In this paper the author presents ways to address issues of financial control efficiency of economic entities through tax administration of budgetary revenues.financial control, fiscal control, economic efficiency

Pop Ioan

English

Research Papers in Economics

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371 
FINANCIAL CONTROL EFFICIENCY IN ECONOMIC ENTITIES 
Pop Ioan 
Faculty  of  Economics  and  Business  Administration  Babe￿-Bolyai  University,  Cluj-Napoca, 
Romania 
 
In  this  paper  the  author  presents  ways  to  address  issues  of  financial  control  efficiency  of 
economic entities through tax administration of budgetary revenues. 
 
Keywords: financial control, fiscal control, economic efficiency  
 
JEL Classification: G32 
 
1. Economic Efficiency of Financial Control 
As is generally known, the concept of economic efficiency expresses the ratio between profitable 
effect or outcome and the effort or expense generated by obtaining it. The higher is the achieved 
effect per unit of expenditure or, conversely, the lower the cost generated by producing a given 
profitable effect, the higher we consider economic efficiency is. From theoretical and practical 
points  of  view,  economic  efficiency  can  be  generally  applied,  since,  without  a  certain labor 
expense, it is not possible to obtain a certain result; work always is the cause, and the product 
obtained its effect. 
The effect of the action of control is expressed in the results obtained from applying the measures 
resulted from it. The results of control, namely its effects can be grouped into two categories: 
- direct and immediate effects of control, quantifiable elements that can be known, tracked and 
aggregated from one period to another; 
 - indirect effects manifesting in time, such as: extending application of control measures, by 
industry, spheres of activity or even economy. 
As for the effort to achieve control, are taken into account, first of all, all expenses resulted from 
maintenance and operation of the control system (salaries, allowances, daily allowances, school 
fees and improving the control authorities, etc.). Also, it must be taken into account the effort of 
the national economy by depriving it of the contribution of the specialists working in the control 
system. 
In our opinion, the factors that influence the efficiency of financial control can be grouped into 
two categories: direct factors and indirect factors.  
In the category of direct factors, we have considered the control authority, his consciousness, 
training and methods used during the inspection to increase its efficiency.  
In our view in the category of indirect factors are taken into account the material conditions in 
which  the  control  takes  place,  audit-specific  legislation,  relations  between  inspectors  and 
economic entity and the factual situation, respectively the control objectives, the control period 
and the results of the control. 
Among the ways to increase the efficiency of financial control, we have taken into consideration: 
financial stimulation of the control authorities, ensuring the independence of control activity, 
modernization  of  the  control  process,  increasing  educational  level  of  inspectors  and  rational 
organization of the control activity.  
Last but not least we mention the fact that improving the results of the financial control by 
attracting additional amounts identified in the state budget is the corollary of the control activity.  
 
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372 
2. The Evolution of the Financial Control Activity in Romania 
The main activities of financial control are:  
- the management and use of funds allocated from state budget; 
- management of properties in the state’s public domain and administrative - territorial units; 
- financial-budgetary discipline; 
- computerizing the financial control activity. 
 
Table no.1 Financial Control Activity in Romania (2008 -2009) 
Indicator  2008  2009  Rate 
2008/2009 (%) 
Number  of  companies  that  have  received  financial 
control 
6381  7680  20.4 
Number of controls made, from which  8446  10402  22.6 
- State departments  291  361  24.1 
- National companies and businesses  529  628  18.7 
- State-owned or majority state-owned companies  598  762  27.4 
- Other controls  7068  8651  22.4 
Fines       
     Number  954  881  -7.7 
     Value of fines imposed (million Lei)  1.2  1.9  58.3 
Source: http://www.anaf.ro/public/wps/portal/ANAF 
 
The table above (Table no.1) shows that in Romania the number of companies that have received 
financial control and the number of controls made increased by around 20% in 2009 versus 2008.  
Within these controls the most of them were done to companies state-owned or majority state-
owned (27.4%), followed by state departments (24.1%), other controls and national companies.  
Following these controls the amount of fines increased by 58.3%.  
 
Table no. 2 The amounts established by financial control 
  2008 
(million Lei) 
2009 
(million Lei) 
Rate 
2009/2008 (%) 
Total, from which  2141  3828  78.8 
- budgetary  291  361  24.1 
-financial  529  628  18.7 
-fiscal  598  762  27.4 
Source: http://www.anaf.ro/public/wps/portal/ANAF 
  
The results of the financial control activity have resulted in additional revenue in the state budget, 
which per total financial control activity was higher with 78.8% in 2009 compared with 2008. 
From revenues the most significant increase of amounts is registered by income from tax (27.4%) 
followed by the ones from budget (24.1%) and financial ones (18.7%). 
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373 
 
Table no. 3 Turning the financial control activity into profit 
Amounts paid during control  2008 
(million Lei) 
2009 
(million Lei) 
Rate 
2009/2008 (%) 
Total, from which  39.7  649.1  1537 
- Financial and budgetary differences  23.0  625.0  2615 
 - Fiscal differences  15.6  23.3  47 
- Imposed fines paid  0.8  0.9  11 
Source: http://www.anaf.ro/public/wps/portal/ANAF 
 
Financial control efficiency is also manifested during the work of tax inspectors which in 2008 
compared to 2009 resulted in a significant increase in the amounts paid during the review of 
1537% in 2009 compared with 2008. 
Budgetary  and  financial  differences  identified  during  the  control  activity  increased  in  2009 
compared to 2008 with 2615%, tax differences increased by 47% and imposed fines increased by 
11%.     
 
Table no. 4 The main activities in financial control 
  Number of 
acts of 
control 
Amounts assessed 
additionally 
(million Lei) 
The administration and management of financial resources 
by companies where the state is a major shareholder and 
by companies that registered loss 
757  636.1 
Establishing and providing payment sources of repayable 
funding guaranteed by the state 
218  2927.4 
Approval of subsidies and transfers from the state budget 
requested by companies 
5690  21.0 
Use  of  subsidies  and  transfers  allocated  from  the  state 
budget 
337  57.6 
Concession of assets and activities that are public property 
of the state 
1087  19.2 
Source: http://www.anaf.ro/public/wps/portal/ANAF 
 
The financial control activity focused in 2009 on five directions, the number of acts of control 
and amounts assessed additionally being significant primarily for the management of resources at 
the  state-owned  companies  and  for  the  creation  and  provision  for  payment  of  reimbursable 
amounts guaranteed by the state. 
 
3. Conclusions 
Although control registers a widening of its sphere of action and a diversification of forms of 
expression, I would like to point out certain restrictions that should be subject to control. 
Knowing these limits and restrictions is important and necessary for both the control authorities 
(who  must  know  exactly  their  responsibilities  and  their  limits),  and  for  administrative  and 
management authorities (who have no right to restrict or expand control operations at their own 
will, to prevent verification of some objectives or request the performance of unnecessary or 
unlawful interference). ￿
374 
The efficiency of financial control is determined by the contribution it has in preventing and 
eliminating failures, improving the organization and management of the decision-making process 
and growing the efficiency throughout the whole economic activity. 
Our opinion is that the efficiency of financial control must be determined not by the amount of 
damage found and penalties applied, but, possibly, by volume of amounts receivable, the debits 
and  credits  processed,  the  available  stocks  recovered  as  a  result  of  measures  taken  after 
completion of inspections. 
Today it is estimated that according to how much focus is on preventing misconduct, on the 
recommendation of the provisions governing the controlled activity, the efficiency of the control 
will (therefore) be higher. The efficiency of financial control is determined by the permanent 
connection between the two strands, namely: between the preventive-operative one and the one 
of immediate improvement of findings. 
 
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4. References 
- Single-author books: 
1.Boulescu, M. Ghi￿￿. Control financiar. Bucure￿ti: Editura Eficient, 1997. 
2.P￿troi,  Drago￿.  Evaziunea  fiscal￿  -  între  latura  permisiv￿,  aspectul  contraven￿ional  ￿i 
caracterul infrac￿ional (Edi￿ia a doua). Bucure￿ti: Editura Economic￿, 2007. 
3.￿ara, Ioan Gh. Controlul financiar ￿i expertiza contabil￿. Oradea: Editura Universit￿￿ii, 2003. 
4.Oprean,  Ioan. Control ￿i audit financiar-contabil. Deva: Editura Intelcredo, 2002. 
5.Iancu,  Aurel. Eficien￿a economic￿ maxim￿. Bucure￿ti: Editura Politic￿, 2006. 
 
- Two-author books: 
6.Boulescu, Mircea, ￿i Cadâr, Fuat. Sistemul de control financiar - fiscal ￿i de audit din România. 
Bucure￿ti: Editura Economic￿, 2008. 
7.Gherasim,  Toader  ￿i  Zai￿,  Dumitru.  Eficien￿a  sistemelor  de  produc￿ie.  Ia￿i:  Editura 
Universit￿￿ii, 2004 
 
- Web sites: 
www.anaf.mfinante.ro/wps/portal 
www.antifrauda.gov.ro 
www.cdep.ro/pls/legis/legis_pck.frame 
www.insse.ro 
www.mai.gov.ro 
www.mfinante.ro 
www.oecd.org 
   

FINANCIAL CONTROL EFFICIENCY IN ECONOMIC ENTITIES

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FINANCIAL CONTROL EFFICIENCY IN ECONOMIC ENTITIES

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