Uniform rules will be implemented for all public institutions, along with oversight of their revenues and expenditures. This will ensure a level playing field for state-funded and other public institutions and stricter control over public finances.
As a reminder, currently, local government-administered public institutions are entities that carry out non-commercial activities and operate on the basis of self-governance principles. Therefore, they are exempt from the requirements of legislation on public finances and budgetary accountability.
These institutions generate revenue by providing public services on behalf of the state. If their revenue exceeds their expenses, they are entitled to carry over the surplus to the next fiscal year. Only upon a decision by the founding authority may a portion of this revenue be transferred to the state budget.
Strict control over public finances is being introduced
Starting next year, the distinctions between self-governing institutions and other public institutions will be eliminated. This will be made possible by removing the very concept of “public body/self-governing public institution” from the legislation.
Going forward, the legal framework for public institutions will be limited to two categories: budgetary institutions and public institutions financed by their own revenues.
Accordingly, they will be subject to the rules governing budgetary oversight and state control. Their activities will be subject to external state audits, internal audits, and inspections by supervisory authorities.
In turn, the legislation will be supplemented with provisions setting forth the principles of financial management in public institutions funded by their own revenues.
They will be required to maintain accounting records, submit reports to the Ministry of Finance, and transfer any surplus of revenue over expenditures to the state budget (with the exception of state medical institutions and public institutions of higher education).
