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Presentation- Preventing and Handling Indication on Fraud and Corruption. Tirana, June 2017


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Presentation made by the Swedish National Audit Office during the Roundtable "The Role of Supreme Audit Institutions in Combatting Fraud and Corruption"

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Presentation- Preventing and Handling Indication on Fraud and Corruption. Tirana, June 2017

  1. 1. SNAO 2017 Preventing and Handling indication on Fraud and Corruption JUNE 20171
  2. 2. Overview  International Auditing standards (ISSAI)  SNAO practice  Border between an audit and a criminal investigation 2
  3. 3. Mandateof the SwedishNAO  Law regulates audit of public activities  Performance and financial audit  For financial audit: Generally accepted auditing standards ISSAI 3
  4. 4. Content in the relevant ISSAI  The auditor is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatements, whether caused by fraudor error (ISSAI 1315)  ISSAI 1240 – audit standards that deals with ”The Auditor’s responsibility to consider fraudin an audit of financial statement” 4
  5. 5. Content in the relevant ISSAI Awareness that fraud can occur  Identify the risk of material misstatement of the financial statements dueto fraud and errors  Obtain sufficient appropriate audit evidence regarding the assessed risks of fraud including representation letter  If suspicions of fraud –report to appropriate level of managementorlaw enforcement 5
  6. 6. SNAO Approach  Indications on fraud appear in audits due to the extensive mandate of the SAI  Expectation from the public that the SAI ensures that all indications on irregularities aretaken careof in a professional and uniform way  When indications on fraud areidentified SNAO has a regulated process for professional assessments of these indications in a uniform manner 6
  7. 7. Ways ofdetecting indications  Risk analysis - Audits in areas with high risk for fraud  Information from the public (e.g.whistleblowers)  TheFinancial Audit ”stumbles” upon indications  ThePerformance Audit “stumbles” upon indications 7
  8. 8. SNAO Fraudsupport group  3 persons, represents each section of the FA department  Experts financial audit and law  Channelize fraudindications from audit  Handling information from public  Link from SNAO to crime fighting institutions 8
  9. 9. What is audit, what is criminal investigation? 9 Staircaseofsuspicions:  Causeto believe (thatcrimehas been committed)  Suspicion  Reasonable suspicion  Plausible cause  Clear and convincing evidence  Beyond reasonable doubt Beyond reasonable doubt Clear and convincing evidence Plausible cause Reasonable suspicion Suspicion Cause to Believe
  10. 10. SNAO Procedures 1. Indication on fraud is identified – Auditors – Thepublic 2. Special group within SNAO with expert advisors with experienceon handling indications on fraud, makes assessments 10
  11. 11. Procedures 3. The legal unit of SNAO is involved whenrules of secrecy applies i.e.cause to believe crimehas beencommitted 4. De-identified discussion with a prosecutor, specially appointed contact persons. 5. If additional investigation is necessary, only normal audit methods areused. 11
  12. 12. Procedures 6. When indication on fraud is confirmed to beon a level of “causeto believe” the audit usually stops. 7. Report to the appropriate level of management of the agency with recommendations to send the information to the appointed prosecutor. 12
  13. 13. Why stopat ”cause to believe” ?  Roles: – SNAO – Lawenforcement  Mandate – Competence  Risk of jeopardizing a future criminal investigation  Article 6 Presumption of innocence 13
  14. 14. Crime fighting agencies  National Anti-Corruption Unit - Handling all cases of bribe - Independent from the national police force - Reinforced 2011  Swedish Economic Crime Authority - Responsible for combating and preventing economic crime - Accounting crime - Tax crime - Bankruptcy-related crime - Crime againstthe EU's financial interests 14