The quality of the public sector activity may have crucial influence on the social economic status of the state. In order to make public sector efficient, stimulate its contribution into the social economic development of the state, it is rational to apply a management tool which has been tested and proven in business practice – the strategic planning possibilities of realising whose principles are higher if the method of functional review is applied. In order to create a model of effective functional review, it is first of all expedient to fulfil these objectives: to reveal the role of functional review of institutions, to analyse its principles, to show what kind of functional review practice we have in state institutions, to define the directions and preconditions for improving functional review of institutions. This article presents the results of fulfilling such objectives which were received with the help of systematic analysis that allowed to perform a synthesis of the results achieved through research of different spectrum.