UKRAINE MINISTRY OF FINANCE UKRAINE GOVERNMENT FINANCE STATISTICS Workshop on the Implementation and Links between the System of National Accounts 2008

UKRAINE MINISTRY OF FINANCE

UKRAINEGOVERNMENT FINANCE

STATISTICS

Workshop on the Implementation and Links between the System of NationalAccounts 2008 and the Government Finance Statistics Manual

20 – 22 November 2013, Istanbul, Turkey

Larisa KalinichenkoHead, Government Finance Statistics Department


Institutional Coverage of the General Government Sector in Government Finance Statistics

Central GovernmentSubsector 1.Central government units financed out of the state budgetParliament (Verhovna Rada), Presidential Staff, Cabinet of Ministers, ministries, state services, state agencies and inspectorates, central executive-branch authorities with special status, Constitutional Court, general-jurisdiction courts, territorial state administrative authorities, budgetary entities subordinate to central authorities and state authorities

Subsector 2. Central government extrabudgetary unitsNot applicable.

Subsector 3.Social security funds3.1 Pension Fund;3.2 Social Occupational Accident and Disease Insurance Fund;3.3 Social Temporary Disability Insurance Fund;3.4 State Mandatory Universal Social Unemployment Insurance Fund. Local authoritiesSubsector 5. Local authorities financed out of local budgets – 12,086 local government authorities, including:1 Crimea Autonomous Republic ;24 provinces;Cities of Kiev and Sevastopol;177 cities under republic (Crimea Autonomous Republic ) or province jurisdiction;488 districts;278 cities under district jurisdiction;55 formations within cities;782 settlements;10279 villages. Central government data cover all operations of units belonging to Subsectors 1-3. Data on local authorities cover the operations of Subsector 5 units.

Slide 2

State social insurance funds not belonging to Ukraine’s Budgetary System:

1.Pension Fund

2.Social Occupational Accident and Disease Insurance Fund

3.Social Temporary Disability Insurance Fund

4.State Mandatory Universal Social Unemployment Insurance Fund

Ukraine BudgetarySystem

Local budgetState budget

Crimea Autonomous

Republic budget

Local government budgets

Province and Kiev and Sevastopol

city budgets,

District budgets

Slide 3

Institutional Coverage of Budgetary System According to Ukraine Budgetary Code

Budgetary law lacks a definition of the general government sector and public sector



!!!!!! Budgetary law governs certain issues pertaining to the state mandatory universal social and pension insurance funds:

The Ukraine Cabinet of Ministers provides for the submission of draft budgets of the state mandatory universal social and pension insurance funds for the plan year to the Ukraine Verkhovna Rada and Ukraine President no later than September 15 of the year preceding the plan year, with accompanying materials, attached to the draft Ukraine Law on the State Budget;

The resources of the state mandatory universal social and pension insurance funds are serviced by authorities of the Ukraine State Treasury Service;

The state mandatory universal social and pension insurance funds submit quarterly reports to the Ukraine Verkhovna Rada, Ukraine President, Ukraine Cabinet of Ministers, Accounting Office, Ukraine Ministry of Finance and Ukraine State Treasury Service on execution of the respective funds’ budgets in accordance with procedures and dates established by the Ukraine Ministry of Finance.

Slide 4


Accounting Method in Ukraine’s Public Sector Ukraine law does not presently define uniform accounting and reporting methods in the public sector

Accounting for execution of the state and local budgets is conducted by Ukraine Treasury authorities using the cash method with elements of the accrual method for certain operations (accounting for the public debt and liabilities of the administrators of budgetary resources)

Accounting for execution of budgetary entities’ budgets is conducted by the administrators of budgetary resources using a modified accrual method

Accounting for state mandatory universal social insurance funds is based on a modified accrual method (uniform accounting methods established by the State Treasury are not used).

Financial and budgetary reports on the execution of budgets are divided into:financial:

quarterly

annual

budgetary:

monthly

quarterly

annual

Slide 5

Reporting Period for Reports

The reporting period for monthly budgetary reports is the period beginning January 1 and ending on the last day of the reporting month

The reporting period for quarterly financial and budgetary reports is the period beginning January 1 and ending on the last day of the reporting quarter

The reporting period for annual financial and budgetary reports is the budgetary period constituting one calendar year beginning on January 1 and ending on December 31 of the same year, unless a different period is defined in instances established by law

Slide 6


The Chart of Accounts for state and local budgets is governed by a legal regulatory act ;

Development of the Chart of Accounts took into account the distinctive features of the execution of state and local budgets, the operation of the unified treasury account, and the servicing of local budgets through Treasury authorities, in compliance with general accounting and reporting principles and requirements;

The Chart of Accounts provides for the reflection in accounting of operations associated with performance of the functions assigned to Treasury authorities, i.e., it makes possible detailed and complete accounting for all banking and other operations associated with execution of the budgets;

The Chart of Accounts has been developed to provide for accounting operations entailed in the execution of the state budget and local budgets operations using the cash method, and for the preparation of financial reports

The Chart of Accounts employs a decimal method of encoding accounts with a four-digit number. Under that method, all classes are divided into 10 sections, which are assigned numbers from 0 to 9. All sections, in turn, are divided into no more than 10 groups, which are also assigned numbers from 0 to 9. Each group is divided into no more than 10 accounts. Such an approach meets the requirements of the Ukraine National Bank with regard to the structure of accounts and number of digits, according to which the number of a balance-sheet account must have 4 digits while analytical accounts that are used in the Ukraine National Bank’s electronic payments system must have from 6 to 14 digits.

7

Chart of Accounts for Execution of State and Local Budgets

Slide 7


Slide 8

Chart of Accounts in Budgetary Entities

Accounting in budgetary entities provides for the reflection of all operations associated with execution of their budgets. The timely, complete and accurate reflection on the entities’ balance sheets makes it possible for their officials to take well-founded managerial decisions, analyze an entity’s (organization’s) work, monitor the use of budgetary resources for their intended purposes on the basis of an approved budget, and detect unlawful and unforeseen expenditures

Budget execution accounting in entities and organizations whose principal activities are financed out of state or local budget resources is based on the Chart of Accounts for budgetary entities approved in the December 10, 1999, Order No. 114 of the Chief Administration of the Ukraine State Treasury, registered with the Ukraine Ministry of Justice on December 20, 1999, No. 890/4183

The Chart of Accounts uses a decimal method of encoding accounts with a three-figure number (first-level subaccount). All accounts are divided into 2 sections. Section І comprises balance-sheet accounts, which are divided into 8 classes. Section II comprises off-balance-sheet accounts, which include one class 0, “Off-balance-sheet accounts”

The Chart of Accounts for a state mandatory universal social insurance fund is approved in a legal regulatory act of that fund.



Further Plans for Improving Accounting and Reporting

Development and implementation of a uniform Chart of Accounts and national accounting standards for public-sector entities using the accrual method (development has been completed of 19 national accounting standards in the Ukraine general government sector based on the International Public Sector Accounting Standards (IPASA). Implementation is slated for approximately 2015).

Establishment of uniform rules for preparing budgetary and financial reports in accordance with national standards developed on the basis of the International Public Sector Accounting Standards

Slide 9

Budgetary Classification

Pursuant to the Budgetary Code, the Ukraine Budgetary Classification includes: - classification of budget revenue, - classification of budget expenditures,- classification of lending, - classification of debt;- classification of budget deficit financing.

Classification of budget expenditure and lending are subdivided into: (1) functional, (2) agency, (3) economic, (4) programmatic.

Slide 10



Budget revenueBudget

expenditures and lending

Budget financing

Tax

Nontax

Revenue from capital operations

Transfers

Taxes

Fees

Other mandatory payments

Income from property and business activity

Administrative fees and payments, income from

noncommercial economic activity

Other nontax revenue

Functional

Economic

Agency

Programmatic

Lending

Sections, subsections, area groups

Current

Capital

Internal and external

List of main administrators of

budgetary resources

targeted-program method

By type of creditor

By type of debt instrument

Debt

By type of creditor

By type of debt instrument

Slide 11


Budget revenue

Tax

Nontax

Revenue from capital operations

TransfersSlide 12

Fees for special use of natural resourcesGFS 2001 codes 113,114

Property taxesGFS 2001code 113

Taxes on income, profits, and capital gains

GFS 2001 code 111

Taxes on international trade and external transactions

GFS 2001 code 115

Internal taxes on goods and services

GFS 2001 code 114

Other taxes and feesGFS 2001 code 116

Revenue from property and business activity

GFS 2001 code 141

Administrative fees and payments, income from noncommercial economic activity

GFS 2001 codes 115,142

Other nontax revenueGFS 2001 codes 141,142,143,145

Budgetary units’ own revenue

GFS 2001 code 142

Transfers from general government units (from other budgets, subsidies and

subventions) GFS 2001 code 133

Transfers from foreign countries and international organizations

GFS 2001 code 132

Revenue from sale of fixed assets

GFS 2001 codes 311,313

Revenue from sale of public inventories

GFS 2001 code 312

Revenue from sale of land and intangible assetsGFS 2001 code 314

Budgetary Classification of Expenditures (functional)

Slide 13

CodeItem GFS

Code

0100 General public functions 701

0170 Debt service 7017

0180 Interbudgetary transfers 7018

0200 Defense 702

0300 Public order, safety and the judicial branch 703

0400 Economic affairs 704

0500 Environmental protection 705

0600 Housing and community amenities 706

0700 Health 707

0800 Spiritual and physical development 708

0900 Education 709

1000 Social protection and social security 710


Budgetary Classification of Expenditures (economic)

Slide 14

CodeItem

GFS Code

2000 Current expenditures х

2100 Employee compensation and wage accruals 21

2200 Use of goods and services 22

2400 Debt service 24

2600 Transfers 25,26

2700 Social security 27

2800 Other current expenditures 28

3000 Capital expenditures х

3100 Acquisition of fixed assets 311

3150 Creation of public inventories and reserves 312

3160 Acquisition of land and intangible assets 313,314

3200 Capital transfers 25,26,28


Slide 15

Budgetary Classification of FinancingBy Type of Debt Instrument

Budget financing

Financing through debt instruments

Revenue from privatization of public

property

Financing through active operations

Borrowing

Retirement

External

Internal

Change in deposits and securities used for liquidity management

Change in cash

Financing with funds in Unified Treasury Account

Slide 16

Budgetary Classification of Financing by Type of Creditor

Budget financing

Internal financing External financing

Financing with resources of state funds

Financing with bank loans

Other internal financing

Revenue from privatization

Financing with funds balances in accounts of budgetary entities and

budgets


Adjustments Adjustments


Loans not elsewhere classified

Loans from foreign commercial banks

Loans from foreign government authorities

Loans from international organizations

Budgetary Classification of Debt by Type of Debt Instrument

Debt

ExternalInternal

Debt on long-term instruments

Debt on medium-term instruments

Debt on short-term instruments and bills

Debt on other internal instruments

Debt on long-term instruments

Debt on medium-term instruments

Debt on short-term instruments and bills

Debt on other external instruments

Adjustments connected with changes in deposits and securities, and with

appraisal differences

Slide 17



Budgetary Classification of Debt by Type of Creditor

DebtExternal

Debt on loans obtained from budgets at various levels and state funds

Debt to banking institutions

Debt to other government units

Internal debt not elsewhere classified



Debt on loans obtained from international financial organizations

Internal

Debt on loans obtained from foreign government authorities

Debt on loans obtained from foreign commercial banks

Debt on loans not elsewhere classified

Slide 18

Adjustments connected with changes in deposits and securities, and with appraisal

differences

Further Plans for Improving Budgetary Classification:

Reflecting in the classification “below the line” transactions involving the acquisition and sale of nonfinancial assets and the attraction and retirement of loans, i.e., as financing transactions

Reflecting “below the line” transactions involving the transfer of funds for increasing public participation in nonfinancial and financial corporations, i.e. as financing transactions Separating subsidy and current transfer items and bringing them into conformity with the requirements of SNA 2008

Slide 19


Documents

UKRAINE MINISTRY OF FINANCE UKRAINE GOVERNMENT FINANCE STATISTICS Workshop on the Implementation and Links between the System of National Accounts 2008