President of Russia Vladimir Putin: Mr Kudrin, we have met for a good reason, the 25th anniversary of the Accounts Chamber. It has a vital role to play in the system of state governance, for it monitors government spending while working directly with the Government, the State Duma and the Presidential Executive Office. We meet regularly to discuss issues of major interest and national significance.
I strongly hope that the Accounts Chamber will take, just as we have agreed, an even broader look at its objectives, or more precisely, that in this situation it will also monitor the implementation of national projects.
I know that this often provokes disputes with the Government and some experts, but I believe that it is an absolutely natural process without which we cannot and will not find the necessary solutions. In other words, I would like to congratulate you on the anniversary and to wish all the best to you and to the Accounts Chamber. Please, convey my best regards to your colleagues.
Chairman of the Accounts Chamber Alexei Kudrin: Thank you, Mr President. It will be my pleasure to convey your regards and best wishes to all personnel of the Accounts Chamber.
The system of auditor and financial comptroller, which exceeds the limits of the Accounts Chamber, includes the control and audit bodies and chambers of the constituent entities of the Russian Federation. We believe that greetings should be conveyed to them as well, because all of us have the same goals in the system of financial control.
The system of financial control has been overhauled over the past 10 years. In addition to the Accounts Chamber, there is also the Treasury of the Russian Federation, which is part of the executive branch. There are also internal financial control bodies at each ministry, agency and state corporation, as well as control and audit bodies of the constituent entities of the Russian Federation. Today this streamlined system of financial control is producing the desired results and monitoring the efficient use of state resources.
But now the Accounts Chamber also monitors, as you said, the achievement of the country’s strategic goals and the implementation of national projects, including the quality of this process. To ensure the implementation of national projects, we have been working with the control and accounts chambers of the constituent entities of the Russian Federation when it comes to regional national projects and state programmes that are part of the national projects. This is why I am talking about an integral system.
I would like to say that Sergei Stepashin and Tatyana Golikova did a great deal to upgrade the system of financial control over the past 10 years. Each of them greatly contributed to this improvement.
We have entered the international stage. You attended the opening of the INTOSAI Congress, which unites the accounts chambers of all the states. The congress participants adopted the Moscow Declaration, which set out the principles of external oversight by other states’ accounts chambers in the next 10 years at the least. The Moscow Declaration was adopted nearly unanimously and will serve as a guideline for all the states concerned.
We have conducted a voluntary analysis the accounts chambers in the majority of constituent entities of the Russian Federation and have revealed such drawbacks as a lack of their connection to modern information systems. We outlined the problem to the governors, and since then the majority of accounts chambers have been connected to information systems. Only six regions have not been connected yet, which means that they do not comply with modern standards and trends.
Also, the regional accounts chambers did not always have the right to assess regional state programmes. We believe that they must have this right. Accounts chambers have been made part of strategic planning and so they must have the right to make such assessments.
Furthermore, we at the Accounts Chamber are not only increasing the share of strategic audit, that is, the assessment of the efficiency and the attainment of targets of state programmes that are part of national projects. We have also adopted a new approach: we not only assess, offer criticism or wait for the fulfilment of our requests. We have pinpointed the strategic goals that are the most difficult to achieve, and we are monitoring the process by holding several inspections within a period of 12–24 months.
Take such a big problem as the provision of housing to orphans. Today we need housing for the 170,000 orphans who are entitled to this. We proposed a solution and took it up with the Government, for the umpteenth time, and eventually we have formulated, together with the Government, a solution that can be implemented within a few years.
Or take the problem of unfinished construction projects.
The volume of such projects grew until last year. It means the freezing of resources. We are working with the Government now to finalise proposals regarding the inventory of such projects and solutions to this problem. The situation is already improving. The methods we are using now include not only identifying a problem but also finding a solution, rather than just punishing those responsible for creating it.
One such problem is the export of raw timber.
Vladimir Putin: Do you mean round timber?
Alexei Kudrin: Yes, it is round timber, basically.
We have traced the entire chain from felling to export and revealed a number of problems, including in the customs sector, when it comes to export declarations. We have forwarded our conclusions to law enforcement agencies, which are working on them.
Today we are considering methods to encourage the use of idle land and land whose ownership has not been formalised. You issued instructions in this regard to the Government, which is preparing a programme for encouraging the use of idle land because it is an economic growth factor.
In addition to the matters we will monitor on a regular basis in the next few years, we will also review the efficiency of state companies and corporations to see whether they are capable of attaining the strategic goals set to them and implementing the strategies adopted by their supervisory boards. We will analyse the quality of corporate governance, the system of acquisitions and the adoption of property decisions, which are not easily seen at the second, third of fourth levels of this system, given these companies’ pyramid of affiliates.
In the near future, we will continue to monitor Rosatom, Rosavtodor and RZD, and we will also set our sights on Rostec, Gazprom and Rosneftegaz. Our goal is to make state companies more efficient to the benefit of the national economy.
To sum up, I would like to thank you once again for your positive attitude to the Accounts Chamber. We receive your resolutions regarding our materials, and we use them to prepare new embracing proposals to improve the financial system and enhance its efficiency. As for violations, we will be working mostly to prevent them or to ultimately reduce their number. It is often said that we reveal violations estimated at hundreds of billions of rubles, but most of them are not the result of embezzlement but rather accounting malpractice.
Vladimir Putin: This is inefficiency.
Alexei Kudrin: Yes, including violations of the purchasing procedure. We will continue to monitor this, but we need to focus on the system-wide issues we must change. In this context, we have produced 1,130 conclusions regarding regulations over the past year alone. It is also a big part of our work. In other words, we will continue working in several spheres.
Vladimir Putin: I expect you to continue to improve your performance. I wish you success.
Alexei Kudrin: Thank you very much.