The USAID HOVERLA Activity conducted an Expert Analysis of over a thousand budget requests from the budget managers of 103 partner communities.

As a standard procedure, a school, a kindergarten, or any other institution in the community receives funds for equipment or salaries based on a budget prepared by that institution. All these requests then go to the financial department of a local government, which then compiles the budgets from all departments. After this, the councilors voted on the passing of the budget.

Recently, when the USAID HOVERLA Activity held the first open dialogue between communities and the State Audit Service, experts confirmed what they had suspected all along that the most significant financial violations come from the community’s local budget documents. These errors lead to distortions in expenditures, inefficient use of funds, and many other unpleasant consequences.

Therefore, from January to March 2024, HOVERLA experts thoroughly analyzed 1,096 budget requests from 133 main budget managers in 11 partner regions of the USAID HOVERLA Activity. During the analysis, experts considered the provisions of the Budget Code and the regulatory framework of the Ministry of Finance of Ukraine. They paid particular attention to education, social protection, public administration, culture, administrative services centers, and other areas. etc.

The analysis found the most common systemic errors:

• Budget managers incorrectly plan expenditure volumes or inadequately justify them.
• They do not specify performance indicators or provide an insufficient list.
• They do not consider all legislative requirements.
• They include expenses that do not correspond to the tasks, directions, and goals of the budget.
• They do not disclose budget requests.

This happens despite the fact that communities have long been practicing program-targeted methods (i.e., focusing on achieving specific results in budget formation and implementation, with an evaluation of efficiency), and communities have a normative-legal framework and systematic training.

Based on the analysis, the HOVERLA experts developed individual recommendations for each community to prevent future mistakes. They also explained these recommendations in detail during an online meeting attended by over 300 representatives of local financial authorities, key budget managers, and recipients of funds from about 100 HOVERLA partner communities.

HOVERLA’s budgeting activity supports the Ministry of Restoration’s efforts to strengthen the revenue-generation capacity of local self-government bodies.