Modeling the Rationalization of Public Expenditure in Public Institutions as an Innovative Mechanism to Reduce Financial Waste and Achieve Governance

Abstract

This study aims to formulate an innovative quantitative econometric model designed to rationalize public expenditure and purify the contractual process in public institutions by reducing non-competitive practices of second-party contractors (private vendors). The research focuses on transitioning from traditional, routine, post-documentary control reliant on absolute human discretion to automated, proactive control powered by econometric modeling and data mining algorithms. Utilizing a simulation methodology with a hypothetical dataset that preserves financial confidentiality, the proposed model demonstrates its mathematical capacity to detect cover bidding, price inflation, and budget leakage with zero human intervention. The findings reveal that depersonalizing the internal audit pathway reduces operational bias, limits collusive behavior, and ensures economic efficiency. The study recommends implementing automated procurement platforms, integrating quantitative audit tools, and establishing dynamic price reference databases to safeguard public funds and enhance institutional financial governance.