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

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
Thank you for your attention
Blanka Bolerazká
blanka.bolerazka @nku.cz