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Presentation- Auditing Corruption Prevention. Tirana, June 2017


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Presentation made by Blanka Bolerazká, Czech Republic Supreme Audit Office, during the Roundtable "The Role of Supreme Audit Institutions in Combatting Fraud and Corruption"

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Presentation- Auditing Corruption Prevention. Tirana, June 2017

  1. 1. © OECD AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU The Role of Supreme Audit Institutions in Combatting Fraud and Corruption Auditing Corruption Prevention Blanka Bolerazká, Czech Republic Supreme Audit Office Tirana, 14-15 June 2017
  2. 2. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Auditing Corruption Prevention • Role of auditors • Corruption and fraud, areas prone to risk in public procurement • The parallel audit “Procurement of public building works and corruption prevention” • ISSAI 5700 Guideline for the audit of corruption prevention
  3. 3. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Role of auditors Example of definition of corruption: “the abuse of entrusted power for private gain”. The role of auditors, concerning corruption, is to find areas prone to risk and to assess whether audited bodies implement and follow anti- corruption measures. Czech SAI: - Mandate - Co-operation with a prosecutor, revenue office
  4. 4. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Corruption and fraud, risk areas in public procurement Procurement is a risk area for fraud and corruption and they usually result in the misuse of public resources. Each individual stage of the procurement process contains risky areas, which may signal a suspicion of corruption. Auditing public procurement as a common task of SAIs.
  5. 5. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Corruption risky areas in Public Procurement THE MANAGEMENT OF THE PROCUREMENT • The functions and responsibilities of those involved in the procurement function are not clearly established and documented. • A person(s) who prepares procurement is involved in the next steps of procurement (assessment and evaluating of bids, conclusion of contract, monitoring of realisation, etc.). • There are cases of documents missing, changed, back- dated, modified or after-the-fact justifications. • Procurement were not approved. • Insufficient internal control and monitoring systems.
  6. 6. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Corruption risk areas in Public Procurement THE PREPARATION OF THE PROCUREMENT • The public authority did not calculate the contract value accurately • The tender documents were not comprehensive, transparent and free from restrictions or conditions which would discriminate certain suppliers • There is no reasonable justification for the need of the project
  7. 7. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Other corruption risk areas in Public Procurement • THE CHOSEN PROCEDURE • THE PUBLICITY AND NOTIFICATION • THE AWARD PROCEDURES • CONTRACT IMPLEMENTATION PHASE • ELECTRONIC PROCUREMENT
  8. 8. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU The parallel audit “Procurement of public building works and corruption prevention” Joint report on parallel audit work submitted by the Czech SAI (NKÚ) and the German SAI (BRH) The co-operation was concentrated in three basic areas: • audit of awarding procedure of construction works with regards to prevention corruption; • analysis of transposition of EU awarding legislation into the national legal framework and comparison of national legislations; determination of common and differing provisions; • analysis of anti-corruption measures.
  9. 9. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU The scope of the parallel audit The German SAI The global audit of awarding procedures in transport and building construction The Czech SAI Audits related to ground communication constructions, railways, water transport projects, big buildings (such as hospitals, cultural premises, universities…)
  10. 10. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU the parallel audit Conclusion - corruption prevention  The German provisions mainly provide for largely unrestricted competition, transparency and checks as central elements of corruption prevention.  In the BRH’s opinion, the principle that specifically states that preference must be given to open procedures or public invitations to tender is a suitable tool for substantially reducing the risk of corruption in connection with the awarding of public works contracts, while restrictions of competition increase the risk of manipulation.
  11. 11. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU the parallel audit Conclusion - corruption prevention The Czech Republic adopted on governmental level the anti-corruption strategies which focus on public procurement. Essential amendments of the Act on public contracts award and connecting implementation rules were made during this parallel audit - the contracting authorities have to justify:  effectiveness of public contracts,  calculation of expected prices,  adequacy of qualification requirements,  definition of the basic evaluation criteria and the method of bid evaluation,  and all that must be duly documented and published.
  12. 12. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU The parallel audit Recommendations • To improve measures against corruption (transparency) • To monitor continuously weaknesses and risks in order to identify and respond to any need for corrective action. • To train staff on corruption topics. • To control delegation of responsibilities on private subjects/matters • Comparison of Czech and German practice indicates that the volume of open procedures offering increased competition and substantially decreasing the chances of corruption acts should be enforced in the Czech Republic. • Also, an increased segmentation of construction work into lots may have a positive impact on achieved price, if it results in more competition due to a higher number of bidders. • Ensuring the correct implementation of contract award procedures is an essential basis for efficient public sector procurement. In Germany, the procedures are organised by special state institutions, while in the Czech Republic (except in transport construction) they are organised by central institutions themselves or by their contractual entities.
  13. 13. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU INTOSAI - WG on Fight against Corruption and Money Laundering ISSAI 5700 - Guideline for the Audit of Corruption Prevention - a general tool for auditing without regards to SAI mandate - Main issues: • Establishment of an organisational unit for corruption prevention or contact person for corruption prevention • Risk assessment and risk analysis • Delimitation of duties • Personnel rotation and job rotation • Supervision, internal control • Decision making • Co-operation with other institutions involved in fighting against corruption
  14. 14. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Thank you for your attention Blanka Bolerazká blanka.bolerazka