Risk Management as a Part of the Internal System of Financial Controls – Practice in the Public Sector of Serbia

The opting for the European integration process, the Republic of Serbia is obliged, through pre-accession negotiations, to ensure the construction of an effective financial management and control system. In this way, public administration reform is supported through an innovative approach to governance that implies efficiency, effectiveness, economy and transparency in the use of public funds, the creation of a management culture based on effective risk relief mechanisms and the prerequisites for achieving the set business goals. The aim of the paper is to look at the interaction of proactive risk management as a component of financial management and control, through the prism of setting goals and assessing risks related to those goals, within the categories related to business, reporting and compliance with laws and regulations. The initial phase of the research is the assessment of the current state of internal control mechanisms and the established risk management system based on the SAI audit reports and the Report on the established financial management and control of the Central Harmonization Unit of the Ministry of Finance of the Republic of Serbia. Research problems in empirical research are expressed by a series of questions to which selected respondents from the RS public administration gave answers, which relate to the component of risk assessment in achieving goals in relation to business, reporting and compliance with laws and regulations. To determine the measure of the connection between the formalization of the risk management process and the quality of goal and risk management, Spearman ‘s rank correlation was used as a measure of connection Result of the analysis provide guidance for overcoming key barriers and recommendations for improving the quality of management, through formalizing the risk management process, in order to achieve the set goals.