AfDB New Procurement Policy: Training Program for the Bank s Procurement Staff

Transcription

1 11 AfDB New Procurement Policy: Training Program for the Bank s Procurement Staff AUDIT EXECUTION Selecting Audit Samples and Evidence Requirements

2 Sample 2 Sample is a part or proportion of the whole representing the whole. Examining a sample allows the identification of the whole and its characteristics and to extrapolate conclusions about the whole without examining it entirely.

3 Samples selection 3 Statistical Samples are used: because examining all data forming the whole is cumbersome, particularly when this whole is complex. for efficiency and economy to provide credibility to the Audit work to justify results achieved

4 Selecting Audit Samples 4 Methods of sample selection : Random Sample: A sample is chosen in a way that it represents all segments found in the whole; parts of the whole are chosen in such a way that all have an equal chance to be measured. Convenience Sampling: A sample that is dependent upon the assessment of the auditor and the nature of risks found in the procurement entity. Sampling is done as convenient. Cluster Sampling: A whole is divided into clusters and a few of these clusters are exhaustively sampled.

5 Selecting Audit Samples - Steps of Sample Selection 5 1. Planning for Sample Selection: Identify the whole and its special features / characteristics in order to form similar and homogeneous types/categories. 2. Selecting the categories that need to be examined: The auditor must ensure that the sample is well representative of the whole it was chosen from. 3. Assessing/Evaluating Results: if the sample is found to be non representative of the whole, further tests must be carried out.

6 Selecting Audit Samples 6 The auditor must validate the evidence found from the results of the proof analysis tests, detailed proof analysis tests, accounts, and compliance tests based on the following : Sample size and design; Sample selection method; The nature and frequency of errors or shortcoming that are discovered in the sample;. The level of dependence on acquired evidence according to sample entries.

7 Sample selection 7 Choosing a sample of the Contracts under investigation: Contracts above certain threshold Contracts for special procurement Contracts of relative importance (financially or strategically) Contracts awarded to a specific Bidder/Consultant Contracts prepared by a specific Officer Contracts with complaints Contracts with disputes

8 Sample selection cont. 8 Choosing a sample of the Contracts under investigation: Contracts with an implementation cost exceeding the allocated budget (cost-overrun) Contracts awarded for specific timeframe Contracts with an implementation time exceeding original Contracts with substantial modifications arising after signature Contracts with Change Orders

9 Sample selection cont. 9 When selecting a sample from the contracts that need to be examined, the sample of selected contracts must have the following characteristics : Relative importance Needed major adjustments at the time of execution The expenses exceed the amount stated in the budget Needed adjustments in value or timeframe Gave rise to complaints or disputes

10 10 Evidence Requirements Evidence. with respect to characteristics, sources, types and importance based on international standards

11 What is the evidence? 11 Evidence : Documents, data, facts, interviews that could support a procurement auditor in drafting his/her audit report including formulation of opinions and findings.

12 International Standards (INTOSAI) 12 The auditor has to obtain sufficient, relevant, suitable and appropriate evidence in order to support its findings.

13 INTOSAI Audit Guide 13 The Auditor must demonstrate prudence in its search for evidence. The Audit institution has to ensure that the means used for collecting evidence are suitable.

14 INTOSAI Guide cont. 14 The Auditor must: Ascertain reliability of obtained evidence by correlating such information from a third source. Determine how much evidence is needed to support the audit findings. Understand how to deal with electronic evidence and how these can be used to support audit findings. Ascertain if there are sufficient controls to verify authenticity of electronic evidence.

15 Types of evidence in respect to strength 15 Direct evidence Relevant evidence Reasonable evidence

16 Characteristics of Evidence 16 1 Trustworthy 2 Suitable 3 Efficient 4 Economic Training Program for the Bank's Procurement Staff

17 Collection and Analysis of Evidence 17 Source of Evidence: The Organisation under Audit Auditor External Parties

18 How to obtain evidence 18 Examination of Internal Control Systems. Analysis of the outcomes/results of the operation in the organization under audit. Comparison between audit results and expectations. Performance of detailed tests.

19 How to obtain evidence-cont. 19 Execution of audit to verify compliance of the organization under audit with set rules and procedures. Verification of illegal activities that may come to the auditor attention. Verification of data/information that is obtained from relevant parties. Re-performance of key organization activities.

20 Obtain Evidence 20 Procurement File : The procuring entity shall keep record of the procurement proceedings containing the following information for a minimum period of X years from the period of the award of tender relating to works, goods or services: 1. Procurement Notices 2. Bidding document and clarifications provided; 3. Bids; 4. Bid opening and evaluation reports; 5. Tender award notification;

21 Obtain Evidence cont. 21 Procurement File cont.: 6. A copy of the contract concluded between the procuring entity and the successful bidder; amendments to the contract; 7. Certificates of completion; 8. All correspondences between the procuring entity and the bidder; 9. Any other useful information, instructions and reports that are related to the tender.

22 Obtain Evidence cont. 22 Documents verification in the Procurement File confirming the sound implementation of the process (timeframes, approvals, use of appropriate documents) with focus on: Procurement Plans and Monitoring; Advertising; Pre/Post Qualification; Bid Opening; Bidding Documents; Bid Validity Extensions; Evaluation Reports and Award Notifications;

23 Obtain Evidence-cont. 23 Documents verification cont.: Protests from Bidders/Contractors; Signed Contracts; Contract Amendments and Change/Variation Orders; Delays in payments; actual contract payments vs. contract award amount; Securities (for Bid, Performance, Advances, Insurance, Liability, etc.);

24 Obtain Evidence-cont. 24 Documents verification cont.: Contractors Claims/ Contractual Disputes and their Resolution; Damages and Penalties for Delays, non-compliance with Functional Guarantees, etc.; Reasons for Slow Progress of Completion; Imports, Customs, etc. if any; List of deliverables and completion (date, description, quantity, location of goods or works): certificates of acceptance/completion, defects list, tests;

25 Short Practical Case 25 A Procurement Audit Team has to audit a $75 million education project financed by the AfDB, the project includes the following procurement: Construction of 15 new elementary schools; Design of new elementary schools curriculum; Training of elementary schools teachers; Training of administrative staff in elementary schools; Procurement of school books for elementary schools; Procurement of computers. Assuming that for each of these procurement there are several contracts, how could the Procurement Audit Team propose a sampling using: The random selection method (See slide 4)? The convenient sampling method (See slide 4)?

26 Short Practical Case 26 In a $20 million project, there are six (6) contracts, two (2) for consulting services, two (2) for constructions, and two (2) for goods. For each of these contracts, one is in the capital of the country and one in another city. Which ones would you expect the Procurement Audit Team to select for audit? Based on which criteria?

27 Short Practical Case 27 The audit report for an Executing Agency on an AfDBfinanced project is shared with you. It contains findings establishing that despite the applicable legal requirements, the Executing Agency is not using standard bidding documents and they are not publishing contract awards. The Procurement Audit Team has not made any recommendation in connection with these two findings. Which actions would you have expected them to recommend? Within which timeframe would you expect these recommended actions to be carried out?