Financial activity' Financial policy' Financial control'

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Financial activity. Financial policy.
Financial control.

• Financial activity
• Financial system of the state
• Financial policy individual parts of finance
  policy
• Financial control. Types of finance control.

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Literature

• Medved, J.- Daniel, P. Financie a mena
  (makroekonomické otázky). BB. 1993, kap. 3, kap.
  4
• Benová, E.- Hlavatá, I. a kol. Financie a mena.
  Bratislava 1996, kap. 8
• Borzová, B., Medved, J. a kol. Úvod do financií a
  meny. 1997. Kap.
• Zásady financnej politiky na rok 1994 a dalie
  obdobie. TREND, 10. 11. 1993
• Memorandum o hospodárskej politike SR na roky
  1994 -1995 . TREND 7.9.1994
• www.finance.gov.sk
• www.nbs.sk

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Activities

• Economic nature
• Non-economic nature

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Financial activity

• Economic activity, including all activities of
  economic subjects, that have relation with
  financing of their activities.
• Its main part is located in the sphere of
  circular flow.
• Is interrelated with the existence of the market
  and the existence of money.

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Primary financial activity (PFA)

• All activities that are directly interconnected
  with objective part of finance.
• In the scope of PFA are operations with money in
  their real pattern (cash or noncash).

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Secondary financial activity (SFA)

• Are all activities, that are directly connected
  with subjective part of finance. The subjective
  part, its position and tasks emerge from its
  objective tasks.
• In the scope of SFA are operations with money in
  their ideal pattern.

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Financial policy

• 1) Meaningful activity of different society
  groups and their institutions, oriented at
  enforcement of their financial goals.
• 2) Package of instruments and tools (technical,
  organizational), which are used by political
  institutions to reaching their financial goals

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2 main types of fin. policy at macro level

• MONETARY POLICY effort of reaching of
  macroeconomic goals by the changes in the money
  supply.
• FISCAL (BUDGETARY) POLICY - effort of reaching
  of macroeconomic goals by the changes in the
  structure of incomes and expenditures of state
  budget.

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Macroeconomic assumptions source MF SR
(www.finance.gov.sk)
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Macroeconomic forecasts(source Committee for
macroeconomic forecasts MF SR, www.finance.gov.sk)
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Tasks of fiscal policy for 2006

• Public program statement of government
• Government will perform all necessary actions,
  for successful adoption of Slovakia into EMU,
  under the condition of favorable external
  environment by the year 2006. (saldo of PF under
  3 GDP in 2006)
• New Stability and growth pact
• Lowering of structural deficit by 0,5 HDP yearly
• Drop from 3,4 HDP in 2005 to 2,9 HDP in 2006
• Convergence program
• Main tasks of fiscal policy in 2006 are
  lowering public finance deficit in 2006 under 3
  HDP (without the costs for introduction of two -
  pillar pension system) and till 2010 regain
  long-term financial balance of PF.
• Public sector budget for years 2005-2007
• Approved deficit of PF by gvt. for 2006 is 2,9
  HDP

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Financial system

• Complex of financial institutions of the state,
  financial relationships between them and
  financial laws, that manage these relationships.

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Financial system of the state

• Public finance system
• Credit system
• Insurance system
• Corporate finance system

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Public finance system

• Represented with the number of finance
  institutions, that are the skeleton of all system
  of finance.
• Ministry of finance SR
• - central authority of state administration in
  SR for the fields of finance, taxes, duties,
  prices, financial control and internal audit.

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Responsibilities of MF SR

• Normative working out of the proposals of the
  financial law.
• Balancing working out of the law proposals
  about the state balances, watching its execution
  and making the necessary corrections in order to
  fulfill them.
• Methodological working out of methodological
  instructions, broadly accepted for the financing
  of the economic subjects.
• Redistributional supply of revenues reverse
  influencing of the economic subjects through
  grants and subventions
• Registration-controlling control of the
  reproduction process by the fulfilling the tax
  and fund contribution duties

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• MF SR performs
• (www.finance.gov.sk)
• Creation and execution of the finance, duty and
  price politics, including budgeting of the
  aggregate deficit of the public finance, creation
  and fulfilling of state budget, administration of
  state-owned assets and liabilities, capital
  market, banking, insurance, tax and levy system
  and finance-economic tools in the field of
  business
• Performing the administration in the fields of
  banking, building savings institutions, voluntary
  old-age insurance, FX economy and control, single
  and double entry bookkeeping and reporting,
  lotteries and other games, administration of
  state-owned property in the field of public
  services and non-profit sphere.
• State supervision on labor market policy,
  health, sickness and old-age insurance
  supervision, observing the terms of
  state-supported savings, mortgage loans

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Credit system

• Central bank
• Commercial banks

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Insurance system

• Accumulation of the temporally free money of the
  businesses and households
• Creation of the insurance reserve funds
• Participation in the covering of the public
  services

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Corporate finance system

• Organization of economic relations accompanied
  with finance (supplier consumer relations)
• Presence in the money bourses
• Makes decisions about allocation of major part of
  financial resources

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Financial control

• Control activity interrelated with managing and
  organizing. The goal is to compare the real state
  of things with the expected (planned) state.

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Types of control

• A) Technical control
• - examines only the technical part of the
  production
• B) Economic control
• - examines the economic aspects of the
  production process
• Financial analysis reflection of economic
  control in finance
• C) administrative control
• - control of meeting the norms interconnected
  with economic activity
• Financial revision (inspection) - reflection of
  administrative control in finance

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Segmentation of control from temporal perspective

• Preliminary FC
• Conventional, routine (operational) FC
• Consecutive FC

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Segmentation of FC from the view of national
economy

• A) macroeconomic FC
• - state-budgetary FC
• - credit-financial FC
• B) microeconomic FC
• - in-house, inter-firm
• - internal analysis, external analysis