Accounting Information: a Framework for Risk-Based Control in the Local Budget Management System

Abstract

Effective management of financial resources of territorial communities requires a developed system of accounting support, providing a robust information base for control over the formation and execution of local budgets. Management of public finances is constantly exposed to risks of violations at all the phases of the budget process. Problems of transparency and accountability in budget spending can be properly dealt with by introducing a risk-oriented approach in the control activities. There is a methodological gap between budgeting and accounting systems, creating risks of hidden liabilities and an illusion of fiscal stability. The research objective is to examine theoretical and methodological foundations of accounting systems as an information framework for implementing risk-based budget control in territorial communities. A model of cyclical interaction of the accounting information is proposed, where a high-performing accounting system generates reliable information for effective control and risk management. International approaches (European EPSAS standards, international IPSAS standards, PIFC concept, SIGMA and INTOSAI recommendations) are analyzed, emphasizing the need for transition to accrual accounting, standardization of accounting procedures, and creation of integrated control and audit systems. Common principles of foreign practices are outlined: standardization of accounting tools; integration of internal and external control mechanisms; enhanced transparency and accountability to the public; development of professional competencies of accountants and auditors. The adaptation of international accounting and control standards to Ukrainian communities in the context of European integration and administrative-financial decentralization will help improve the quality of budget management, minimize budget risks, and ensure transparent use of public funds.