STATE MECHANISMS OF CONTROL, AUDIT AND PERFORMANCE EVALUATION OF THE USE OF BUDGET FUNDS AT THE LOCAL LEVEL

Abstract

The article substantiates directions for improving state mechanisms of control, audit and
performance evaluation of local budget expenditure under martial law, fiscal decentralisation and the
growing responsibility of territorial communities for public service delivery. The current Ukrainian
framework combines treasury controls, managerial internal control, internal audit, state financial audit,
inspections, public procurement monitoring, programme performance evaluation, oversight by local
councils and public scrutiny. However, these components frequently operate as separate procedures and
do not form a continuous decision-making cycle. Structural-functional, comparative, statistical and casestudy methods were applied to map institutional responsibilities across the stages of the budget process
and to assess recent fiscal and audit evidence. The dynamics of general-fund local budget revenues in
Ukraine and Ivano-Frankivsk region for 2016-2025 were examined together with the results of State Audit
Service control activities. Particular attention was paid to Ivano-Frankivsk region and the cases of Kalush
and Kolomyia territorial communities. The analysis identifies recurrent risk areas: incomplete mobilisation
of land and municipal property revenue, weak expenditure planning, output-focused performance
indicators, poor alignment between budget programmes and strategic priorities, delayed implementation
of audit recommendations, and limited professional capacity in smaller communities. A risk-oriented
model of a continuous management cycle is proposed. It links risk identification, preventive control,
implementation monitoring, performance audit, corrective managerial action and public verification of
results. A balanced set of indicators is developed for legality, economy, efficiency, effectiveness, service
quality, transparency and implementation of recommendations. The practical value of the proposed
approach lies in its direct applicability by local executive bodies when developing budget-risk registers,
planning internal audit assignments, revising programme passports, prioritising external audit attention
and publishing community performance reports. The model shifts the emphasis from detecting violations
after resources have been spent to preventing losses and demonstrating the public value generated by
each budget programme.