Control of the operational efficiency of state-owned enterprises

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State tax university

Control of the operational efficiency of state-owned enterprises

postgraduate student of the department of accounting and consulting

Abstract

In the current state of the economy of Ukraine, the role of state-owned enterprises in fulfilling the state's social obligations and ensuring economic stability is becoming increasingly significant. However, many of them face financial challenges, leading to non-compliance with obligations to creditors and, consequently, to default. The main issues affecting the financial stability of state- owned enterprises include a lack of transparency in financial activities, unsatisfactory operational indicators, and management problems. This article focuses on analyzing the financial efficiency and stability of state-owned enterprises and the role of controlling bodies in their financial activities. The research was based on reports from the RPU and DASU for 2018-2022, consolidated financial statements of NAK "Naftogaz of Ukraine", JSC "Ukrzaliznytsia", NEK "Ukrenergo", and NAEK "Energoatom"for theperiod 2018-2021. Financial results, profitability indicators, the proportion of borrowed funds relative to equity, and bankruptcy indicators of state-owned enterprises were analyzed. As a result of the research, problems of state financial control (SFC) of enterprises were identified, and recommendations for improving the situation were provided. Specifically, from 2018 to 2021, companies such as "Naftogaz of Ukraine", "Ukrzaliznytsia", "Ukrenergo", and "Energoatom" were financially unstable and had low liquidity and solvency indicators. State financial control did not provide proper control of state-owned enterprises and exercised control in the face of obstruction from officials of state enterprises.

Keywords: state enterprises, financial efficiency, financial stability, bankruptcy, state financial control.

Анотація

В.Ю. Слюсар,

аспірант кафедри обліку та консалтингу,

Державний податковий університет

Контроль ефективності діяльності державних підприємств

У сучасному стані економіки України роль державних підприємств у виконанні соціальних обов'язків держави та забезпеченні стабільності економіки стає все більш важливою. Проте багато з них стикаються з фінансовими труднощами, що призводить до невиконання зобов'язань перед кредиторами та як наслідок, до дефолту. Серед основних проблем, які впливають на фінансову стабільність державних підприємств, можна виділити недостатню прозорість фінансової діяльності, незадовільні операційні показники та проблеми у управлінні. Дана стаття зосереджена на аналізі фінансової ефективності, стабільності державних підприємств та ролі контролюючих органів у їх фінансовій діяльності. В процесі дослідження застосовані загальнонаукові та спеціальні методи пізнання: абстрактно-логічний та порівняння, аналізу і синтезу, системного підходу, логічного моделювання та формулювання висновків. Інформаційною базою для дослідження слугували звіти Рахункової палати та Державної аудиторської служби за 2018-2022 рр., консолідовані фінансові звіти НАК «Нафтогаз України», АТ «Укрзалізниця», НЕК «Укренерго» та НАЕК «Енергоатом» за період 2018-2021 р. Проаналізовані фінансові результати, показники рентабельності, частка позикових коштів по відношенню до власного капіталу та показники банкрутства державних підприємств. Особливу увагу приділено визначенню проблем та перешкод, які заважають органам внутрішнього та зовнішнього контролю здійснювати свою діяльність. В результаті дослідження визначені проблеми державного фінансового контролю підприємств та приведені рекомендації для поліпшення ситуації. Зокрема, за 2018-2021 рр. компанії «Нафтогаз України», «Укрзалізниця», «Укренерго» та «Енергоатом» були фінансово нестійкими та мали низькі показники ліквідності та платоспроможності.

Органи державного фінансового контролю не забезпечували належного нагляду за державними підприємствами та здійснювали контроль в умовах перешкоджання зі сторони посадових осіб державних підприємств.

Ключові слова: державні підприємства, фінансова ефективність, фінансова стабільність, банкрутство, державний фінансовий контроль.

Main part

Problem setting (description of the problem being analyzed in general and its connection with important academic or practical tasks). In the context of the current economic climate, state enterprises in Ukraine play a pivotal role in fulfilling the state's social obligations and ensuring the stability and development of the economy of country. Through the execution of financial control over state- owned enterprises, the state ensures the stability and transparency of their financial activities and the effective use of budgetary funds. However, many state enterprises are characterized by a lack of transparency in their financial operations and reporting, unsatisfactory operational and financial results, and significant management deficiencies. These issues become primary reasons for defaulting on obligations to creditors and declarations of default. Consequently, the credit ratings of state enterprises are downgraded by international rating agencies, eroding creditor trust and undermining the state's financial security. This calls into question the effectiveness of the financial control of state-owned enterprises.

Analysis of Recent Research and Publications. The issue of financial control in all its manifestations has been studied by such scientists as S. Bardash, I. Basantsov, N. Vygovska, G. Dmitrenko, I. Drozd, I. Ivanova, V. Symonenko, Y. Slobodyanik, I. Stefanyuk, O. Shevchuk, and others. Ukrainian and foreign scientists, including V. Delas, E. Nosova, O. Yafinovych, G. Korepanov, I. Yatskevych, O. Popova, L. Shevtsiv, M. Marych, O. Purtskhvanidze, S. Kozlovskyi, A. Butyrskyi, B. Poliakov, A. Bobkova, R. Lavrov, N. Ivanyuta, O. Steshenko, V. Masalygina, O. Salenko, have been studying a wide range of issues in the field of financial security and enterprise stability. The researchers have examined the general concept of enterprise financial security, mechanisms for managing financial stability in crisis conditions, and methods of bankruptcy risk assessment. Besides, they focused on sectoral aspects, for example, the stability of the railway sector in the context of globalization and integration. However, the issue of overseeing the operational efficiency of state-owned enterprises, such as JSC “Ukrzaliznytsia”, SE NNEGC “Energoatom”, NJSC “Naftogaz of Ukraine”, and NEC “Ukrenergo”, remains insufficiently explored and requires further research.

Formulation of the goals of the article (task statement). The objective of this article is to investigate the control of operational efficiency in state-owned enterprises.

Presentation of the main research material. An integral part of the financial security of a country is the stability of the state enterprises, which signifies the balance of financial interests and the ability to ensure their implementation, resilience to the negative impact of internal and external threats to the company, the capacity to maintain financial equilibrium, and the reliability of the enterprise in the short and long term.

The analysis of net financial results of state enterprises such as “Naftogaz” “Ukrzaliznytsia” “Ukrenergo” and “Energoatom” for the period 2018-2021 demonstrated an ambiguous situation (Fig. 1).

According to the consolidated financial report of “Naftogaz” in 2019, the company increased its net income by 5.46 times compared to the same period of the previous year, reaching 63.3 billion UAH. The sharp increase is explained by the separation of gas transportation processes, which are reflected as discontinued operations, from natural gas production and supply operations. Profit from discontinued operations amounts to 60.713 billion UAH, and from continuing operations - 2.581 billion UAH. From 2018 to 2020, there was a decrease in the net financial result from continuing operations, thus, the indicator fell in 2019 by 83.74% compared to 2018 and in 2020 by 836% compared to 2019. In 2021, the company turned a loss of 33.199 billion UAH into a profit of 83.235 billion UAH.

Figure 1. Net financial results of state enterprises, in billions of UAH.

Source: developed by the authors on the basis of [2].

The net financial result of “Ukrzaliznytsia” in 2019 increased by 1365.88% compared to 2018, amounting to 2784.39 million UAH. However, the situation reversed the following year, with the indicator sharply decreasing to 14.9 million UAH, indicating the unprofitability of the company. This phenomenon can be explained by the negative impact of COVID-19. The lack of transportation contributed to a decrease in net revenue from sales by 16.67% compared to the previous year. In 2019, the company increased its net income by 104.2% compared to the same period of the previous year, to 500 million UAH.

The results of “Ukrenergo” operations from 2018 to 2020 are characterized by a gradual decrease in net profit. Thus, in 2019, the profit decreased by 27%, and in 2020 - by 1547.4%. However, the dynamics changed in 2021: the indicator increased by 100.4% to 100 million UAH.

The dynamics of the net financial result of “Energoatom” from 2018 to 2020 indicate a negative trend. Specifically, it fell by 17.39% in 2019 and by 226.32% in 2020. However, the situation improved in 2021: the financial result increased by 222.9%, reaching 5.9 billion UAH.

Table 1. Profitability indicators of state enterprises for 2018-2021.

In “Energoatom” equity capital during the researched period ranged from 52.26% to 61.28%. Long-term liabilities ranged from 24.06% to 29.85%. The percentage share of short-term liabilities ranged from 14.23% to 17.89%.

Figure. 2. Indicators of the Probability of Bankruptcy for State-Owned Enterprises

Source: developed by the authors

In 2020, the State Audit Service conducted audits of “Naftogaz” and “Ukrzaliznytsia” as a result of which losses amounting to UAH 150.2 billion and UAH 2.9 billion were identified, respectively. Since the State Audit Service identified violations in 2020 that led to losses amounting to UAH 154.4 billion, of which UAH 153.1 billion, accounting for 99.16%, were attributed to two state enterprises, it indicates the importance of control in the state sector [6]. In 2022, an audit of the activities of “Energoatom” for 2018-2021 was carried out, revealing financial violations and shortcomings totaling UAH 13 billion. This suggests that the State Audit Service does not pay due attention to the control of state enterprises, resulting in the state losing significant financial resources.

The Accounting Chamber, in 2020, conducted an audit of “Ukrainian Railway” on the use and disposal of state property by the regional branch "Southwestern Railway". As a result, due to the lack of an effective organization of state property management during 2017-2019, an uncollected income of the enterprise when managing state property amounting to UAH 4.25 billion was identified, used in violation of legislation amounting to UAH 525.3 million, a shortage of fixed assets and reserves amounting to UAH 107.9 million, and dividends not paid to the state budget amounting to UAH 206.2 million.

- pay more attention to the activities of state enterprises, which will increase their efficiency;

- ensure the accountability of individuals guilty of violating financial control rules and hindering the activities of the controlling entities.

Conclusions from this study and prospects for further exploration in this area. Research on the financial control of the operational efficiency of state- owned enterprises revealed that JSC "Ukrzaliznytsia", SE "NNEGC "Energoatom", NJSC "Naftogaz of Ukraine", and NPC "Ukrenergo" were financially unstable throughout 2018-2021. They were incapable of independently financing their daily operational activities, exhibiting low levels of liquidity and solvency. This indicates that state financial control bodies did not give proper attention to the enterprises in question. Additionally, these control bodies operated in conditions where they faced obstructions from the officials of these state-owned enterprises. As a result of these issues, NJSC "Naftogaz of Ukraine" declared default in 2022, while NPC "Ukrenergo" and JSC "Ukrzaliznytsia" were on the brink of default.

References

1. Delas V., Nosova E. and Yafinovych O., (2015), “Financial security of enterprise”, Procedia Economics and Finance, vol. 27, pp. 248-266, available at: https://doi.org/10.1016/S2212-5671(15)00998-3.

2. JSC “Ukrzaliznytsia”, SE “NNEGC “Energoatom”, NJSC “Naftogaz of Ukraine”, NPC “Ukrenergo” (2022), Finansovi zvity 2018-2021 [Financial reports 2018-2021], Kyiv, Ukraine.

3. Korepanov G., Yatskevych I., Popova O., Shevtsiv L., Marych M. and Purtskhvanidze O., (2020), “Managing the financial stability potential of crisis enterprises”, International Journal of Advanced Research in Engineering and Technology (IJARET), vol. 11, no. 4, pp. 359-371.

4. Kozlovskyi S., Butyrskyi A., Poliakov B., Bobkova A., Lavrov R., and Ivanyuta N. (2019), “Management and comprehensive assessment of the probability of bankruptcy of Ukrainian enterprises based on the methods of fuzzy

sets theory”, Problems and Perspectives in Management, vol. 17, no. 3, pp. 370381, available at: http://dx.doi.org/10.21511/ppm.17(3).2019.30.

5. Cabinet of Ministers of Ukraine (2016), Resolution “About the State Audit Office of Ukraine”, available at: http://zakon.rada.gov.ua (Accessed 3 February 2016).

6. Shevchuk O. and Sliusar V., (2021), Vzayemodiya vnutrishn'oho ta zovnishn'oho finansovoho kontrolyu derzhavnykh pidpryyemstv [Cooperation between the internal and external financial control of state enterprises], Ekonomichnyj visnyk, vol. 8, no. 1, pp 135143, available at: https://drive.google.com/file/d/1Z1mZ8yiur02SFiWoE2VowmZQFIHKUkqQ/vie w?usp=sharing.

7. Steshenko O., Masalygina V. and Salenko O., (2018), “Financial and Economic Stability of Railway Sector in the Context of Globalization and Integration”, International Journal of Engineering & Technology, vol. 7, no. 4.3, pp. 568-572, available at: https://doi.org/10.14419/ijet.v7i4.3.19958.

8. The Verkhovna Rada of Ukraine (2015), The Law of Ukraine "On the Accounting Chamber", available at: https://zakon.rada.gov.ua/laws/show/576- 19#Text (Accessed 2 July 2015).

Література

1. Delas V., Nosova E., Yafinovych O. Financial security of enterprise. Procedia Economics and Finance. 2015. №27, P. 248-266. URL: https://doi.org/10.1016/S2212-5671(15)00998-3.

2. Фінансові звіти АТ «Укрзалізниця», НАЕК «Енергоатом», НАК «Нафтогаз України», НЕК «Укренерго». 2018-2021.

3. Korepanov G., Yatskevych I., Popova O., Shevtsiv L., Marych M., Purtskhvanidze O. Managing the financial stability potential of crisis enterprises. International Journal of Advanced Research in Engineering and Technology (IJARET). 2020. 11(4). P. 359-371.

4. Kozlovskyi S., Butyrskyi A., Poliakov B., Bobkova A., Lavrov R., Ivanyuta N. Management and comprehensive assessment of the probability of bankruptcy of Ukrainian enterprises based on the methods of fuzzy sets theory. Problems and Perspectives in Management. 2019. 17(3). P. 370-381. URL: http://dx.doi.org/10.21511/ppm.17(3).2019.30.

5. Положення про Державну аудиторську службу України: Постанова Кабінету Міністрів України від 3 лютого 2016 р. №43. Урядовий кур'єр. 2016. 9 лют. (№25).

6. Шевчук O.A., Слюсар В.Ю. Взаємодія внутрішнього та зовнішнього фінансового контролю державних підприємств. Ekonomichnyj visnyk. 2021. 8 (1). С. 135-143. URL: https://drive.google.Com/file/d/1Z1mZ8yiur02SFiWoE2 VowmZQFIHKUkqQ/view.

7. Steshenko O., Masalygina V., & Salenko O. Financial and Economic Stability of Railway Sector in the Context of Globalization and Integration. International Journal of Engineering & Technology. 2018. 7(4.3) P. 568-572. URL: https://doi.org/10.14419/ijet.v7i4.3.19958.

8. Про Рахункову палату: Закон України від 02.07.2015 р. №576-VIII. Голос України. 2015. 8 серпня. (№145).

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