Abstract:

Purpose:
Only the accurate and precise financial statements are the basis for making correct business decisions in every organization and also in the educational institutions in the Republic of Serbia. According to that, financial management and control, is also an instrument that can be managed most efficiently by a budget institution. Therefore, it is necessary to design an educational institution mechanisms that will manage the budget intended for this purpose through well designed internal controls. This is the way to achieve planned costs in the future.

Methodology/Approach:
The authors analyze the following elements in this paper: duration / level of established financial management and control in educational institutions; curriculum for implementation of its use and training of employees in order to establish financial management on a legally satisfactory level; access to initial training of teachers and other employees in educational institutions in the Republic of Serbia, as well as the organization.

Findings:
Financial Management and Control (FMC) is a system of internal controls based on the concept of risk management that is established by the managers of public funds users. The system includes all business transactions, cash flows, tender procedures and contracts, assets and liabilities in accordance with the law, legal and other regulations. The progressive or comprehensive implementation of financial management and control in education institutions requires time, and innovation can take into account the following: a change in - a way of doing ("process innovation"), a change in the context in which employee training is introduced. This analysis will show whether the financial management and control system exists in educational institutions, what kind of work process they have derived from and how the employed teachers in the Republic of Serbia perform their work. It will also show what are the main differences in the systems of individual regions in Europe and the historical, political and cultural reasons for these possible differences. It should enable understanding of common and unresolved issues, dilemmas and controversies related to FMC.

Research limitations/implications:
Coordinated synergy of educational institutions, state government and legal regulations is an important requirement for unified treatment of the work process. The legal obligation of implementation the project of the FMC system not only stimulate better control of the costs of the budgetary operations of the Republic of Serbia, but also become the key element of an innovative solution that encourages the creation of new ideas.

Originality/Value of paper:
The benefit from the establishing the FMC system, besides the implementation of the legal obligation, is also for the management and employees of the educational institutions. The Government of the Republic of Serbia has specifically defined the problem of establishing and implementing this new management method in the public sector through the Strategy of Development of Internal Financial Control in the Public Sector of the Republic of Serbia. This approach enables that, through training and workshops, we could make all the necessary documents and implement them into the practice of regular activities. At the same time we could see the differences in relation to the same institutions of the countries in the region.

Keywords:

Educational institutions, financial management and control, budget, internal controls, costs.