Component 1: Support relevant national institutions in the improvement of budget preparation, implementation and control

Overall Objective:
The overall objective of the programme is to improve Public Finance Management in Ukraine,
thereby ultimately improving public service delivery and the business climate.

Specific objectives:
Support relevant national institutions in the improvement of budget preparation,
implementation and control.

Main activities
The following are indicative activities, which might be further complemented and adjusted to reach
the objectives of the programme.

1.1 Strengthen capacities in MoF and other key spending units for the implementation of medium-term budgetary planning.
  • Review and update the procedure for defining medium-term policy priorities and respective
    distribution of resources (policy discussions at various stages of the budget cycle).
  • Review and update the procedure for the distribution of medium-term expenditure ceilings.
  • Develop the instructions from MoF to the KSUs for the preparation of the Budget
    Declaration.
  • Review and update the instructions for preparation of budget requests by KSUs for the
    implementation of the medium-term budget planning.
  • Develop proposals on reflecting long-term commitments of KSUs within the medium-term
    budget preparation process.
  • Develop proposals on the possibility of introducing and using a budget margin as a planning
    reserve.
  • Provide support (advisory, on-the-job consultations) to KSUs on the practical application of
    the above tasks.
  • Design and deliver a training programme for the MoF and KSUs on improvement of
    medium-term budget planning.
1.2 Strengthen capacities in MoF and other KSU’s regarding programme-based budgeting and execution of spending reviews.
  • Develop proposals for improvements in programme-based budgeting according to the
    international best practices.
  • Develop proposals for the improvement of the methodology for establishing performance
    indicators of budget programmes.
  • Review and update the methodology for conducting spending reviews.
  • Review KSU budget expenditure and develop proposals for undertaking spending reviews.
  • Provide support (advisory, on-the-job consultations) to KSUs on the practical application of
    the above tasks.
  • Design and deliver a training programme for the MoF and KSUs on improvement of
    programme-based budgeting and spending reviews.
  • Develop relevant business processes and preparation of functional requirements linked to
    expert recommendations and subsequent reforms in the budget process;
  • Design a system roll-out plan and delivering training and change management program.
1.3 Strengthen capacities in the State Treasury Service of Ukraine and MoF regarding budget execution function and liquidity management.
  • Develop proposals for improved methodology and analytical tools for projecting cash flows;
  • Improved information flows related to cash, liquidity and debt management, including
    through expert support to automation of relevant information exchanges between MoF,
    State Treasury, KSUs and other agencies;
  • Develop proposals on effective tools for liquidity management, including placements of
    spare Treasury Single Account balances, repo transactions;
  • Design and deliver a training programme for the MoF, Debt Management Agency and State
    Treasury on cash and liquidity management.
1.4 Strengthen capacities with regards to the further alignment of the Ukrainian accounting system with international standards.
  • Translate the latest version of the International Public Sector Accounting Standards (IPSAS)
    and amendments to IPSAS to Ukrainian;
  • Develop new and propose improvements to the existing national public sector accounting
    standards to cover the identified gaps and ensure alignment with IPSAS;
  • Develop recommendations and guidelines for application of certain national accounting
    standards in the public sector;
  • Develop proposals for improved methodology for preparation of consolidated financial
    statements based on the European best practices;
  • Analyze compatibility between the Chart of Accounts and the budget classification in terms
    of classification and management of assets;
  • Analyse goals, objectives and results of accounting and reporting of budget execution
    transactions based on accruals, adjusted to specific features of Ukraine’s economy;
  • Deliver trainings on the revised national public sector accounting standards to MoF, State
    Treasury and KSUs;
  • Analyse the existing organizational framework for delivery of accounting services and
    qualification requirements to accountants in the public sector; prepare proposals for their
    improvements based on the European best practices;
  • Prepare proposals for modifications to assessment of chief accountants based on the
    European best practices.
1.5 Strengthen capacities for internal control and internal audit in state institutions.
  • Develop and implement appropriate capacity building tools in the field of public internal
    financial control, including: a platform for distance learning in internal control and internal
    audit, a module for assessing the professional level of internal auditors in the public sector,
    automation of processes for generating and summarizing reporting on performance of
    internal audit units, risk analysis for selection of objects for internal audits and the formation of plans, selection of objects for external quality assessments.