INTERNAL CONTROL AND AUDIT AS INSTITUTIONAL MECHANISMS FOR ENSURING OPENNESS OF MANAGEMENT IN ORGANIZATIONS: EVIDENCE FROM REGIONAL CENTERS OF UKRAINE

Анотація

The article provides a systematic and comprehensive analysis of internal control and audit (ICA) as the foundational institutional mechanisms for ensuring open governance within municipal public sector organizations. Drawing upon OECD recommendations regarding open government and public integrity, the study substantiates that ICA constitutes the core of a municipality's institutional architecture, successfully integrating the critical principles of transparency, accountability, integrity, and stakeholder participation. This subject matter acquires particular strategic relevance under the conditions of decentralization and post-war reconstruction, where the development of functional and effective ICA instruments is a mandatory requirement for preventing corruption-related losses and ensuring the efficient utilization of budget resources. Serving as a logical bridge from theoretical foundations to practical analysis, the empirical study utilizes an author's select sample of 13 verified relevant indicators from Transparency International Ukraine’s 2024 «Transparent Cities» monitoring program, focused on 20 regional centers of Ukraine. The application of descriptive statistical methods helped determine a deficient state of institutionalization: the average ICA score is a mere «0,65» points on a scale from «0» to «2», with 40% of municipalities stagnating at the zerolevel development stage. Through the application of Pearson correlation analysis, the research verified the presence of a noticeable and strong positive (R=0,596-0,745; R^2=0,355-0,555) between the quality of ICA implementation and indicators of openness in the spheres of «Budget and Procurement» and «Integrity». The findings indicate a critically low average development of ICA functions and extreme statistical variability of these indicators across municipalities (90%). The paper argues that ICA serves as a primary institutional predictor for open municipal management, facilitating the mitigation of corruption risks, the optimization of budget expenditures, increased civic engagement, and the strengthening of international donor confidence in municipalities as reliable financial recipients.

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