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CURRENT STATUS OF FINANCIAL CONTROL IN THE CONTEXT OF
DEVELOPMENT OF THE DIGITAL ECONOMY IN THE NATIONAL ECONOMY.
Turgunov Bakhtiyor Nuriddinovich
Senior lecturer of the Department of Economics,
Namangan branch of Tashkent International University of Chemistry
Abstract:
This article analyzes the current state of financial control in the national economy in the
context of the digital economy. At a time when digital technologies are rapidly developing, the
updating of financial control methods and mechanisms, their compliance with modern
requirements, is of particular importance. The article presents the institutional foundations of the
financial control system in the conditions of Uzbekistan, the problems encountered in the process
of digitalization, and recommendations for their solution. It also highlights the prospects for
digitalization of financial control based on advanced foreign experience.
Keywords:
digital economy, financial control, digitalization process, budget control, fiscal policy,
economic security, public finance, audit, control system, economy of Uzbekistan, financial
monitoring, modern technologies, digital transformation, fight against corruption, financial
transparency.
In today's era of globalization and technological progress, the digital economy is deeply penetrating
all spheres of human activity. In particular, digitalization processes are being implemented at a
rapid pace in public finance and economic management systems. At the same time, these changes
also require a new approach to the financial control system. In the digital economy, financial
control plays an important role not only in ensuring the targeted and effective use of budget funds,
but also in ensuring economic security and transparency.
In the Republic of Uzbekistan, in recent years, digital transformation processes have been actively
introduced into the public finance management system. This article analyzes the current state of
financial control in this process, the problems encountered, and ways to overcome them. It also
considers the prospects for further improving financial control in our country based on advanced
foreign experience.
At this point, it would be appropriate to touch upon the history of the application of financial
control forms in Uzbekistan.
The financial control system in Uzbekistan has been gradually taking shape since independence,
that is, since 1991. In the early years, the main forms of financial control were aimed at controlling
state budget expenditures, monitoring tax revenues, and ensuring the rational use of state property.
1992 and 2000, financial control was mainly carried out through traditional audits, revisions, and
financial inspections. During this period, the financial control departments of the Ministry of
Finance acted as the main competent bodies.
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Since the 2000s, in the process of modernization of the economy, laws have been adopted that
legally regulate auditing activities. In particular, the Decree of the President of the Republic of
Uzbekistan No. PF-6300 dated August 27, 2021 " On measures to further improve the state
financial control system " Decree , the new edition of the Law "On Auditing Activities" in 2007
laid the foundation for the formation of the audit institution as an independent form of financial
control.
In the 2010s, forms such as internal audit, state financial control, operational monitoring, and
targeted analytical control began to be used more widely. During this period, forms of financial
control became specialized by sector and region.
After 2020, the forms of financial control have changed fundamentally based on the digitalization
policy. Traditional document checks have been replaced by advanced forms such as electronic
monitoring, digital audit, real-time financial analysis. The introduction of electronic information
systems for public procurement, tax revenues, and budget expenditures has accelerated these
changes. As a result of studying the current state of financial control in Uzbekistan, we can observe
that large-scale measures are being taken to reform this area, but despite this, the volume and
number of cases being detected are increasing .
This, in turn, indicates that the government, ministries, and departments should pay close attention
to the financial control sector , and that its legally secured infrastructure should be created based on
modern technologies.
In our opinion, financial control should not be limited to the distribution of available funds, their
targeted spending, and their focus on the efficiency of their use, but should also encompass the full
formation of revenue funds, which are important for the formation of various funds.
Below, the results of tax audits conducted from January to October 2024 based on social media
data show that the amount of tax risk identified in the risk analysis program was 3,834.8 billion
soums, while in reality, 4,841.4 billion soums were identified as a result of tax audits, of which the
amount of tax due was 3,150.3 billion soums, and 1,125.6 billion soums were paid by taxpayers.
At the same time, as a result of an audit conducted at 553 entities, it was revealed that the tax base
of 8,360.3 billion soums was hidden, of which 266 entities understated the amount of goods sold
worth 2,512.5 billion soums, 172 entities did not have goods worth 2,714.2 billion soums in
warehouses, and 115 entities stored and sold undeclared goods worth 3,133.6 billion soums.
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As a result of tax audit control measures carried out during this period, a total of 4,605.6 billion
soums of tax payments were calculated and paid to the budget, as well as cases of concealment of
the tax base were identified. We can see that the largest share of these financial errors and
shortcomings was 3,424.7 billion soums or 70.7 percent for trade and catering enterprises, 460.9
billion soums or 9.5 percent for construction organizations, 330.0 billion soums or 6.8 percent for
the manufacturing sector, and 404.9 billion soums or 8.4 percent for the service sector.
This data analysis highlights the need for wider use of digital financial control technologies for the
complete and accurate calculation and payment of budget and extrabudgetary funds by tax entities.
We can also see that the results of inspections conducted to study the state of the public
procurement sector, such as in a number of sectors, in terms of the values purchased for their needs
by entities that receive funds from the budget, show that there are cases of spending funds in this
area in violation of a number of legislative requirements.
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The results of monitoring conducted in the field of public procurement in 2024 alone showed that
out of 273 public procurements worth 552.5 billion soums studied, 234, or 85 percent, were
conducted illegally and their results were canceled.
257 submissions were submitted to ministries and departments regarding the identified cases,
including 52 to the Ministry of Health, 32 to local government bodies, 30 to the Ministry of
Transport, 23 to the Ministry of School and Preschool Education, 18 to the Ministry of Higher
Education and Innovation , 14 to the Ministry of Water Resources, and a total of 88 submissions
were sent to other ministries and departments to eliminate the identified financial violations and
prevent such cases in the future.
Based on the results of the monitoring, 273 questionnaires were sent to law enforcement and
supervisory authorities, and 104 of those who violated legal requirements were brought to
administrative and 85 to disciplinary liability.
In addition, despite the implementation of large-scale financial control measures, we can see that
financial violations in this area, especially errors and shortcomings in the spending of budgetary
and extra-budgetary funds, are increasing.
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the available data on violations and other errors and omissions identified by the State Financial
Control Inspectorate of the Ministry of Finance, i.e. the dynamics of the 1st half of 2020 and the
1st half of 2021 , we can see that in this reporting period, i.e. the 1st half of 2021, the number of
financial violations and other errors and omissions by ministries and departments increased
compared to the corresponding period of the previous 2020.
In particular, we can observe that in the first half of 2021, violations and errors worth 65.2 billion
soums were identified in the Ministry of Public Education, which is an increase of 43.7 billion
soums compared to the same period in 2020, in the Roads Committee by 59.2 billion soums, in the
Ministry of Preschool Education by 52.2 billion soums, in the Single Customer Service engineering
companies by 51.8 billion soums, in the Ministry of Health by 27.6 billion soums, and in the
Ministry of Housing and Communal Services by 23.2 billion soums.
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Also, when analyzing the dynamics of violations and other errors identified in the targeted
spending of local budget funds as a result of financial controls, we can observe that the number of
violations in the spending of budget funds in the first half of 2021 has significantly increased
compared to the same period in 2020.
The largest number of financial violations occurred in the Syrdarya region, which increased by
52.8 billion soums in the first half of 2021, or by 51.2 billion soums compared to the same period
in 2020, in the Andijan region by 33.2 billion soums, or by 24.2 billion soums compared to the
same period in 2020, in the Republic of Karakalpakstan by 23.6 billion soums, in the Jizzakh
region by 22.8 billion soums, in the Tashkent region by 17.9 billion soums, in the city of Tashkent
by 13.2 billion soums, and in the Fergana region by 15.2 billion soums.
Analysis of the dynamics of this data shows that, along with the expansion of the scope of financial
control measures being carried out, the spending of budget and extrabudgetary funds being formed
and allocated, despite the launch of a number of software packages in the field of public
procurement and other financial services, creates the need to introduce and widely use new modern
digital technologies based on world practice in a way that eliminates the human factor.
Thus, if we consider the current organizational state of financial control in Uzbekistan, the forms of
financial control have historically gone the way from simple control, i.e. inspections and audits, to
digital audits, and are currently being improved based on modern economic requirements.
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1. The relationship between the digital economy and financial supervision
The digital economy is a modern economic model based on information and communication
technologies, encompassing real and virtual economic activities. One of its main features is the
ability to manage the flow of information quickly, accurately and transparently. Financial control is
a key tool in ensuring economic stability, financial discipline and transparency.
As the digital economy develops, financial control also requires new forms and mechanisms.
Traditional control methods are no longer sufficient in this area. Therefore, online monitoring of
financial transactions, the introduction of automated audit systems, and the use of artificial
intelligence and blockchain technologies are becoming increasingly relevant.
2. Current status of the financial control system in Uzbekistan
The financial control system in the Republic of Uzbekistan is an integral part of the state financial
system and is implemented by bodies such as the Ministry of Finance, the Accounts Chamber, and
the State Financial Control Inspectorate . In recent years, the following achievements have been
made:
Implementation of the "Taxpayer" and "Government Procurement" electronic platforms;
Monitoring the movement of budget funds through the "Electronic Budget" system;
Pilot introduction of digital audit methods;
The Open Budget project aims to ensure transparency in public finances.
However, there are still problems in the system that need to be resolved:
Incomplete automation of financial control processes;
Weak regional and cross-sectoral coordination;
Low level of information systems integration;
Lack of qualified digital personnel.
3. Advantages of using digital technologies in financial control
Digital technologies improve the financial control process in the following ways:
Speed and accuracy: Ability to capture and analyze data in real time;
Transparency: Providing open information on costs and financial flows;
Error Reduction: Increase accuracy by reducing the human factor;
Combating corruption: Detecting illegal activities through automated monitoring systems.
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For example, in the field of public procurement, the use of digital technologies has increased the
openness of procurement processes and resulted in savings in budget funds.
4. Foreign experience and recommendations for Uzbekistan
In many developed countries of the world (for example, Estonia, Singapore, the Republic of Korea),
financial control is fully digitalized. In these countries, financial flows are analyzed using artificial
intelligence, and incorrect expenses are identified using automatic audit algorithms.
The following recommendations are important for Uzbekistan:
Creation of a single information platform for financial supervisory authorities;
Introduction and standardization of digital audit methodologies;
Development of special programs to train qualified IT specialists;
Improving information exchange between the public and private sectors;
Implementation of blockchain, artificial intelligence and big data technologies.
In conclusion, improving the financial control system in the context of a digital economy is a
pressing need. Although certain results have been achieved in this regard in the Republic of
Uzbekistan, there is a need for deep digitalization of the system, widespread introduction of
automated control tools, and strengthening the integration of information systems.
The organization of financial control based on digital technologies not only ensures targeted and
effective spending of budget funds, but also serves the implementation of strategic goals such as
economic security, transparency, and the fight against corruption. Also, the study of advanced
foreign experiences and their adaptation to the national system are important factors in developing
effective solutions in this area.
In the future, the quality and reliability of financial management can be significantly improved by
managing financial control on the basis of modern digital platforms, using artificial intelligence,
blockchain, and big data technologies.
References:
1. Decree of the President of the Republic of Uzbekistan No. PF-5978 dated April 28, 2020 "On
the Strategy "Digital Uzbekistan - 2030".
2. Official website of the Ministry of Finance of the Republic of Uzbekistan — www.mf.uz
3. Annual reports of the Chamber of Accounts (2022–2024).
4. Law of the Republic of Uzbekistan "On Electronic Government".
5. Bobokhujaeva GT, Juraev AS Fundamentals of the digital economy. – Tashkent: Economics,
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2021.
6. Akhmedov Sh., Komilova Z. Financial control and audit. – Tashkent: Economics and Finance,
2022.
7. World Bank. "Digital Economy for Central Asia: Opportunities and Challenges." Washington,
2021.
8. OECD (2020). "Digital Government Index 2020: Overview of Key Indicators."
9. PwC Global. "The Future of Financial Auditing in the Digital Age." – www.pwc.com
10. Deloitte Insights. "AI and Blockchain in Public Sector Financial Control." –
www2.deloitte.com
11. UNDP Uzbekistan. "Digital Governance in Uzbekistan: 2023 Review."
12. Karimov B. Public finance management system. – Tashkent: Iqtisad-Maliya, 2023.
13. IMF (2022). "Public Financial Management Reform and Digitalization."
14. Official website of the Statistical Agency – www.stat.uz
