UKRAINE MINISTRY OF FINANCE

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UKRAINE MINISTRY OF FINANCE
Workshop on the Implementation and Links between
the System of NationalAccounts 2008 and the
Government Finance Statistics Manual20 22
November 2013, Istanbul, Turkey

• UKRAINE
• GOVERNMENT FINANCE
• STATISTICS

Larisa Kalinichenko Head, Government Finance
Statistics Department
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UKRAINE MINISTRY OF FINANCE

• Institutional Coverage of the General Government
  Sector in Government Finance Statistics
• Central Government
• Subsector 1.Central government units financed out
  of the state budget
• Parliament (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
  units
• Not applicable.
•  
• Subsector 3.Social security funds
• 3.1 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 authorities
• Subsector 5. Local authorities financed out of
  local budgets 12,086 local government
  authorities, including
• 1 Crimea Autonomous Republic
• 24 provinces

Slide 2
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UKRAINE MINISTRY OF FINANCE
Institutional Coverage of Budgetary System
According to Ukraine Budgetary Code
State social insurance funds not belonging to
Ukraines 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 Budgetary System
Local budget
State budget
Crimea Autonomous Republic budget
Province and Kiev and Sevastopol city budgets,
District budgets
Local government budgets
Budgetary law lacks a definition of the general
government sector and public sector
Slide 3
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UKRAINE MINISTRY OF FINANCE

• !!!!!! 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
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UKRAINE MINISTRY OF FINANCE

• Accounting Method in Ukraines 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
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Reporting Period for Reports
UKRAINE MINISTRY OF FINANCE

• 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

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Chart of Accounts for Execution of State and
Local Budgets
UKRAINE MINISTRY OF FINANCE

• 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 Banks electronic payments system must
  have from 6 to 14 digits.

Slide 7
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Chart of Accounts in Budgetary Entities
UKRAINE MINISTRY OF FINANCE

• 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 entitys (organizations) 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 ? 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.

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UKRAINE MINISTRY OF FINANCE

• 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
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UKRAINE MINISTRY OF FINANCE

• 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.

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Budgetary Classification
Budget revenue
Budget expenditures and lending
Budget financing
Taxes
By type of creditor
Sections, subsections, area groups
Functional
Tax
By type of debt instrument
Fees
Current
Other mandatory payments
Economic
Capital
Income from property and business activity
Debt
Nontax
List of main administrators of budgetary resources
Agency
By type of creditor
Revenue from capital operations
Administrative fees and payments, income from
noncommercial economic activity
Programmatic
By type of debt instrument
targeted-program method
Other nontax revenue
Lending
Internal and external
Transfers
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Budgetary Classification
Budget revenue
Internal taxes on goods and services GFS
2001 code 114
Other taxes and fees GFS 2001 code 116
Taxes on income, profits, and capital gains
GFS 2001 code 111
Taxes on international trade and external
transactions GFS 2001 code 115
Tax
Fees for special use of natural
resources GFS 2001 codes 113,114
Property taxes GFS 2001 code 113
Other nontax revenue GFS 2001 codes
141,142,143,145
Revenue from property and business activity GFS
2001 code 141
Nontax
Budgetary units own revenue GFS 2001 code 142
Administrative fees and payments, income from
noncommercial economic activity GFS 2001 codes
115,142
Revenue from capital operations
Revenue from sale of land and intangible
assets GFS 2001 code 314
Revenue from sale of fixed assets GFS 2001 codes
311,313
Revenue from sale of public inventories GFS 2001
code 312
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
Transfers
Slide 12
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Budgetary Classification of Expenditures
(functional)
UKRAINE MINISTRY OF FINANCE
Code Item 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

Slide 13
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Budgetary Classification of Expenditures
(economic)
UKRAINE MINISTRY OF FINANCE
Code Item GFS Code
2000  Current expenditures ?
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 ?
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

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Budgetary Classification of Financing By Type of
Debt Instrument
Budget financing
Borrowing
Financing through debt instruments
External
Retirement
Internal
Revenue from privatization of public property
Change in deposits and securities used for
liquidity management
Financing through active operations
Change in cash
Financing with funds in Unified Treasury Account
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Budgetary Classification of Financing by Type of
Creditor
Budget financing
Internal financing
External financing
Financing with resources of state funds
Loans from international organizations
Financing with bank loans
Loans from foreign government authorities
Other internal financing
Loans from foreign commercial banks
Revenue from privatization
Financing with funds balances in accounts of
budgetary entities and budgets
Loans not elsewhere classified
Change in deposits and securities used for
liquidity management
Change in deposits and securities used for
liquidity management
Adjustments
Adjustments
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Budgetary Classification of Debt by Type of Debt
Instrument
Debt
External
Internal
Debt on long-term instruments
Debt on long-term instruments
Debt on medium-term instruments
Debt on medium-term instruments
Debt on short-term instruments and bills
Debt on short-term instruments and bills
Debt on other external instruments
Debt on other internal instruments
Adjustments connected with changes in deposits
and securities, and with appraisal differences
Adjustments connected with changes in deposits
and securities, and with appraisal differences
Slide 17
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Budgetary Classification of Debt by Type of
Creditor
Debt
External
Internal
Debt on loans obtained from international
financial organizations
Debt on loans obtained from budgets at various
levels and state funds
Debt on loans obtained from foreign government
authorities
Debt to banking institutions
Debt on loans obtained from foreign commercial
banks
Debt to other government units
Internal debt not elsewhere classified
Debt on loans not elsewhere classified
Adjustments connected with changes in deposits
and securities, and with appraisal differences
Adjustments connected with changes in deposits
and securities, and with appraisal differences
Slide 18
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UKRAINE MINISTRY OF FINANCE

• 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
•