UDC 657.44.3

Zhytnyy Pavlo Yevhenovych Doctor of economic sciences, professor

Lukyanova Olena Yuriyivna Philosophy doctor in economic science

Financial and industrial system bank accounting and control processes organization

Business growth which is based on financial and industrial capital merger complicates economic processes management and requires specific cash flow centralization and control. There is needed to implement special cash management inner center to solve this problem. Banking institution becomes such kind of a center for financial and industrial systems (FIS).

Bank is the very link that will not only serve FIS enterprises, but also will offer them a full range of financial services taking into account their interaction to insurance and investment companies.

Stanford University and University of Kyoto professor M. Aoki approves banking institutions main role to effective control FIS activities and interactions [9, p. 193]. So-called company’s main bank is the major shareholder and creditor. It organizes economic unit’s long-term loans consortium and is strategic actor in each business management control system. Bank receives each company’s activities information. It is also allowed to control FTS. Control system is based on FIS integrated accounting policy which provides well-timed regulation for financial resources redistribution enhances funds use efficiency, reduces overall risk. Obtained concentration of cash flows helps to solve risk, cost and liquidity management problems.

Banking system is most involved to international economic market and innovative projects financing. Therefore macroeconomic (international) management and transnational obligations risks transfer in unstable economic and social situation states is very important to FIS-connected banking institutions.

The main component of international economic relations is monetary and credit transactions between business entities. Experts note that international monetary interconnections are peculiar type of mediators for countries, regions, economic units, banks, institutions and individuals’ goods, capital and services flow transferring [10, p.7].

Such interactions are always related to uncertainty and interstate risk. Economic researches draws attention to the fact that macro-economic risks are common to all states and affect to investment projects implementation results equally in every country. Current risks are the most significant for foreign investors who decide to invest to particular country businesses [5, p. 212].

Bank losses threats are related to FIS assets transfer across national borders and foreign countries residents’ obligations case. One of the components in total interstate risk is capital transfer risk, which occurs when debtor obligations are denominated in national currency in transfer period from one country to another.

It is necessary to define responsibility centers functions distribution of front office, back office, accounting and bank treasury for effective banking institutions risk and profitability management (scheme is given below (fig. 1)).

Operations limits control

Concluded agreements information

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Fig. 1. Bank accounting and control processes organization (for FIS)

Front office concludes banking contracts and agreements. Back office takes estimations and calculation functions, also it controls and operates risk fields, confirms transactions, monitoring aligned limits compliance.

Bank treasury and front office affirm funding agreement. (E.g.: If front office needs monetary funds for current active transaction, it applies treasury. Treasury lends the funds for front office on a fixed term taking into account credit funds agreed percentage. Back office controls operation limits compliance.)

Limitation is certain process of banking transactions restrictions setting. However, risks limits are set on transactions amount and expected financial results also.

Limiting complex transactions include solutions for peculiar prognosis problems:

– bank financial state prognosis based on preset (achieved) indicators of active and passive operations, circumstances, external constraints (legislation, National Bank regulations), management requirements;

– strategic goals achieving based on active and passive banking operations parameters permissible areas determining.

Specific limits indicators value is formed on peculiar business tasks:

– resources allocation volume and its dynamics for the planning period and its minimal amount which is need to be accumulated;

– permitted average values indicators of costs and time;

– permitted average values indicators of profitability and investment.

Back office sends operations confirming information and documents to accounting office. Accounting office compiles financial statements results in accordance to up-to-date legislation and regulatory documents.

Back office organizes and monitors policy of management accounting, reports. It interacts to internal bank departments, external FIS structures and capital market. Accounting office interacts to internal bank departments and state bank regulatory authorities. Financial and management reports formation takes into account risk levels that were defined by bank accounting policy. FIS structures pricing transfer is the top point for effective risk and profitability management in financial and industrial capital mergers conditions.

Pricing transfer is important part of management accounting. It sets prices for different resources (including monetary) and services that are provided by peculiar structural blocks of organization (accounting centers) to other ones in terms of FIS functioning.

These research results can be used as risk management practical recommendations for large-scale business structures.

Literature:

1. Zhytnyy P.Y. Risk management peculiarities for financial and industrial system conditions / Zhytnyy P.Y., Lukyanova O.Y. // Chasopys ekonomichnykh reform (Time description of economic reforms) : naukovo-praktychnyj zhurnal. – 2015. – Sievierodonetsk. – Vol. 1 (17). – P. 62 – 67.

2. Zhytnyj P.Y. Oblikova polityka v umovakh rozvytku finansovo-promyslovykh system: metodologiya ta organizaciya (Accounting policies for financial and industrial systems terms conditions: methodology and organization) : monograph / P.Y. Zhytnyj. – Luhansk : Volodymyr Dahl East Ukrainian National University publishing office, 2007. – 352 p.

3. Ryzyky, bezpeka, kryzy i stalyj rozvytok v ekonomici: metodologiyi, modeli, metody upravlinnya ta pryjnyati rishen (Risks, safety, crisis and economy sustainable development: methodology, models, management and decision-making) : monograph / scientif. edited by prof. S.K. Ramazanov. – Luhansk : Noulidzh (Knowledge) publishing house, 2012. – 948 p.

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7. Zhytnyy P.Y. Osoblyvosti upravlinnya operacijnym ryzykom v umovakh komercijnogo banku (Operational risk management peculiarities for commercial bank) / Zhytnyj P.Y.,.Zhytnyj V.Y. // Visnyk Shidnoukrayinskogo universytetu im. V. Dalya (Digest of Volodymyr Dahl East Ukrainian National University). – 2009. – Vol. 3 (133). – P.64–72.

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10. Rudenko L.V. Mizhnarodni kredytno-rozrahunkovi i valyutni operaciyi (International credit-settlement and currency transactions) : [Pidruchnyk] (Tutorial) / L.V. Rudenko. – Kyiv : CUL, 2003. – 616 p.