THE ROLE OF INTERNAL FINANCIAL CONTROL SYSTEMS IN THE EFFICIENT USE OF BUDGETARY FUNDS IN THE PUBLIC SECTOR

Abstract

The system of internal financial controls in the public sector of the Republic of Srpska represents a framework of financial and other control mechanisms, encompassing organizational structure, methods, and procedures of internal control established by the responsible official of the entity. Its purpose is to ensure successful management and achievement of the entity’s objectives in a transparent, lawful, economical, efficient, and effective manner. A well-designed and properly implemented internal financial control system ensures compliance with the applicable legal framework, which is reflected through the accountable use of entrusted public funds and contributes to efficient and effective reporting. The responsibility for establishing, implementing, and maintaining the internal financial control system lies with the head of the public funds beneficiary, i.e., the highest level of
management. The aim of this paper is to highlight the role of internal financial control systems in the efficient utilization of budgetary funds within the public sector. The methods used in the research include the descriptive method and a survey questionnaire. This paper aims to provide a theoretical contribution, expand the existing body of fundamental knowledge in this field, and demonstrate how an established internal financial control system can influence more efficient spending and allocation of financial resources in the public sector.