THE IMPACT OF FINANCIAL MANAGEMENT AND CONTROL ON THE QUALITY OF FINANCIAL REPORTING IN THE PUBLIC SECTOR

Abstract

Financial management and control represent a relatively new phenomenon in public sector entities. Specifically, to enhance the efficiency and effectiveness of public sector operations within internal financial controls, a system of financial management and control has been developed. This system aims to mitigate or eliminate risks by identifying them promptly and improving the efficiency of public sector entities. This is a crucial general objective because the resources used by the public sector are public property, and all citizens are interested stakeholders in their operations. A successfully integrated and implemented financial management and control system ensures compliance with positive legal regulations, which reflects through the responsible expenditure of entrusted public funds, contributing to efficient and effective financial reporting. The responsibility for the implementation and successful existence of the financial management and control system lies with the head of the public funds user, i.e., the highest managerial level. This paper aims to highlight the impact of financial management and control on the quality of data presented in financial reports. Inaccurate financial reports provide a misleading picture of the returns and financial situation of an enterprise. The methods used in the research include the descriptive method and a survey questionnaire. The paper aims to make a theoretical contribution, expand existing fundamental knowledge in the field, and demonstrate how financial management and control affect the quality of data presented in financial reports, which can have consequences for investors when making business decisions based on financial reports.