financial control in our state.

Unfortunately it is a fact that a great amount of violations of law in the field of budget is of system character and it is recurring constantly. There has been no permanent legislation in modern Ukraine for decades. And under such conditions assessment of legality, expediency and effectiveness of state funds usage is a priority in the work of the Accounting Chamber.

Increase of activity effectiveness of the Accounting Chamber is impossible without improvement of legal field of its functioning, absolute solution of problems concerning obligatory response from the direction of leadership of objects of inspections as for its official documents concerning usage of budget funds and means of State off-budget funds.

Choice of the mode of development of the Accounting Chamber today to a considerable degree depends on the Peoples' Deputies of Ukraine. Pace of creation of a sole integral system of state financial control and control over forming of profitable part of State Budget of Ukraine depends on legislature.

Report of the Accounting Chamber for 2003 is approved by decree of the Board of the Accounting Chamber from May 6, 2004 № 9-4.

CHAIRMAN OF THE ACCOUNTING CHAMBER 
SYMONENKO V.K.

Appendix

List of Information Bulletins Prepared by
 the Accounting Chamber on the Basis of the Results of Actions Carried out in 2003 and Sent to the Verkhovna Rada of Ukraine