Finance system: essence and structure

The financial system is a complex of links and units of monetary relations, through which the formation, distribution and use of funds. This institution includes all the institutions of the country that provide capital circulation services. Let us further consider the features of the financial management system.

general characteristics

Cash is the subject of a distribution relationship. They take place within the framework of various financial and economic systems. The distribution is carried out between various business entities. In the financial system, financial activity there are two major areas. One includes the totality of monetary relations between institutions and companies. The second area is the state financial system. In a broad sense, the institute under consideration also includes credit and banking services.

Key elements

Each of the above financial systems has its own structure and is formed of several links. So, banks and credit institutions are included in the credit and banking sector. The enterprise finance system acts as a decentralized institution. Their combination is involved in the regulation and stimulation of economic and social sphere at the micro level. The RF finance system is centralized. The complex of its elements is used in the regulation of management and in distribution relations at the macro level. The division of the whole institution into separate areas and links is determined by the specifics of the functioning of each element, differences in the methods of distribution and subsequent use of capital. This, in turn, determines a special role for each area of ​​the organization of finance.

State finance system

It includes several institutes. These include, in particular:

1. Budget system.
2. State loan.
3. Extrabudgetary state trust funds.
4. State Insurance Fund.

The budget system is a complex of state funds. It acts as a form of creating and spending capital, designed to ensure the functions and tasks of the federal, regional and local authorities. The budget is the main plan for the formation and use of centralized capital. The state financial system ensures the exercise of power. They consist in carrying out state policy through the redistribution of revenues. Revenues are generated mainly from tax deductions. The state budget of the Russian Federation includes federal, regional and local financial plans.

Funds

This is the next integral element, which includes the financial system of the Russian Federation. In the process of transition to market conditions, such extra-budgetary social funds were formed as:

1. Social insurance.
2. Pension.
3. Compulsory medical insurance.

These funds act as federal property, but function as independent institutions. They have a specific purpose. It is expressed in the financing of social services that are provided to citizens. In addition, economic funds are being formed. Their funds are used to finance the needs of the country in solving economic problems.

Other links

In the field of state loan relations arise regarding the attraction of temporarily free capital of the population, companies and institutions to finance government spending. They are based on voluntary payments.The state loan also includes the country's external borrowing - funds that the government takes from foreign countries to cover budget deficit. The insurance fund is used to recover probable losses from accidents and natural disasters. His funds are also directed to measures to prevent such losses.

Organization of the financial system at the micro level

The capitals of business entities are considered one of the most important links of the institution in question. They participate in the production and non-production areas of the country's economy. Companies belonging to the first sphere, within the framework of market conditions, operate on the basis of full commercial (economic) calculation. It, in turn, is based on three principles:

1. Self-financing through incoming income.
2. Profitability.
3. Financial independence.

The capitals of economic entities act not just as an integral element of the institute, but as one of its key links. The financial system of companies occupy a special, defining position in the overall structure. It forms cash flows, creates national profits and gross domestic product. Income is subsequently redistributed through the budget and tax, non-production and production sectors. The finance system of individual business entities has specifics that depend on the type of ownership and legal form. Along with this, not all companies build their work on the principles of cost accounting. The Civil Code provides for the delimitation of legal entities into commercial and non-commercial enterprises. Such a classification is established depending on the purpose of creating companies. The criterion for separation is also the order in which the income received is used. The system of finance for legal entities, therefore, includes capital:

1. Nonprofit institutions.
2. Public associations.
3. Companies operating on a commercial basis.
4. Municipal and state institutions.

Cash resources

They act as the basis for organizing the financial system of enterprises of any form of ownership. Business entities must have cash resources of a certain volume. It should be enough for them to carry out commercial and other activities. The capital of legal entities forms the basis of microeconomics. At this level, most of the cash resources are created. The financial condition of enterprises has a significant impact on the entire capital system in the country. Cash companies allow you to adjust the valuation of material, labor and other resources, to ensure the balance of these elements. In addition, the revenues that enterprises receive play a decisive role in budgeting at all levels.

Credit Banking

The objective need for its existence is determined by the circulation of the commodity-money supply in the course of social reproduction. Some resource owners generate free funds. At the same time, others have a need to attract additional capital. As a result, credit relations are formed. Temporarily available funds of enterprises are accumulated in banks and other financial companies. Legal entities get the opportunity to take out a loan or credit to accelerate the implementation of planned projects, without waiting for the accumulation of their own funds. The mobilization of finance and their transformation into loans and borrowings are provided by the banking system. It acts as another key element of the entire monetary fund of the country. The banking system is formed of two levels:

1. Central Bank
2. Commercial banking institutions and specialized financial institutions.

Institute development features

The implementation of economic reforms, the implementation of a fundamentally new financial and economic policy led to the formation of new links in the framework of monetary relations. It should be noted that the primary capital of any country is the primary income of business entities. These include not only the profits of commercial and state institutions and companies, but also citizens. As mentioned above, the position, the role of the subject in the process of social reproduction acts as a classification sign of the division of the monetary sphere into two directions. According to this criterion, differences in the needs of resources and funds are distinguished.

The specifics of the subjects

Citizens and legal entities directly involved in social reproduction, carrying out entrepreneurship, produce products and provide services. To do this, they need certain means that would ensure the production process. The financial system of business entities is considered the initial element. It is in the process of their functioning that primary incomes and monetary resources are formed, other distribution and redistribution of value begins.

Grouping of relations within the scope of economic activity of entities is carried out in accordance with the nature of the work of each of them. It affects the sources of formation of resources and the order in which they are used. Some companies operate for profit. Such enterprises are considered commercial. In addition to them, to ensure the normal existence of society, organizations are created that are designed to meet the needs of the population in cultural, educational, scientific and other necessary benefits. These institutions do not pursue the goal of making a profit; they do not redistribute the income received between the founders.

The need to have a certain amount financial resources driven by the tasks defined in their charters. This provision also affects the structure of relations in which such institutions participate. In commodity production involved and PBUL. Such entities carry out independent activities aimed at the systematic extraction of income from the use of property, sale of products, performance of work or the provision of a range of services.

Social Insurance Fund

The main task of this institute is the payment of benefits:

1. Maternity and pregnancy care.
2. For rehabilitation after illness and prevention.
3. By temporary disability.
4. For partial financing of services for children in extracurricular activities.
5. On the behavior of scientific and research work on social insurance.
6. On the formation of reserves to ensure the stability of the financial situation of the fund.

Mandatory contributions to the FSS include:

• Revenues of citizens and employers.
• Financing from the state budget.
• Other payments.

Contributions to the fund are set at 4% of the accrued salary.

FIU

Pension funds are considered the largest financial extrabudgetary funds in terms of the amount of resources mobilized in them. In developed countries, their share is 50-60% of all funds allocated for social needs. PF financial management provides for:

1. Target collection and accumulation of insurance payments.
2. Financing retirement benefits.
3. Carrying out work to recover from employers and citizens amounts of compensation for disability resulting from occupational disease, work injury and so on.
4. Capitalization of PF funds, attraction of voluntary funds.
5. Ensuring control with the participation of tax services of full and timely receipt of contributions.
6. Formation of the state information base for all existing categories of payers.
7. Conducting explanatory work among legal entities and citizens on issues falling within the competence of the pension fund.

PF expenses and income

Pension funds make up their own budget for revenues and expenses. PF incomes are generated from sources such as:

1. Insurance contributions of employers, individuals engaged in individual entrepreneurial activities, other entities.
2. Budget appropriations.
3. Voluntary contributions.

PF expenses are allocated to:

1. Payment of pensions.
2. Providing material assistance to disabled and elderly citizens.
3. Payment of benefits.
4. Material and technical and financial support of the PF.

In the process of determining income that is subject to contributions to the fund, the following are excluded:

1. Severance pay paid upon dismissal.
2. Compensation for unused vacation days.
3. The average monthly salary provided to temporarily unemployed citizens during the period of employment.
4. Material assistance, compensation, benefits.

MHIF

This fund is intended to finance the expenses of the population on medical services. The main goals of the MHIF are as follows:

1. Financing the implementation of targeted programs in the framework of the compulsory medical insurance.
2. Monitoring the rational use of the fund.

The income of the MHIF is formed due to:

1. Insurance contributions of legal entities.
2. Budget appropriations.
3. Voluntary contributions.
4. Profits from the turnover of temporary free capital of the MHIF.

Federal and regional (territorial) funds were established in accordance with the Federal Law governing public health insurance in the Russian Federation. The main tasks of the MHIF law are:

1. The accumulation of financial resources allocated to ensure compulsory health insurance.
2. Compensation of medical care costs.
3. Ensuring for all citizens equal access to medical services in the country.
4. Implementation of federal health programs.

Direct financing of medical institutions is carried out by territorial compulsory health insurance funds.