THE COVID-19 FINANCIAL PROBLEMS AND ASPECTS OF AUDIT QUALITY ASSURANCE IN GEORGIA

The new Corona-virus and the contagious disease which it causes, the so called COVID 19, put forward the serious challenges for many countries all over the world and for Georgia among them. Almost the whole world is facing very serious obstacles on the international and national levels. Too many problems emerged in the world countries. To resist against the new disease has become the main priority for each country. The global processes caused by the pandemics have influenced the audit service as well. The uncertainty and unpredictability caused the new risks of deficiencies and activated already existed ones in the new environment. The situation became more complicated due to the fact that it can happen that the auditors do not consider the mentioned risks in the process of planning for audits or the risks may be considered mistakenly. The firms and other economical institutions in which the audit is carried out are obliged to adopt the new rules and changing environments in which their businesses function; they should change the rules of fulfilling the operation, preparing the financial accounts, the processes of their representing the information processes, safety of information shown in the financial accounts, the rules of their preparing; they also evaluate the possibilities of keeping on their activities in the nearest future. The qualified performing of the audit implies the basical elemenst which helps to create such environment where the possibility of the high level audit will be at the maximum. Implementing the quality control implies that such system will include two stages; each of them is directed towards providing the audit processes according the international standards There are several types of the quality improvement system. In all of them the main variable value represents the amount of costs for the proper system. All countries choose the system which provides benefits taking the costs into consideration. There are four main stages in the process of implementation the system which will ensure the high quality audit. Here are four main stages shown in the process of implementation:  The first stage: to carry out diagnostic observation;  The second stage: stating the view;  The third sage: working out the system;  The fourth stage: implementation of the system. The firms and other economical institutions where the audit is carried out are obliged to be reliable with their activities in the changing situation in which their businesses function. The subjects change the rules of carrying out the usual operations, change the open information given in the financial accounts, and estimate the possibilities of maintaining the existing possibilities for the nearest future. It is important to revise some standards out of Audit International Standards and to make them fit for revealing and assessing the risks of essential mistakes and discrepencies. The controlled variation of the standard regulates such issues as the newly corrected risks caused by influences of COVID-19 pandemic on the planned approaches to the audit and also, evaluation of the risks already defined and making changes in them taking into consideration the influence of the errors in the risk evaluations and influence made upon the planned evaluations and audits the changes of which will influence the evaluations of the risks in the inner control of the subject on the previously made imagination of the control environment, in order to define the measures to be taken in order to change the reactions to the mistakes using different measures in order to reach the trustful mechanisms to rely on. International standards of audit– answering to the assessed risks, the checked variation of the standard implies that it maybecome necessary to change the measures of reaction to the changes in the circumstances in order to obtain enough reliable measures and activities to control the situation by means of enough auditory evidences. The auditor has responsibilities to take into consideration that largening the deadlines will cause growth of the period and the risks of the dates of events which will happen in the time interval between accountability date and the date of the conclusion made by audit, the audit is also responsible for any event taking place later in relation to the Covid-19 situation. He is responsible also for evaluation of the fact about financial information. The enterprise functioning within nowadays complex environment taking into consideration the situation of COVID 19, should consider such priority issues as the uncertainty accompanying the Covid situation, related covenants, and others which accompany the pandemic period, among them the region, the financial state of customers and dealers, liquidating and paying capacity. During the process of the risk assessments it should considered that Covid 19 pandemic greatly influenced the global economics and the separate branches such as hotels business, retail sail, tourism and others. As a result of pandemic, it is possible that the number of audit considerations and thee circumstances can modify them which can be conditioned by different circumstances and the audit will state if there are incorrectable improper conditioned due to the circumstances. The audit will make it certain there are unimprovable mistakes which apart and together are essential for the financial accountability and the auditor will conclude that they cannot acquire the proper conditioned which apart or together could be essential financial accounts or the audit will conclude that they are not able to the essential accountability. Important researches were led to assess the appeared situation and it was concluded that the COVID 19 pandemic had influenced the financial situation which showed that the specific actions and procedures became complicated.

PANDEMIC, GLOBAL ECONOMIC CRISIS AND FOOD SECURITY OF THE COUNTRY

Agriculture is an important and organic part of the national economy of any country. Its role is great in ensuring the country's food security, improving the balance of payments and strengthening state independence. The state and proportions of development of other sectors of the national economy depend on the level and speed of development of agricultural production. This connection is reflected in both technical-technological and industrial-economic connections. At the same time, this connection is bilateral, with the increase of agricultural production, the structure and quality of food of the population improves, the volume of imported food decreases, which has a positive impact on reducing the balance of payments deficit and increasing the degree of independence of the country. Due to the important role of agriculture, the field received a lot of attention in the first years of the restoration of independence, which is confirmed by the agrarian policy developed and implemented during that period, whose primary task was to ensure the country's food security and strengthen food independence. In connection with the important role of agriculture in the first years of the restoration of independence of the region, much attention was paid, which is confirmed by the agricultural policy developed and implemented during this period, the main task of which was to ensure the country's food security and strengthen food independence. At the same time, it was a great challenge for a country with a devastated economy, followed by significant reforms in agriculture, restructuring of the sector and the creation of an appropriate legal framework, the integration of state regulation of the market economy and self-regulatory mechanisms. However, under the influence of a number of external and internal factors, it was not possible to fully implement the developed agrarian policy. Agriculture is still characterized by low productivity and, consequently, by a small share in the sectoral structure of the national economy. The country has serious problems in supplying and providing vital agricultural products such as wheat, corn, potatoes, vegetables, meat and poultry. The global pandemic and the resulting global economic crisis have put the issue of solving the country’s food security problem on the agenda. To this end, the revitalization of rural areas, social stability and balancing the level of migration from rural to urban areas should be a priority. Establishing food security is a complex task and is primarily the responsibility of the government. There is no universal mechanism for solving the global food security problem in the world today. This problem must be solved at the national level, as food security is considered to be a level of national food production that allows the principle of self-sufficiency of the population and state reserves with food to be implemented in accordance with scientifically substantiated norms. The current severe economic crisis in the country has further intensified the social background and demanded the strengthening of the stimulating and organizing function of the state. The issue of state regulation of the agricultural sector should be considered in close connection with the development of entrepreneurship and self-regulation of production at the micro level, and priority should be given to measures that maximize the adaptation of producers to market economic conditions, increase production efficiency and competitiveness, which will ultimately contribute to the saturation of the market with domestic products and state food security. It should also be noted that recent years and even more so the pandemic process, have once again confirmed the notions of omnipotence on the market mechanism. The market does not have a magic wand that will solve all the problems by itself and regulate the existing problems. The myth of the role of the "invisible hand" and the crisis itself is a thing of the past. The modern world community supports the social orientation of the economy, therefore "realizing the dangerous nature of social polarization", which can not be solved by bypassing state regulation and mechanisms.

PENSION REFORM - GOALS AND ESTIMATED RESULTS

The existence of pension schemes does not count for a long period, but its obligation has been historically proven, as the experience of countries has shown that the countries that have the best practices provide better social protection of the population when retiring. The article discusses the redistribution of pension assets worldwide, pragmatically and theoretically evaluating the pros and cons of retirement plans. The implementation of the pension reform in Georgia has been delayed many times due to the socio-economic situation, accompanied by the psychological attitude of the population towards distrust of the state. Georgia is on the path to European integration, where one of the most important requirements is the proper protection and social equalization of the socially vulnerable, while the existence of pension schemes ensures the accumulation of large amounts of funds, which can play an important role in capital and financial markets. The advantages of the existence of pension schemes may be reflected in the permanent increase of the equalization ratio, but it should be noted that at such times the macroeconomic indicators of the state should be relatively stable, such as inflation, stability of the national currency and others. As of today, the tasks set before the Pension Agency in Georgia are quite ambitious and require effective management, as the pension reform takes only a few years.In the social security system of the population, the pension is a mechanism for maintaining a stable material condition during the period of disability. Following in the footsteps of the development of mankind, pension systems were improved, the main purpose of which was to replace the average income per capita during the working period in a way that would not worsen living conditions. Therefore, the pension replacement rate has become a measure of the evaluation of the pension system of a country. The replacement rate in the pension systems of developed countries is in the range of 60-80%, in developing countries it is 15-30%, which is systematically subject to adjustment. Georgia, despite the normal rate of economic growth in the last decade, is not distinguished by a pension provision mechanism. From the day of independence, the state basic pension was periodically subject to changes. The change, however, was related not so much to the approach to the subsistence level as to the subsequent promises of a change of government. At the present stage, the pension system is in the process of modification, which aims to ensure adequate pension income, fiscal sustainability of pension expenditures and a more effective response to demographic changes in the population. Developing and developing countries are trying to equalize the time of retirement of the population, which is often difficult to achieve and requires both economic and political decisions, because the financing of social security from the state budget requires large expenditures. Which can often be the result of the devaluation of the national currency and high inflation, which in itself can be seen as an impediment to economic development. The increase in social spending is often the subject of controversy among scientists-economists, for example, for the development of the state, what kind of spending will be more effective, financing social or capital projects ?! Often, the increase in capital expenditures, at the expense of the social situation, is not considered a popular political decision, because at this time the dissatisfaction of the socially vulnerable segments of the population increases. One of the goals of the accumulative pension is to achieve social equality and a high replacement rate, but how much it will work in Georgia is also a question, because the unemployment rate and the self-employed are high in terms of labor force, in particular, about 30% of the labor force The amount of monthly salary that is published statistically is also problematic, because the calculation methodology is often disputed and there is no minimum wage at the level of legislation. The main functions of the Pension Agency are to invest the accumulated funds, but investments in investment assets are not defined by the National Bank and are quite narrow, for example, foreign practice allows pension funds to invest funds in both real assets and foreign financial markets. As mentioned, the implementation of such investments by the Pension Agency should be allowed in Georgia and should be used to finance national, strategic projects. Ensuring the stability of inflation and the national currency in Georgia remains a challenge. In the event of inflation approaching double digits, pension savings will lose effectiveness. Also noteworthy is the gender imbalance when receiving a pension, namely in terms of average salary and life expectancy, a man's salary is about 4 times higher than a woman receiving a pension, which should be considered unfair, the state will have to adjust the retirement age in the future. Finally, it should be noted that the pension reform, despite its shortcomings, should be considered a step forward, but it needs to refine certain issues, diversify asset management and economic stability, which will not be easy to achieve.

DECENTRALIZATION IN SLOVAKIA: PERSPECTIVES FROM THE TRNAVA REGION

Decentralization is the priority reform in the post-socialist countries of Central Europe. Slovakia’s accession to the European Union has accelerated decentralization, which is being implemented at the political, fiscal and administrative levels. Based on the example of the Trnava region, located in Western Slovakia, it was determined that administrative-territorial decentralization is prioritized in the region. Slovakia’s accession to the European Union and the political situation have little effect on decentralization, and municipal utilities improvements are still issues of concern in the region. The level of decentralization effectiveness in Slovakia is determined as 60–70%, and in the Trnava region – 70–80%.

THE IMPACT OF THE PANDEMIC ON THE TOURISM BUSINESS

If Pandemic has had an impact on any business it’s primarily a tourism business. Other businesses have a very close relation with this business and therefore they have been affected as well. As you know, the world travel and tourism market is expected to have lost more than 75.2 million jobs by 2020. According to the UNWTO, small and medium-sized enterprises were most affected. Their share in the tourism sector is 80%. Coronavirus will have a special impact on the countries whose economy accounts for a large share of tourism and whose economic growth is largely due to the tourism sector, and Georgia is also among them. According to the Georgian government, Georgia will develop the tourism sector in the near future, of course, in compliance with the safety standard and taking into account the recommendations. Tourism is the sector that has received the hardest and first blow due to the crisis and which, in addition to being one of the most important driving forces of the country's economy in recent years, the sector has a competitive advantage that can contribute to the economic development of Georgia in the post-crisis pandemic economy. Tourism is one of the largest spheres in the world, and its development is conditioned by the safe environment of the country, economic and political stability. It creates jobs and helps increase incomes for the population. International tourism contributes to the inflow of foreign currency into the country and affects the social and cultural environment of the country. That is why it is important to bring the tourism business out of the crisis.

ENVIRONMENTAL SUSTAINABILITY OF TRANSPORT AS A COMPONENT OF ECONOMIC STABILITY (ON THE EXAMPLE OF KUTAISI)

The intensive growth of industrial processes and transport in cities is directly related to environmental pollution, which is manifested by an increase in the amount of emissions from vehicles and an increase in the concentration of aerosols in the atmosphere. The dynamics of this process depends on many different factors, in particular, the state of atmospheric stratification, wind direction, speed and more. The main source of air pollution in Kutaisi is road transport - more than 90 percent of total air pollution emissions come from road transport. The emission of large amounts of pollutants from vehicles is due to many factors, including improper organization and management of traffic, low fuel quality, catalytic converter malfunctions, and the age of vehicles. The number of passenger cars in Kutaisi is growing, for example, according to the years. In Kutaisi in 2014 -38929, 2015 -47668, according to global trends, if we do not take into account possible changes in policy, we can assume that car ownership will double in the next ten years. According to the data conducted by the National Environment Agency on air pollution in Kutaisi in November 2018, the maximum single concentration of dust exceeded the maximum allowable norm by 2.4 times (4.2 times as of December), and the other components: carbon dioxide, sulfur dioxide, sulfur Also the maximum single concentrations of nitric oxide were within the norm. There have been up to a million cars across the country in recent years, according to this year’s data. 49273 cars (cars, buses, trucks) are registered in Kutaisi. The main part of the increased car fleet in Kutaisi is outdated and does not meet international technical and environmental requirements. Most of the registered cars were produced before 2002. According to the Service Agency of the Ministry of Internal Affairs, the issue amounts to 22,628 units over 20 years old, 11,737 units from 10 to 15 years old, and 387 units under 5 years old. It should be noted that st. Kutaisi has introduced municipal transport, namely buses, based on their ecological passport data, we can assume that air pollution will be minimized, which will contribute to sustainable development of the city, in particular, improving the ecological situation will increase the socio-economic situation. Their economic sustainability will improve and the welfare level will rise, sustainable transport will improve the economy of transport users, as you know, municipal transport is much cheaper compared to other service transport. We have mentioned that the emissions of harmful substances by the new buses are less. The buses were currently out of order due to regulations imposed during the pandemic period, thus increasing the number of light vehicles, their excessive number, thus affecting the air quality composition. The author has made a comparative analysis between the harmful substances emitted by the municipal transport in the previous years and the substances emitted by the new buses, namely we have selected greenhouse gases CO2 and NO em, increasing greenhouse gas emissions leading to temperature rise and resulting in climate change. The IPCC methodology was used. The mathematical relationship between the fuel used by vehicles and the harmful substances emitted into the atmosphere as a result of combustion is as follows: yCO2 = 3.22x-0.003 (1) yNO = 0.035x + 0.0017 The given equations can be used to predict the quantitative pollution of the environment by vehicles during the day, if the intensity of traffic D or the amount of fuel consumed is known. here are the following challenges to ensure transport sustainability in Kutaisi: Develop an appropriate environmental, economic and social development strategy for the functioning of sustainable transport in the city: Reducing the negative impact of traffic on air quality and reducing secondary pollution in the city area; The level of awareness of the population about the air quality in the city; Air pollution quality control; Increasing flow of vehicles, which is not in line with proactively integrated transport planning and demand management, and which negatively affects air quality; Development and implementation of socio-economic policy in the field of transport; Control of vehicle flow, work on updating the vehicle fleet, creation of electric transport infrastructure, appropriate planning for green cover cultivation; Increase the involvement of the Department of Ecology and Landscaping of the Infrastructure Development, Landscaping, Transport and Cleaning Service in the work process of drafting the city master plan; Cultivation of new green zones and restoration of green zones in the area of the city and its surroundings; Participation of the Department of Ecology and Economy and Landscaping in joint measures to be taken by various agencies to reduce transport emissions, such as: Optimization of traffic management in Kutaisi (including the introduction of a traffic light regulation system); Setting an age limit on imported cars; Gradual tightening of fuel quality and emission requirements; Introduction of mandatory use of catalytic converter; Re-introduce annual technical inspection of vehicles, including exhaust inspection. Support for measures to reduce the number of vehicles: Introduction of environmentally friendly vehicles; Improving and complex development of municipal transport in the city and increasing its popularity; Popularization of municipal transport in order to reduce the number of vehicles; Participate in the implementation of the principles of Ecological sustainable transport, energy efficiency, intensive transport planning and demand management, low-carbon fuel and electrification of transport (through new technologies - hybrids, fuel, mobile communications, etc.). Development of electric transport infrastructure and bringing to the forefront alternative transport modes; Expansion of the existing network of pedestrian and bicycle lanes, arrangement of new pedestrian roads and bicycle lanes and development of relevant infrastructure.

ON SOME PROBLEM ISSUES RELATED TO LIBERALIZATION OF THE TAX SYSTEM IN GEORGIA

The article looks into the phases of reforming the tax system of Georgia in term of its liberalization. Since the early 2000s, the tax system of Georgia has undergone a significant transformation. There were reduced both the number of taxes and tax rates. Anti-corruption measures were taken, the legal framework was improved, and tax services were changed over to e-services. Tax administration was considerably simplified, but also at the same time was strengthened. The level of fiscal discipline was increased. As a result, despite the seeming release of tax pressure, tax revenues for the treasury were increased manifold. It is clear that success of tax liberalization at this stage of the reform was largely due to the reform of the tax administration system. Higher fines were imposed for violators of tax discipline, which was reflected in severe tightening of tax administration due to the disruption of the corruption environment. A positive link was confirmed between tax liberalization measures and streamlining of the tax administration system in terms of successful tax reform. A number of innovations have been introduced, including: simplified and mostly electronic-automated service procedures, special tax statuses for small and micro entrepreneurs, the so-called "Estonian" model of the taxation of enterprises, the possibility of concluding a tax agreement, a warning mechanism as an alternative to monetary penalties, and so on. It should be noted that over the years, measures to relief, forgive or partially reduce tax debts accumulated in previous periods have become an accompanying and distinctive attribute of the significant ongoing reforms in the tax system. This process has become particularly large-scale since 2015. Just in 2015-2019, more than 68 billion taxpayers owed more than 3.5 billion GEL in terms of both basic taxes and fines. We believe that the unambiguously positive assessment of these large-scale measures for debt relief would not be correct. Of course, such measures relieve the tax administration system of the burden of recovering uncollectible debts. The International Monetary Fund and other donor organizations also require and welcome this. The advantages of this process, as well as related risks and possible threats are being discussed. It is noted that consistent use of such mechanisms leads to long-term negative fiscal consequences, as it undermines tax morality of taxpayers and prevents the introduction of a culture of tax compliance. The tax amnesties, especially if they are recurrent, encourage an anti-competitive environment and generate a sense of unfairness among conscious taxpayers. Destructive expectations are created, which leads to the transformation of the taxpayer behavior model in the wrong direction. These trends are evident in the case of Georgia according to statistical data. We believe that the final result of the tax reforms will depend to a great degree on the ability of the tax administration system and the state in general to prevent the possibility of the new tax amnesties in the future. It is necessary to create the preventive mechanisms that largely exclude possible recurrences of both debt relief of taxable objects and the accumulation of unpaid amounts of taxes.

ENTROPY IN MANAGEMENT OF BUSINESS PROCESSES

Information clarity and order are essential for the successful functioning of an organization. The more information an organization has about the internal and external environment, the higher is the likelihood of its operation, self-survival and development. Optimal management with minimal resources in private and public organizations can be achieved by reducing the entropy of the system. In economics, the term entropy is associated with the extent of uncertainty. Practice shows that the understanding and application of the theory of entropy for the correct handling of the organization management is manifested as an important source of a high level of organization and increasing the efficiency of activities. Entropy factors must be taken into account to run an organization flawlessly.

FOR THE ISSUE OF IMPROVING THE AGRICULTURE AND RURAL DEVELOPMENT STRATEGY

The modern world is facing very serious challenges. Our society has once again strongly felt all the challenges of a pandemic. Mankind is going through this ordeal and the economic crisis provoked by it. We have a need for global, fundamental macroeconomic change. The world is changing before our eyes and in these conditions there is a chance for the country to correctly assess the current situation. Despite the rich resource potential of the country, the share of food exports in the country's total exports is 7-9%, and imports - 10-12%. At the same time, according to the results of 2019, food imports exceeded exports by 3 times. Many factors need to be considered when formulating a state support policy, however, the strategy for action should be based on several important principles: 1. Information-analytical support of the state agrarian policy and management of the forecasting system; 2. Access to government support; 3. The consistency of the policy of the Ministry and its sustainable nature, because the long-term goals and objectives facing the field can not be questioned; 4. Competitive products and conditions of its production; 5. Public involvement and participation of industry associations in defining strategic tasks. We get a picture where all five principles are completely violated in both business practice and thought theory. Programs are fragmentary and less result-oriented, the information-analytical part is weak and vague, there is no forecasting system, unequal conditions are maintained in the market and there are no conditions for its protection and regulation, government actions are mostly inconsistent and inflexible, sectorial associations are virtually mixed. They not only dominate the formation of policies implemented by the state, but it also acts on their orders and often seriously damages the process. We believe that the current strategy of agriculture and rural development in Georgia, with its content, goals and objectives, does not meet the challenges facing the country and the sector. The agenda highlights the need to create a new strategic document with more involvement of scientists, experts, practitioners and farmers, which will be the subject of public discussion before adoption. The need for a "big push policy" is suggested by the authors in the paper. The proposed vision, where the territorial and sectoral principles complement each other, moreover their synergy creates a precondition for development, requires more attention from the state. At the modern stage, reasonable, scientifically substantiated and at the same time adapted in practice target-program action models are gaining special importance. They are part of a complex macroeconomic government vision in which all agencies, entities and individuals have explicit rights and responsibilities. All the above problems can be overcome if there is political will and we will replace evolutionary inertia with a policy of revolutionary big push, where the state will comprehensively understand all the problems and advantages, thus creating a Georgian model of crisis management and development. We need to address the challenges, create a new strategic document for overcoming the crisis and promising development, where, along with monetary and fiscal issues, we will play an important role in the regional and agrarian development of Georgia. We are not really in the reality to be satisfied and follow the state in the policy of "evolutionary self-flow", we need a new strategic vision, targeted programs, a new understanding of the food security problem, flexible stimulus and regulatory policies, fast, effective and responsible action by the government.

ECONOMIC COMPLEXITY INDEX (ECI) AS BEST INDICATOR FOR GROWTH PREDICTION

The complexity of the economy implies two factors operating for the same purpose. On the one hand, the more goods a country produces, the more complex its economy becomes. On the other hand, the complexity varies depending on how many other countries can produce the same goods. Georgia is as complex as expected in terms of its income level. As a result, it is planned to develop its economy moderately. Growth Lab's 2028 growth forecast for Georgia is projected at 4.2% annual growth over the next decade, making it one of the top twenty countries globally. As soon as innovation is introduced, people start striving to use it. That is, they are copying it in some way. Meanwhile, after this copying, more and more opportunities to use this particular innovation are revealed, which in turn leads to an increase in revenue. This happens every 50-60 years.