Public Procurement Audit

8/17/2019 Public Procurement Audit

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Overview and ObjectivesBy the end of the course, participants will be able to:

Apply the legal regulatory frameworks governing the audit

Understand the procurement cycle and what is procurement malpractice

Apply the principles of risk management

Carry out organisational analysis – how procurement is conducted

Ensure accountability, probity and organisational governance for the procurement process

Audit commercial aspects of outsourcing contracts Implement the procurement function, strategies and policies

How to source ethically and demonstrate environmental awareness

Analyse and investigate, including what to do if you uncover malpractice

Communicate the audit report

Plan the follow-up

Determine the legal and regulatory requirements for the audit

Carry out an analysis of the organisation to be audited, including determining the scope for

malpractice in each element of the procurement cycle and a staff assessment

Ensure that the organisation has considered alternative methods for acquiring and providing goods andservices, including the use of competitive processes and outsourcing

Amend contracts and manage changes that occur during the procurement process

Maintain productive working relationships with suppliers

MODULE 1:

Session: – Fundamentals of Procurement Auditing

This module will provide an overview of best practice in procurement and focus on:

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key issues associated with the management of procurement expenditure and the control of individucontracts

• key risk areas and the audit approach to reviewing• Procurement expenditure to provide the basis for an audit programme• Introduction to procurement audit and types of procurement audit;

Analysis of the context of the contracting Authority that is subject to audit:

– analysis of the legal/regulatory requirements of the procurement function; – analysis of risks (and potential fraud and corruption) in the various steps of procurement cyc

(definition and quantification of requirements, approval of requisition, supplier sourcing, selection procurement method, selection of contract type, bid opening and evaluation proceedings, formatiof evaluation committees, approval of award, contract management, records management, use

financial securities, management of warranty/maintenance obligations, disposal of assets); – Analysis of the procurement strategy of the organisation and its annual procurement planniprocesses (including use of e-procurement methods, aggregation of demand, etc.);

Development of the audit objectives and audit plan: – setting audit objectives and scope; – development of the procurement audit plan (size and method of selection of the sample

procurement operations to be audited), audit criteria and evidence requirements; execution of tprocurement audit process:

– methods for collection and analysis of evidence and "due care" in reporting cases of potential frauand illegal acts, compilation of "Procurement Audit" report;


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MODULE 2:

Session 1: How to Structure a Public Procurement Audit

Importance of organisational understanding of audit of public procurement – Create value

Procurement with a strategic, tactical and operational point of view for the organisation and for theinternal auditors

How to structure the internal audit of public procurement The need for involving the organisation in the internal audit

How deep and wide will or can the internal audit do auditing of public procurement? Identifying the risk of fraud in the procedures for public spending Key points in reporting the result of the internal audits work with public procurement Use of key ratios in connection with public procurement

Session 2: Using Investigation Methods to Support Evidence

• The balance between the internal auditor as an auditor and a criminal/police investigator• Forensic auditing - risk understanding - risk acceptance - risk control• How does the internal auditor work against producing and securing evidence• Steps in the work of an internal auditor to document evidence – NOT produce evidence

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How does an internal auditor prepare the presentation of the evidence to the company and/or theperson?• How does the internal auditor work together with the police/court?• How do the internal auditor and the company /department secure that processes in the future can

avoid or reduce the possibilities of fraud

Session 3: Use of IT in Public Procurement Audits

• Use of IT in the planning and implementation of audit• Planning: Procurement data analysis, determination of “questionable” procedure or purchase families,

sample selection• Audit implementation: Compliance audit of tender and operational audit of procurement execution

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Results of audits (initial and follow-up)• Findings with regard to

- The procurement information system- Auditing methods

Session 4: Auditing Costing Practices in Public Procurement

• Assessment of the control environment as a prerequisite for the identification, evaluation, andmitigation of costing risks

• Systematic review of the process for estimation of contract volume: the importance of the cost matrixand the budget breakdown

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Evaluation of the practices targeting verification of contractors‘ economy and efficiency of operations• Practical approach towards the examination of the cost performance of the procurement system: keyperformance indicators (KPIs)


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MODULE 2:Session 1: Strategy, Governance and ControlIf procurement and contract management processes and procedures are to be successfully implemented acrossorganisations, there must be a coherent, clear and well-communicated strategy. This module will:

• Address risk areas arising f rom an organisation’s strategic approach to procurement Highlight the key risks associated with failure to corporately manage procurement processes, and how

such risks can be mitigated Examine the key issues that need to be incorporated within corporate policies and systems of control to

manage an organisation’ s procurement expenditure

Identify an audit approach to the top-level review of procurement policies

Session 2: Procurement Audit Management Managing The Audit Directorate Responsibilities For Procurement Audit Resource management And Allocation Staff Monitoring, Mentoring And Appraisal Technical Development And Capacity Building 1planning And Budgeting The Procurement Audit Planning Methodology The Annual Audit Work Plan

Procurement Audit Execution Stages In Audit Reporting Purpose And Effect Of The Quarterly Internal Audit Report

Session 2: The Procurement Audit Process and Procurement Risk analysis

Planning the Audit Of Auditees Strategic Plan Macro Plan Micro Plan Risk Assessment To Define Audit Objective And Scope Steps In Risk Analysis

Inherent Risk Identify Controls Areas Of Risk Management Extent And Scope Of Internal Audit Detection Risk

Session 2: Auditing the Management of the Procurement

Auditing the Management of the Procurement Are procurement processes well organized and documented? Are proper budgetary arrangements taken? Is Procurement Plan prepared and approved?

Are internal control systems in place? Is procurement execution duly monitored and documented?

Auditing the Preparation Of The Procurement Did the public body calculate the contract value accurately? Were the schedule of requirements adequate to needs and legal requirements? Were the bidding documents comprehensive, transparent and non-discriminating? Was the submission of alternative bids accepted and duly ruled? Where applicable, did the public body adequately manage experts employed to assist in the procurement

process? Did the public body select an appropriate and admissible procurement method?


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Auditing the Procurement Method Selected to Procure

Did the selected method ensure competition and transparency? Auditing the Publicity and Invitation To Bid Used

Did the public body advertise bids in compliance with the Proclamation? Was timely and equal access to bidding documents and information provided to all candidates? Was confidentiality ensured when necessary?

Auditing the Award Procedures Was a formal bid opening procedure undertaken? Was the qualification of candidates accurately assessed?

Were bids properly evaluated? 66 Was the outcome of the evaluation process properly reached and communicated? Were complaints lodged by bidders / candidates against any act or omission by the public body properly

resolved? Auditing direct procurement concerning additional works or deliveries Were any additional works or deliveries admissible without the need for a new procurement procedure?

Auditing Management Of Contract Whether the contract terms and conditions were comprehensively drawn up, and whether they are

unambiguous, free from uncertainties and misinterpretation and serve to protect the Governmentinterests?

Whether priority was accorded to post contract follow up including disciplining of suppliers so as to avoidtime and cost over runs, loss to the Government and/ or undue benefit to suppliers?

Was there any modification of contract terms? Is there established any post-procurement actions by public bodies?

Session 8: Contract Administration Key contract administration policies Dealing with non-compliance Continuous communication Applicable charges to the buyers and the sellers Change Management Termination and contract resolution

Key contract administration policies Tasks for buyers and sellers Contract analysis Performance and progress Records, files and documentation Resolving claims and disputes

Training Materials( Soft Copies) and notes Hand-outs Tablet 10 inch/Laptop

Tea Breaks/ refreshments

Course tuition Personal action planning Certification Follow-up support (on request)

Public Procurement Audit

Documents

Transcript of Public Procurement Audit