MECHANISMS FOR ENSURING COMPENSATION FOR DAMAGES CAUSED TO THE BUDGET FOR THE PRACTICE OF PUBLIC FINANCIAL CONTROL ENTITIES IN UKRAINE

Abstract

Ensuring compensation for damages to Ukraine’s state budget remains a pressing issue, particularly due to the persistent gap between identified losses and amounts actually recovered, despite ongoing reforms. The study aims to analyze and systematize the mechanisms employed by public financial control bodies to secure recovery, identify shortcomings in their application, and substantiate directions for improvement. The research methods include qualitative analysis of the legal, institutional, and procedural framework; functional classification of recovery instruments (administrative requirements and sanctions, judicial remedies, budgetary reallocation, and voluntary pre-trial compensation); and quantitative assessment of effectiveness using the proposed “Recovery Rate (%)” indicator based on the State Audit Service’s annual reporting. The findings show a substantial improvement in recovery performance over 2022–2025: the Recovery Rate increased from 1.1% (2022) to 35.1% (2025). However, a considerable share of losses remains unrecovered, indicating persistent constraints related to enforcement and follow-up. The study highlights key limiting factors, including lengthy court proceedings and weak enforcement of court decisions, insufficient preventive controls, and fragmented oversight caused by inadequate interagency coordination and data exchange. The practical value of the article lies in recommendations to strengthen the regulatory and enforcement toolkit, institutionalize interagency cooperation (including integrated data platforms and joint task forces), expand preventive control through PIFC instruments (risk-based approaches, a dedicated PIFC web portal, and delegated managerial accountability), and develop human capacity through targeted training and professionalization initiatives. The article’s novelty lies in linking the set of recovery mechanisms to a unified, comparable effectiveness metric and in conceptualizing recovery as a chain that requires coordinated preventive and reactive measures. The results can be used by audit and control bodies to monitor recovery performance and to prioritize corrective actions and institutional improvements.