Problem

The main reasons for the problem of a flawed system of control over the financing of political parties and their participation in elections are:
the inability to submit financial statements on the receipt and spending of election and referendum funds through the electronic reporting system.
Financial statements on the receipt and spending of election funds by political parties, their local organizations, candidates in national and local elections (hereinafter referred to as “financial statements of election process participants legally obligated to file reports”) are published by the National Agency in the public section of the electronic system of the Unified State Register of Reports of Political Parties on Assets, Income, Expenditures, and Financial Liabilities. At the same time, submission of financial statements on the receipt and spending of funds of referendums (nationwide or local), the initiative groups and campaigning for the initiative to hold them by political parties, public organizations registered as supporters or opponents of the referendum issue is mandated in hardcopy form and in electronic form simultaneously to two government agencies (the Central Electoral Commission and the National Agency). In this regard, the system of control over the financing of political parties and their participation in elections needs to be improved by enhancing the electronic system of the Unified State Register of Reports of Political Parties on Assets, Income, Expenditures, and Financial Liabilities. This will create an opportunity for political parties, their local organizations, candidates in national and local elections, as well as political parties and public organizations registered as supporters or opponents of a referendum (national or local) to submit and publish financial statements online on a single electronic platform;
the absence of automatic mode of auditing the financial statements of election process participants legally obligated to file reports.
The National Agency has begun implementing automatic verification of reports of political parties through integration with other information, telecommunication and reference systems, registers, and databases. However, the final adjustment is possible on condition that reporting gets reinstated and the automated system gets integrated with other databases.
The introduction of a mechanism for submitting financial statements of election process participants legally obligated to file reports through the electronic services of the National Agency is mandated by the relevant resolution of the Central Electoral Commission, which will enable automatic verification of compliance with the requirements of the law by these participants;
failure to apply a risk-based approach to controlling the activities of political parties, their local organizations, and candidates in national and local elections.
The National Agency applies a risk-based approach to controlling the activities of political parties by monitoring risks in their activities in accordance with approved internal methodological recommendations. At the same time, there is a need for a legislative definition of the powers of monitoring as continuous tracking of financial, economic, and other activities of political parties with the objective of identifying risks.
The Central Electoral Commission and the National Agency are responsible for monitoring the activities of election process participants. However, both institutions lack the essential resources and tools to effectively analyze candidates’ campaign expenditures or detect violations of the financing rules due to the large number of reports. The problem of limited resources in controlling the political financing and election campaigning can be solved by introducing selective control, taking into account the risks inherent financial, economic, and other activities of political parties, their local organizations, and candidates running in national and local elections;
ineffective division of powers between the Central Electoral Commission and the National Agency involving control over political financing and election campaigning. This is due to the absence of a legally defined single state body responsible for controlling (analyzing) financial statements on the receipt and spending of election funds of political parties, their local organizations, and candidates running in national and local elections. Thus, the analysis of financial statements on the receipt and spending of election funds is carried out by the Central Electoral Commission together with the National Agency, which leads to overlapping powers and, as a result, inefficient usage of resources.