Determinants of influence on the implementation of budgeting in vertically integrated structures

Abstract

The article is devoted to the study of the reasons for insufficient application of the budgeting system in vertically integrated structures of the oil and gas industry. The author noted that the importance of budgeting is that it is not only the basis of future strategic financial planning, but also a prerequisite for quality financial analysis and further control. In this regard, the purpose of this article is to diagnose the financial condition of vertically integrated structures of the oil and gas sector based on the use of industry benchmarking, identify reasons for "fragmentary" implementation of budgeting elements in these enterprises and identify the nature of restrictive factors. The conducted financial diagnostics showed the deterioration of the financial condition of vertically integrated structures of the oil and gas industry during 2020-2021, which is partly due to the negative impact of environmental factors (economic, social, political). At the same time, the article highlights a group of internal factors, which also had a significant impact on the deterioration of financial performance. The study of information sources on the implementation of budgeting systems in vertically integrated structures (Neftegaz, Kazmunaigas, Gazprom, China Petroleum & Chemical Corp.) identified the following internal factors: 1) the complexity of forming the company's strategy in uncertainty; 2) lack of relationship between strategic planning and budgeting; 3) ineffective control over the level of budget execution; 4) lack of organizational changes, the competence of which includes control of the strategy; 5) insufficient level of understanding of strategic goals and development of the enterprise; 6) lack of proper training of employees in the field of budgeting. Diagnosis of the state of financial planning in NJSC "Naftogaz of Ukraine" allowed to determine the nature of the influence of restrictive factors (determinants) on this process, namely managerial, organizational, technological (internal factors) and legal, economic (external factors). Prospects for further research should be associated with the search for new innovative approaches to the formation and further implementation of budgeting.

Keywords

• vertically integrated structures
• budgeting
• determinant
• oil and gas sector