Finance as a sphere of monetary relations represents. Finance
FINANCE AND FINANCIAL SYSTEM OF THE STATE
Finance concept
Finance - is a system of monetary relations regarding the accumulation, distribution and use of funds Money for the purpose of material support for the implementation of government functions and tasks.
Finance is an integral part of monetary relations. Finance is a distribution category through which the distribution or redistribution of gross domestic product and national wealth occurs. It is thanks to this quality of finance that the state and local government are provided with the necessary financial resources used in the form of monetary funds.
According to most researchers, the term “finance” goes back to the medieval Latin words - fmatio, financia pecuniaria, which were preceded by the Old Latin word figo - to drive, drive, and later - finis, meaning end, limit, boundary, end (a marking stake was driven into the ground for separation of one piece of land from another). The first author of a scientific and practical work on finance is considered to be Xenophon (about 430-355 BC), whose work was called “On the Revenue of the Athenian Republic.”
Finance can be viewed in economic and material aspects. In the economic aspect, finance- This economic relations related to the formation, distribution and use of centralized and decentralized funds of funds in order to perform the state’s own functions and tasks or local government, as well as delegated powers of the state and ensuring conditions for expanded reproduction, during which the distribution and redistribution of the gross domestic product and control over meeting the needs of the community are carried out.
In the material aspect of finance represent the monetary funds of the state, state-territorial and municipal entities, enterprises, institutions, organizations, used to materially support the needs of society and the development of production.
Features of finance public relations
The totality of these funds of funds represents state financial resources.
Finance as an economic category operates within monetary relations. The content of finance includes only those monetary relations that have a specific financial form of value movement associated with the distribution of cash income and savings, the formation and use of certain funds of monetary resources. The most important distinctive feature of financial relations is the mandatory participation of the state in them . All other types of monetary relations go beyond financial relations and are regulated by other branches of law.
Financial relations differ from monetary relations on the basis of equivalence. The movement of money in most cases is accompanied by a counter movement of goods, works or services, i.e. monetary relations are of an equivalent nature. Finances are not intended to create consideration; their movement is not in the nature of compensation. The only exception in financial relations they represent credit relations that arise, in particular, when purchasing government securities.
The essence of state and municipal finance, the patterns of their development, the scope of commodity-money relations covered by them and their role in social reproduction are determined economic system society, the nature and functions of the state and local government.
Finance is a set of monetary relations organized by the state, during which the formation and use of national funds is carried out. To solve economic, social and political problems. Finance is an integral part of monetary relations, however, not all monetary relations are financial.
In this sense, finance is closely related to money circulation and the sphere of credit. At the same time, money performs various functions, the main one of which can be called the function of universal equivalent. In contrast, finance represents a system of relationships, i.e. are a tool for the accumulation and distribution of wealth.
Finance – relationships of the following components:
1. relations on the creation and use of centralized state funds;
2. relations on the distribution and redistribution of resources through the use of the state budget, territorial budgets and extra-budgetary funds;
3. relations on the creation and redistribution of funds of enterprises and households.
The essence of finance, the pattern of its development, the scope of commodity-money relations covered by it and its role in the production process are determined by the economic system of society, as well as the functions of the state. Finance as an economic category expresses an economic attitude regarding the production, distribution and use of GDP and national income (hereinafter referred to as ND).
Finance is the link between GDP and income and the use or distribution of goods and services. The emergence of finance as a historical category is due to the following factors:
1. social division of labor and division of society into social groups;
2. development of commodity-money relations with an increase in production and an increase in GDP and income;
3. the emergence of independent independent economic entities;
4. creation of a centralized state.
Finance differs from money both in content and in the functions performed. Money is a universal equivalent, with the help of which, first of all, the labor costs of associated producers are measured, and finance is an economic instrument for the distribution and redistribution of gross domestic product and national income, an instrument for controlling the formation and use of funds of funds.
The criteria for classifying certain relationships as financial are the following:
1. Real cash flow, i.e. transfer from one owner to another.
2. The distributive nature of these relations.
3. Place of origin - the second stage of the reproductive process.
Money is primary - finance is secondary.
Financial relations express monetary relations between:
· enterprises and employees (payment of wages, issuance of dividends, material sanctions);
· enterprises and its branches, divisions (providing working capital, providing them with resources for updating the MTB, training and advanced training of personnel;
· enterprises (payment of bills, payment of advances, joint participation in the implementation of investment projects, collection of sanctions for violation of contracts);
· enterprise and state (tax payments, budget financing of individual costs);
· enterprises and banks (storage of enterprises’ own funds in bank accounts, deposits, short-term and long-term lending);
· the state and the population (payment of taxes and fees, state financing of part of the social and cultural needs of the population, purchase of government bonds);
· banks and the population (deposits of the population in Sberbank and other banks, acquisition of bank certificates, payment by banks to the population of income on deposits, certificates;
· the above and the shadow economy.
The financial system is a set of various financial relations. The financial system includes 2 areas of financial relations:
1. Decentralized sphere. Its links: enterprise finance and household finance. They are the basis of the financial system. The overall financial situation of the country depends on their condition. The main source of production and social development labor collectives become profit. The enterprise independently distributes it, forms production and social funds, finds funds for investment, and uses the resources of the financial market.
2. Centralized sphere. Links: federal budget, regional budgets (89), local budgets (more than 29,000), extra-budgetary funds. The centralized sphere is owned by the state in accordance with the Code of January 1, 2000. Each budget is autonomous, that is, the lower one is not included in the higher one. For the purpose of planning budget resources, a consolidated budget is drawn up - a statistical budget, which combines the resources of all levels of the budget system. Centralized funds ensure the expansion of state production at the macro level through the redistribution of finances between industries and territories.
In the early 90s there were more than 20 extra-budgetary funds (economic and social). By 1999, these funds were consolidated with the federal budget, and regional funds with the regional budget. Currently, 3 social extra-budgetary funds have been preserved. The most important of them is Pension. The fund is formed from insurance premiums of employers and employees, subsidies from the federal budget and resources received from the funds’ own investments. Facilities Pension Fund go to pay pensions, disabled people, loss of a breadwinner, length of service.
There are also a social insurance fund, federal and territorial health insurance funds.
Finance- a synonym for funds (cash and non-cash), as well as relations associated with their movement and use. Finance, translated from French “finances” means “money”. In scientific literature, finance is understood as the unification of all economic ties, which arise in the process of origination, distribution, redistribution and application of cash flows, both by central funds and decentralized ones, which often act as the state treasury (budget). Thus, finance is an important link in the formation government system. The nature and functions of finance will be described in more detail in this text.
Western scientific and educational literature interprets finance in a fairly wide semantic range. Specificity is manifested in the variety of financial relations, as an integral part of finance, which can be public (social), corporate, or personal. Thus, public finance covers processes and mechanisms, including the accumulation and expenditure of the state’s monetary wealth, balance, and monitoring methods.
As for corporate finance, which is equivalent to financial and managerial management and business management, it implies the art of money management, a science studied in higher educational institutions. We are mainly talking about literature that serves as a basis for teaching students of Higher Educational Institutions.
In addition, the term “finance” can mean an economic discipline that deals with the analysis of economic actions in various areas of the socio-cultural, legal and economic space. Here we are already talking about research institutes working for the government.
In human understanding, finance is, first of all, money that has a certain value. Money can be exchanged for other money or received part of the surplus value in the form of goods (services).
Finance functions
Cash performs such special functions as:
- formative;
- controlling;
- regulatory;
- stabilization;
- fiscal;
- stimulating.
The distribution function refers to the dissolution of the country, for the subsequent formation of state budgets of different levels.
The controlling function of money makes it possible to monitor cash flows, as well as the expenditure of treasury money on mandatory needs (health care, construction of sports facilities).
Through the regulatory function, the influence is exerted on segments of economic relations through taxes and the issuance of government loans.
The stabilizing function provides citizens of the country necessary conditions for the formation of social, cultural and economic freedom.
Fiscal and incentive functions are aimed at combating other regressive factors such as stagnation, and so on.
Financial management
Financial management involves sustainable events during which the redistribution and distribution of monetary assets occurs among all participants economic activity. This also includes actions that help increase the economic return from the use of monetary resources.
Following the theory of financial resource management, we can distinguish the components of relationships, such as objects on the one hand and subjects (special services) of management on the other, as well as methods and forms of management, etc.
The monetary resources management apparatus consists of executive (Ministry of Finance, tax organization, customs service) and legislative (President and Government of the Russian Federation) authorities.
Level of economic and economic activity The administrative apparatus is determined by certain forms considered in the plane of organization and law.
Public finance
Public finance is represented by a special formation of a set of financial and economic relations and the distribution of cash flows, the use of which helps the state implement a number of strategically important projects.
Public finance performs certain functions, including:
- distributing;
- controlling;
- regulatory
The structure of the state treasury (budget) includes:
- federal budget;
- budget of the constituent entities of the Russian Federation;
- off-budget funds.
Public finances also include government loans, the taxation system, tax receipts to the treasury and various funds, and the budget regulation system.
Distribution function of finance
Finance, in addition to its secondary functions, has two main ones - distributing and controlling. The distribution function of finance allows the formation of the country's state treasury through the redistribution of national wealth.
The distribution and redistribution of state accumulation is carried out through budgetary sphere. In addition, the financial and insurance markets participate in the redistribution.
In addition, one of the tools for redistributing the state’s national wealth can be past savings, profits from foreign economic activity, and loans.
Signs of finance
Financial relations express some signs of finance. Thus, the basis of finance is always money that can be exchanged for a product or service. In addition, the product directly produced and the services provided by someone are included in financial relations. In addition, finance has characteristics of the distribution of state wealth and management of the country’s financial flows.
A superficial reference to finance and the concept of finance manifests itself in the movement of money. Operations in the financial sector involve the transfer of money from one entity to another, as well as their target orientation. Thus, the main difference between finance and other economic concepts lies in its monetary form (value), which is in constant motion and depends on many economic and political factors.
In addition to the movement of monetary resources, finance is manifested in its distribution function, when money from the budget is directed to social and government needs of prime necessity.
The distribution value of GDP is not only finance, but also wages, prices, loans, etc. Listed categories economic activities have some features that manifest themselves in a specific purpose.
From financial relations, part of the savings is isolated in the form of everything and net income(arrived). Such processes of distribution and redistribution of GDP give rise to special types monetary resources. The peculiarity is that cash flows are formed as a result of the separation of cash savings, with subsequent use for the targeted needs of state and extra-budgetary funds and organizations.
As a result, it turns out that the distribution and redistribution of GDP is associated with the movement of cash flows (resources) in the form of profits, tax deductions, revenues and savings. And this, in turn, forms a specific feature of finance, which consists in the accumulation, isolation and targeted spending of public money.
Decentralized finance
Decentralized finance is the form of monetary relationships between all participants in economic activity, where funds formed outside the borders of the state in general and urban areas in particular are used as money. Decentralized monetary relations act as a certain basis in the financial system, prevailing in state finances.
The concept of decentralized finance includes the financial savings of all subjects of financial and economic activity.
Centralized finance
Centralized finance is a system that generates and spends financial flows for the permanent work of all government bodies. Centralized finances belong to the budget system.
Centralized finance gives rise to finance of public importance, which is managed by various government agencies.
Local finance
The share of local money in the financial system reaches 70%, which depends on the government structure. Thus, the more developed the country, the greater the share of local monetary savings and related relations, which stimulates the work of local authorities.
Today there is a steady increase in local finances, which speaks volumes about the importance of local governments. But economic freedom is still limited for local authorities, who are forced to constantly coordinate their actions with the supreme government, which gives rise to a certain bureaucratic delay.
An integral component of local finances are local budgets, special purpose funds, as well as money from city enterprises.
The structure of the local budget is no different from the central budget. Includes both income and expenses of local authorities. Their actions extend to the administrative territory of the body receiving them.
The formation of the revenue side of the local budget is carried out at the expense of taxes of all economic entities, as well as some part of the income of state-owned companies, subsidies and subsidies from the centralized budget, municipal loans and other sources.
One of the forms of local finance - taxes, is classified into some components that form the local treasury, which, for example, includes many local taxes.
Another component of local taxes determines the state system taxes. Thus, taxes alone serve to replenish the local treasury. Others also generate income, which significantly replenishes the state treasury.
Withholding taxes on gifts and inheritance, on trade and the issuance of special licenses, are sent to the local budget.
Local self-government bodies, having full control over capital real estate, fixed and working capital, generate additional revenues for the local budget. For example, land, municipal swimming pools and roads may be leased. In addition, the local budget is replenished through various levies.
In many countries of the world, a significant percentage of budget replenishment is represented by utility bills, as well as payment for travel on public transport.
However, it is still not possible to finance many government programs. Assistance comes from government subsidies and subventions allocated from the local treasury. Such actions are referred to as subsidies.
Local level budgets are quite independent, but they are constantly forced to pay attention to decisions made by the government. Otherwise, if you act blindly, you may lose the lion's share of subsidies and subsidies, which will negatively affect the economic and investment climate of the region. And this is already fraught with a precarious position for the local authorities themselves.
The lack of money from local treasuries is forcing local government officials to find other ways to finance their projects. In addition to subsidizing the local budget, the practice of obtaining credits and loans is widespread.
The main type of loan is municipal securities (bonds) supplied to the stock market. All operations on stock market strictly controlled by the government. This is due to the fact that manipulations in the stock market affect the value money circulation, which often leads to inflationary surges.
As in the case of financing local projects, the issue of bonds is strictly controlled by the supreme government, which sets a limit on the securities issued. The term of the bonds can be up to sixty years. The longer the period, the more profitable it is for the state. Placement among buyers may occur outside administrative boundaries.
Financial management bodies
The main financial management body in the Russian Federation is the Federal Assembly, the Government of the Russian Federation and the President of the Russian Federation. It is these bodies that make the main decision on approving the budget and reporting the intended use public funds.
The state financial management machine includes the following bodies:
- Committee on Budget, Taxes, Banks and Money of the Executive and Legislative Branches;
- Accounts Chamber;
- Ministry of Finance;
- Central bank;
- State Tax Service;
- Central Bank Market Supervision Commission;
- Ministry of Property.
The key financial management body, forecasts the budget's supply of cash and gold and foreign exchange reserves, both in the short and long term.
The Ministry of Finance is also working to improve legislation in the field of taxes: developing projects, analyzing the impact of the current tax system on replenishing the revenue side of the treasury.
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A leap in the development of financial relations occurred in the twentieth century, especially after the Second World War. The volumes of state budgets have increased significantly; In all countries, part of the national income was nationalized (30...50%). States managing large funds of funds began to have a significant impact on social reproduction. The circle of financial relations has expanded. In particular, the state began to accumulate resources not only from the budget system, but also from numerous extra-budgetary funds. The finance of enterprises has received significant development, the main form of which has become joint stock. The issue of shares is a powerful form of mobilizing monetary capital, transforming monetary savings into productive investments. Stocks, bonds and other financial market instruments allow businesses to overcome the barrier of self-financing and expand their growth opportunities. Enterprise finance services the circulation of huge funds of funds. Therefore, the issues of effective management of enterprise funds[K4] (i.e. financial management). On the other hand, in countries with developed market economies, the activities of enterprises are under strict financial control and are subject to strict legal regulation.
Financial relations cover two areas:
1) economic relations related to the formation and use of centralized state funds accumulated in the state budget system and state extra-budgetary funds;
2) economic relations associated with the circulation of decentralized monetary funds of the enterprise.
Thus, finance is a set of economic relations regarding the formation, distribution, redistribution and use of centralized and decentralized funds of funds in order to perform the functions and tasks of the state and ensure conditions for expanded production .
Finance as an economic category operates within the framework of monetary relations. At the same time, it is important to understand the relationship between the concepts of “financial relations” and “monetary relations”. Any financial relationship is monetary, but not all monetary relationships are financial (Fig. 1.1.).
Rice. 1.1. The relationship between the concepts of “monetary relations” and “financial relations”
Money is a universal equivalent by which the labor costs of producers are measured, while finance is an economic tool for the distribution and redistribution of gross domestic product (GDP) and national income, a tool for controlling the formation and use of funds.
Finance is a set of monetary relations through which the formation, distribution, redistribution and use of centralized and decentralized cash funds. The content of finance includes only those monetary relations that have a specific financial form of value movement associated with the distribution of cash income and savings, the formation and use of certain funds of monetary resources. A distinctive feature of financial relations is the mandatory participation of the state in them. All other types of monetary relations go beyond the scope of financial relations.
Financial relations differ from monetary ones on the basis of equivalence. The movement of money in most cases is accompanied by a counter movement of goods, works or services, i.e. monetary relations are of an equivalent nature. Finances are not intended to create consideration; their movement is not in the nature of compensation.
Money relations arising in the process of exchange “money - goods” act as financial relations. This circulation of money serves not only the commodity market, the service market and the resource market, but also the financial market.
Rice. 1.2. Scheme of the circulation of product and income in a pure market economy (without government intervention)
Rice. 1.3. Circuit diagram of product and income in a modern mixed economy (with government intervention)
Finance has the following characteristics:
1) always add up relative to money or money equivalent;
2) due to the managerial role of the state;
3) are redistribution relations in the sphere of the total social product;
4) are non-equivalent - do not imply mutual exchange;
5) their movement is carried out in the form of financial resources through monetary funds.
These signs together characterize the essence of finance. Their absence will not allow monetary relations to be considered financial; these will be credit relations, wage relations, purchase and sale relations, or other relations, but not financial ones.
The essence of finance is manifested in its functions. Finance performs two functions:
1) distribution (redistribution);
2) control.
These functions are performed simultaneously, that is, each financial transaction involves the distribution of the social product and national income and control over this distribution.
Distributive function Finance manifests itself in the creation of primary, or basic, income, equal in amount to national income. Basic incomes are formed during the distribution of national income among participants in material production and include two groups:
1) wages of workers, employees, income of farmers engaged in the sphere of material production;
2) income of material enterprises.
However, to develop priority sectors of the economy, ensure defense capability and law and order, and meet the material and spiritual needs of society, the formation of primary income is not enough; further redistribution of national income is necessary. Redistribution occurs:
1) between the production sphere and the non-production sphere, in which national income not created (health care, education, culture, etc.);
2) between industries;
3) between territories, regions of the country;
4) between forms of ownership;
5) between social strata of the population.
When redistributing national income, secondary, or derivative, income is formed: income received in the non-productive sphere, taxes, benefits, etc. Secondary incomes make it possible to form the final proportions of the use of national income.
The control function of finance is manifested in control over the distribution of gross domestic product among the relevant funds and their expenditure for their intended purpose. The control function extends to both the material and non-material spheres. It is designed to provide economic stimulation, rational use of all types of resources, reduce unproductive expenses, and stop mismanagement and waste.
One of the most important tasks financial control- checking compliance with legislation when making financial transactions, ensuring the completeness and timeliness of fulfillment of obligations to tax authorities, the budget system, banks, business partners, and employees. The control function is implemented through the work of financial authorities.
On the other hand, the control function of finance is aimed at ensuring the rational use of resources, efficiency financial activities.
In addition, other functions of finance are also called: stimulating[K8], regulating. The regulatory function of finance means state intervention in the process of reproduction through finance (taxes, government spending, government credit). The stimulating function is manifested in the fact that finance can contribute to the development of priority socially significant, useful industries. However, these functions are not manifested strongly enough in the Russian Federation and remain controversial.
The functions of finance are implemented through the financial mechanism, which is part of the economic mechanism. The financial mechanism includes a set of organizational forms of financial relations in the economy, the procedure for the formation and use of centralized and decentralized funds of funds, methods of financial planning, forms of financial and financial system management, as well as legislation on financial issues [K9] .
Financial resources
Finance can be viewed in economic and material aspects. According to the economic content, finance is an economic relationship associated with the formation, distribution and use of centralized and decentralized funds of funds in order to perform the own functions and tasks of the state or local government, as well as delegated powers of the state and ensuring conditions for expanded reproduction, in the process of which distribution is carried out and redistribution of gross domestic product and monitoring of meeting community needs.
In terms of its material content, finance represents the monetary funds of the state, state-territorial and municipal entities, as well as enterprises, institutions, organizations, used to materially support the needs of society and the development of production. The totality of the funds mentioned above represents financial resources .
Financial resources are a set of target funds of funds from the state and business entities, i.e. accumulation [K10] . Financial resources are generated by the state and business entities (enterprises, organizations) through various types of cash income, deductions and receipts (Fig. 1.4) and are used for expanded reproduction, material incentives for workers and meeting various needs of society.
Rice. 1.4 . Sources of financial resources
The main condition for the growth of financial resources is an increase in national income.
Financial resources and finance are not identical categories. Financial resources by themselves do not reveal the essence of finance, their internal content and social purpose. It should be understood that we are not studying financial resources, but social relations that arise regarding the formation, distribution, redistribution and use of resources, as well as the patterns of development of financial relations.
1.3. Financial system: its elements and their relationship
Funds of financial resources are used in various areas of monetary relations, each of which represents a specific channel for the distribution of the corresponding part of the national income. These areas constitute separate but interconnected financial units (institutions). The totality of the links included in finance in their interconnection forms the financial system of the state.
The financial system is a set of different spheres or links of financial relations, each of which is characterized by features in the formation and use of funds, as well as a different role in social reproduction [K12] .
The financial system is a system of forms and methods of accumulation, distribution and use of funds of the state, municipalities, as well as various organizations and sectors of the national economy. The financial system of the state should not be confused with the system of financial institutions - a set of government bodies that carry out financial activities.
Each link of the financial system serves a specific area of distribution and redistribution of national income through the use of specific forms and methods of accumulation and use of state and (or) municipal funds. These features delimit individual links and financial relationships. Each link in the financial system influences public financial activity in a certain way and has its own functions.
Currently, the financial system of the Russian Federation consists of the following links (Fig. 1.5):
1) the budget system, which, in turn, is formed by the federal budget, budgets of the constituent entities of the Russian Federation, local budgets;
2) extra-budgetary state funds;
3) government loan;
4) compulsory state insurance;
5) finances of organizations various forms property, associations, enterprises, institutions, sectors of the national economy.
Rice. 1.5 . Financial system of the Russian Federation
The first four links of the financial system (national finance) relate to centralized finance and are used to carry out public financial activities throughout the state. The fifth element (finances of business entities) refers to decentralized finance, since the finances of enterprises of various forms of ownership have a certain independence, do not have vertical interaction, and after paying all due mandatory payments, enterprises independently manage the remaining profits.
Enterprise finance is the basis of the financial system. They are directly involved in the process of material production. Public finance plays a leading role in the system. The overall financial situation of the country depends on the provision of centralized funds with financial resources. Public finances ensure the pace of development of all sectors of the national economy.
Budget system is the leading link in the financial system of the Russian Federation. It includes the largest funds of funds. The budget system has three levels:
Federal budget;
Regional budgets (budgets of constituent entities of the Russian Federation);
Local budgets (budgets of municipalities).
The budget system is an organizational form of functioning of the budget. The totality of funds included in the budget system acts as a guarantor of the financial sovereignty of the state. Through the distribution of funds through the budget system, the state finances the implementation public functions. The budget is closely interconnected with other parts of the financial system; it is through it that the state’s financial policy is implemented. The budget system is an important element of the socio-economic activities of the state. All types of budgets in the budget system are formed in the process of financial activities of the Russian Federation, constituent entities of the Russian Federation or municipalities. The budget of each level has its own sources of income, strictly defined by budget and tax legislation, as well as objects of expenditure that are subject to mandatory financing.
Off-budget funds are an independent link in the financial system, representing a collection of funds, separate from the budget of the appropriate level, having their own revenue sources and intended to provide material support for strictly defined public purposes.
Extra-budgetary funds are created at all levels and can be state or municipal. These funds are separate from the budget and have a strictly targeted purpose for attracting additional resources to priority sectors of the economy, developing problematic sectors of infrastructure, and implementing social programs. Extra-budgetary funds are especially important for financing socially significant and at the same time the most costly government needs, such as pensions and healthcare.
Extra-budgetary funds are formed through mandatory payments legal entities and citizens, as well as voluntary gratuitous transfers.
State and municipal loans represent a set [K14] of socio-economic relations arising from the receipt by the state (municipal entity) or placement by the state ( municipality) funds, as well as relations for the provision of government guarantees.
Compulsory state insurance represents a relationship for the protection of property and related non-property interests of individuals and legal entities upon the occurrence of certain events (insurance events) at the expense of monetary funds formed from insurance contributions (insurance premiums) paid by these persons [K15].
Insurance as a link in the financial system includes only those relations in which the state is necessarily a participant. The development of insurance as a link in the financial system in the block of centralized finance is due to the presence of a social function in the state and, therefore, the principle of social orientation of financial activities (for example, pension and medical support, payment of unemployment benefits, insurance of military personnel, workers law enforcement, doctors of certain specialties, etc.). Financing of such expenses is carried out through the formation of insurance funds and their subsequent [K16] distribution. Financial activity in the insurance sector is one of the ways to accumulate additional funds for state income. Insurance premiums citizens and legal entities mobilized into funds are spent exclusively upon the occurrence of an insured event. At the same time, cases that entail the need to pay the insured amount do not always occur; then the state has the opportunity to direct the funds accumulated in this way to materially support other public needs or to finance capital investments.
Finance of business entities represent monetary relations that develop between economic entities (enterprises, organizations) during the formation, movement and use of fixed and working capital, intangible assets and financial resources (including decentralized funds of funds) of enterprises. The financial system covers the finances of enterprises of all forms of ownership. As a link in the financial system, enterprise finance closely interacts with its other links.
Based on the integrity, flexibility, dynamism and openness of the financial system, the basic rule of its activity (system theory) was derived: One should always strive for the financial stability of the system as a whole, and not of certain of its links and sub-institutions. This rule involves strengthening and deepening the connections of the financial system with the external environment, as well as the constant exchange of information.
Lecture 2.
Financial management, financial policy
and financial control
2.1. Financial management.
Financial management bodies, their functions
In the Russian Federation, financial management is carried out primarily by legislative authorities:
1. The Federal Assembly and its two chambers: the State Duma and the Federation Council. Their management is manifested when considering the draft budget and its approval, as well as when considering and approving the report on budget execution, when considering financial laws (on taxes and fees, tariffs for contributions to social extra-budgetary funds, etc.), when setting the maximum amount state internal and external debt.
2. Ministry of Finance of the Russian Federation and its local authorities.
The most important departments of the Ministry of Finance of the Russian Federation: Budget Department; sectoral departments of industrial finance, construction and construction industry, transport systems and communications, Agriculture, Food Industry and nature conservation, defense complex, etc.; foreign loans and external debt, government securities and the financial market, etc. An important division is the Main Directorate of the Federal Treasury, which is responsible for the cash execution of the budget.
The functions of the Ministry of Finance of the Russian Federation are as follows:
Participation in the work of drawing up long-term and short-term forecasts for economic development, determining the need for state centralized financial resources, preparing proposals for the distribution of these resources between the federal budget and state extra-budgetary funds;
Organization of work on drawing up a draft federal budget, a forecast of the consolidated budget of the Russian Federation, development of draft standards for deductions from federal taxes, fees, amounts of subsidies and subventions from the federal budget to the budgets of the constituent entities of the Federation;
Ensuring the execution of the federal budget and the budgets of state extra-budgetary funds;
Participation in the development of proposals to improve tax policy and the tax system;
Participation in the development of pricing policy;
Participation in work to improve insurance activities in the country;
Development of proposals for the issue of government internal loans of the Russian Federation;
Development of proposals for the development of the financial market in the Russian Federation;
On behalf of the Government of the Russian Federation - cooperation with international financial organizations;
Development of draft programs for external borrowings of the Russian Federation.
The main tasks of the Ministry of Finance of the Russian Federation:
Drafting and execution of the federal budget;
Ensuring the sustainability of public finances and their active impact on the socio-economic development of the country, on the implementation of measures to develop the financial market;
Concentration of financial resources in priority areas of the country's socio-economic development;
Development of proposals for attracting foreign loans to the Russian economy;
Improving methods of budget planning, financing and reporting;
Exercising financial control over rational use budget funds and funds from state extra-budgetary funds.
3. Tax authorities responsible for the correct calculation, completeness and timely payment of mandatory payments to the budget.
4. Customs authorities responsible for the collection of customs duties.
In modern conditions, it is of utmost importance financial management - effective management of resources of enterprises of various forms of ownership .
Key issues of financial management:
Planning and forecasting of financial aspects of the enterprise;
Making the most informed and appropriate decisions regarding the investment of funds;
Coordination of the financial activities of the enterprise;
Conducting operations on the financial market to mobilize additional capital, sell own shares and bonds.
The main methods of financial management are: forecasting, planning, taxation, self-financing, lending, settlement system, depreciation system, incentive issues, financial sanctions system.
The lecture notes meet the requirements of the State educational standard for higher professional education. Accessibility and brevity of presentation allow you to quickly and easily gain basic knowledge on the subject, prepare for and successfully pass tests and exams. The content, functions, socio-economic essence of finance, the monetary system of Russia, the importance of the budget in the development of the economy and social sphere, current state off-budget redistribution of financial resources, as well as finances of business entities and much more. For students of economic universities and colleges, as well as those who independently study this subject.
LECTURE No. 1
The essence and functions of finance
1. The emergence of finance
Finance appeared simultaneously with the emergence of the state during the stratification of society into classes. With the decomposition of feudalism and the development in its depths of the capitalist mode of production, monetary income and expenses of the state began to acquire increasing importance.
In the early stages of the development of the state, there was no distinction between the resources of the state and the resources of its head.
With the allocation of the state treasury and its complete separation from the property of the monarch (XVI-XVII centuries), the concepts of public finance, state budget, and state credit arise.
Public finance served as a powerful lever for the initial accumulation of capital.
Government loans and taxes were widely used to create the first capitalist enterprises. An important role in the creation of initial capital belonged to the system of protectionism, which allowed the first capitalists to set high prices for manufactured industrial products and receive high profits, which were largely used to expand production.
Under capitalism, when commodity-money relations become all-encompassing, finance expresses economic relations in connection with the formation, distribution and use of funds of funds in the process of distribution and redistribution of national income.
The fixed assets of capitalist states began to be concentrated in the state budget.
The public finances of capitalist countries are characterized by rapid growth in expenditures, which is primarily due to the increased militarization of the economy. Military purposes, repayment of public debt and interest on it accounted for more than 2/3 of all government spending. Huge funds were allocated for maintenance state apparatus- parliament, ministries, departments, police, prisons, etc. The costs of education and healthcare were extremely low. The main source of income was taxes.
By the beginning of the 20th century. the state began to participate in the process of production, distribution and use of the social product.
Democratization public life in a developed market economy has led to the fact that in a number of small countries in Western Europe (Sweden, Norway, etc.) the costs of social goals became one of the main ones. This is where the concept of the “Swedish model of socialism” arose.
State intervention in the economy has developed significantly. It began to actively help its country's monopolies in intense competition in the world market, providing export firms with so-called export bonuses.
Intervention in the reproductive process and sphere social relations carried out not only at the national, but also at the interstate level.
Interstate funds of funds were created to finance agriculture, overcome unemployment, retrain and redeploy the workforce, and overcome significant imbalances in the development of individual regions.
New government spending has appeared: on security environment, overcoming the economic backwardness of certain areas, providing subsidies and loans to developing countries.
Huge expenses necessitate an increase in taxes - the main financial method of mobilizing resources into state and local budgets.
However, despite the increase in taxes, the accumulated revenues are not enough to cover the ever-increasing government expenses.
The budgets of all countries are characterized by large chronic deficits, covered by government loans, the issue of which entails an increase in public debt.
2. The essence of finance
Finance as a scientific concept is usually associated with processes of various forms that manifest themselves in public life and are necessarily accompanied by the movement of funds (distribution of profits, transfer of tax payments, making extra-budgetary and charitable payments).
Cash flow in itself does not reveal the essence of finance. To comprehend it, it is necessary to identify those general properties that characterize the internal nature of all financial phenomena - the relationships between various participants in social production.
Finance, expressing production relations that actually exist in society, having an objective nature and a specific social purpose, acts as an economic category.
An important feature of finance is the monetary nature of financial relations. Money is a prerequisite for the existence of finance.
The next feature of finance as an economic category is the distributive nature of financial relations.
The distribution and redistribution of value with the help of finance is necessarily accompanied by the movement of funds, taking a specific form of financial resources, which are formed by business entities and the state through various types of cash income, deductions and receipts, and are used for expanded reproduction, material incentives for workers, and satisfaction of various needs society.
Potentially, financial resources are formed at the production stage, when new value is created and old value is transferred. In reality, the formation of financial resources begins only at the distribution stage, when the value is realized and specific economic forms of the realized value are identified as part of the proceeds.
The use of financial resources is carried out mainly through financial funds for special purposes.
Financial relations are always associated with the formation of cash income and savings, which take the form of financial resources. This is an important specific feature of finance, distinguishing it from other distribution categories.
So, finance is the monetary relations that arise in the process of distribution and redistribution of the value of the gross social product and part of the national wealth in connection with the formation of monetary income and savings among business entities and the state and their use for expanded reproduction, material incentives, satisfaction of social and other needs of society.
3. Functions of finance
The essence of finance is manifested in its functions. Finance performs two main functions: distribution and control. These functions are carried out by finance simultaneously. Each financial transaction means the distribution of social product and national income and control over this distribution.
When the creation of so-called basic or primary income occurs, it manifests itself distribution function. The amount of income is equal to national income. Basic incomes are formed through the distribution of national income among participants in material production. They are divided into two groups:
1) wages of workers, employees, income of farmers, peasants employed in the sphere of material production;
2) income of enterprises in the sphere of material production. Primary incomes do not form public money
funds sufficient for the development of priority sectors of the national economy, ensuring the country's defense capability, and meeting the material and cultural needs of the population. Further distribution or redistribution of national income is needed.
The redistribution of national income is associated with: intersectoral and territorial redistribution of funds in the interests of the most efficient and rational use of income and savings of enterprises and organizations; the presence, along with the production non-production sphere, in which national income is not created (education, healthcare, social insurance and provision, management); redistribution of income between different social groups population.
As a result of redistribution, secondary, or production, income is formed. These include income received in non-productive sectors, taxes (income tax individuals and etc.). Secondary incomes serve to form the final proportions of the use of national income.
Income created during redistribution must ensure correspondence between material and financial resources and, above all, between the size of monetary funds and their structure, on the one hand, as well as the volume and structure of means of production and consumer goods, on the other.
The control function is manifested in control over the distribution of gross domestic product among the relevant funds and their expenditure for their intended purpose.
One of the important tasks of financial control is to verify compliance with financial legislation, timely and complete fulfillment of financial obligations to the budget system, tax service, banks, as well as mutual obligations of enterprises and organizations for settlements and payments.
The distribution and control functions of finance are implemented through the financial mechanism, which is part of the economic mechanism. The financial mechanism includes a set of forms of financial relations in the national economy, the procedure for the formation and use of centralized and decentralized funds of funds, methods of financial planning, forms of financial and financial system management, and financial legislation.
Finance, participating in the distribution of value, is closely connected and interacts with such categories as price, wages, and credit.
In order for the process of formation and distribution of various forms of monetary income and savings to begin, the value generated in production must be realized. The economic instrument through which the value of a product receives monetary expression and becomes an object of distribution is price.
Being a quantitative measure of the value created in production, its monetary expression, the price predetermines the proportions of the future cost distribution, but itself cannot ensure either distribution among property subjects or functional isolation of different parts of value. This is highlighted at the exchange stage with the help of finance and wages. It is thanks to them that, in the process of primary distribution, different kinds cash income, savings and deductions.
Wages as a form of distribution are determined by the need to generate income for specific workers. As an economic category, wages express value relations that arise as a result of the division of newly created value when creating individual incomes that go to workers depending on the quality and quantity of labor expended.
Finance is at the disposal of business entities and the state and is intended to satisfy various social needs. But they are closely related to each other: on the one hand, finance contributes to the formation of the wage fund, on the other hand, wages, the accrual of which does not coincide with payment in time, act as a source of creating part of the financial resources of the enterprise, taking the form of stable liabilities.
Being in the turnover of the enterprise between accrual and payment, wages act as a source of formation of working capital.
Credit also participates in the distribution of costs. Finance and credit have the same economic basis, but unlike finance, credit operates on the terms of repayment and payment.
The main objects of the complex impact of finance and credit on the reproduction process are fixed assets and working capital.
Based on the relationship between finance and the most important economic categories, it is necessary to attach special importance to the issues of financial management, i.e., the most effective management of financial resources.
5. Financial management
In economically developed countries, the greatest impact on the finances of enterprises is exerted by: the internationalization of economic life, the globalization of business transactions and the expansion of computer technology.
Computer and telecommunications technologies are dramatically changing the financial decision-making process. The parent companies are provided with the system personal computers, united local network, with computer suppliers and rakers. This allows the financial manager to constantly be aware of all information and make the most rational decisions.
Main tasks of financial management:
1) maximization of real assets and liabilities of enterprises;
2) forecasting the financial side of enterprises’ activities. Business plans are drawn up for production volume, product sales, profit, capital investments, implementation of new management decisions and financial resources to support them;
3) making appropriate decisions when investing large funds (optimal growth rates of sales volume, structure of funds raised, methods of mobilizing them, etc.);
4) coordination of the financial activities of enterprises with other services (bank, tax department, etc.);
5) carrying out large transactions in the financial market for
mobilization of additional capital.
Financial management is also of great importance for public finances, including the budget system and extra-budgetary funds.
In connection with the transition to market relations There is a trend towards significant decentralization of financial resources. The development of extra-budgetary funds leads to the dispersal of funds, does not allow for their mobile use, concentration on priority areas of economic development, and weakens control over the expenditure of public funds. Therefore, it is necessary to pay special attention to the development of financial management, on the basis of which financial policy should be built.
6. Financial policy
The main task of financial policy is to provide appropriate financial resources for the implementation of a particular program of economic and social development. Financial policy is a set of government measures aimed at mobilizing financial resources, their distribution and use for the state to perform its functions.
Financial policy is an independent sphere of state activity in the field of financial relations. It includes three main elements:
1) identification and setting of main goals and specification of further and immediate tasks that need to be solved to achieve the set goals over a certain period;
2) development of methods, means and forms of organizing relations in which these goals are achieved in the shortest possible time, and immediate and long-term problems are solved in an optimal way;
3) selection and placement of personnel capable of solving the assigned tasks and organizing their implementation. Financial policy is assessed by how much it corresponds to the interests of society and how much it contributes to achieving set goals and solving specific problems.
To determine and formulate financial policy, reliable information about financial situation the state, its financial potential, i.e. the objective capabilities of the state.
During evolutionary development social life and a stable state structure, the internal and external financial policies of the state solve one main task - ensuring the preservation and strengthening of the existing system of social relations in a given state. During the period of revolutionary changes, political forces pursue policies aimed at destroying the existing one and forming new system public relations.
The role of financial policy at critical moments in life is difficult to overestimate, since first of all there is a radical redistribution of financial resources.
Primary challenges facing modern financial policy Russian state, - fighting inflation, overcoming the decline in production, increasing social security of the population.