View
34
Download
0
Category
Tags:
Preview:
DESCRIPTION
Risk analysis (UVER). Luigi Guerci. Public Investment Verification Unit (UVER). The organisational principles at the foundation of the management and control system defined by the Community regulations refer to the following key elements of the system itself: - PowerPoint PPT Presentation
Citation preview
Risk analysis
(UVER) Luigi Guerci
Public Investment Verification Unit (UVER)
The organisational principles at the foundation of the management and control system defined by the Community regulations refer to the following key elements of the system itself:
• integration of management and control system components;• separation of functions;• risk assessment.
Public Investment Verification Unit (UVER)
Integration of management and control system components (art. 71 Reg. (EC) 1083/06 and annex XII Reg. (EC) 1828/06)
•management activities (programming, ordinary management, payment,reporting, etc);•risk assessment;•routine check activities (1st level);•sample check activities (2nd level);•monitoring system.
Public Investment Verification Unit (UVER)
It is a sequential procedure, where each component may affect another, regardless of the sequence of the process.
Public Investment Verification Unit (UVER)
Management activities must ensure the effectiveness and correctness of theImplementation
Risk analysis is the activity that allows to identify and oversee those internal and external factors that may compromise the fulfilment of intervention objectives, withspecial reference to the objectives of sound financial management.
Public Investment Verification Unit (UVER)
Routine check activities (1st level) are carried out in parallel with interventionmanagement and are represented by all those controls accompanying the activities of the Managing authorities and shall include: - administrative check regarding 100% of applications for payment - on the spot check on a sample basis
Art. 60 let. b 1083/2006
Public Investment Verification Unit (UVER)
Sample check activities (2nd level) are aimed at verifying the efficacy of themanagement and control systems implemented and, based on selective criteria and on a risk analysis, the statements of expenditure presented at the various levels involved
Public Investment Verification Unit (UVER)Routine check activities (1st level)
First level activities
Sequence of activities
Administrative Checks
Art. 13 par 2 lett. A 1828/06
On the Spot check Art 13 par. 12 lett. B
Reg 1828/06
Self control Administrative check Risk analysis Sampling
operationsOn the Spot
check
Tipology control
Control
activitiesC
ontolrepresentativeness
Alloperations
Alloperations
Sample check
Public Investment Verification Unit (UVER)
Sampling activities are performed on reported eligible expenditure based onthe administrative check.
Public Investment Verification Unit (UVER)
For assessment purposes, risks may be classified as:
- inherent risks (IR) of the management system- control risks (CR), i.e. the possibility that a systematic control be unable to prevent or detect errors or irregularities.
Public Investment Verification Unit (UVER)
Inherent risks (IR) of the management system are mainly related to:
- type of operation involved - type of beneficiaries involved
Public Investment Verification Unit (UVER)
The Operation classes considered are the following:1. construction of public works2. procurement of goods and services3. granting of funds and services to individual beneficiaries4. training
the adoption of the operation class is proposed as a baseline for the identification of management macro-processes and the relevant risks
Public Investment Verification Unit (UVER)
To define the risk level of each macro-process we have considered the following main factors:- number of activities into the macro-process- number of administrative documents handovers- number of entity involved and number of level of responsibility
Public Investment Verification Unit (UVER)
According to these factors we can identify different level of risk as follow:
High risk: 1. construction of public works with presence of intermediate body; 2. granting of funds and services to individual beneficiaries with presence of intermediate body;3. training with presence of intermediate body;
Public Investment Verification Unit (UVER)
Medium risk:
1. construction of public works; 2. granting of funds and services to individual beneficiaries;3. training;4. procurement of goods and services with presence of intermediate body
Low risk:
1. procurement of goods and services;
Public Investment Verification Unit (UVER)
With reference to risk level associated with Beneficiaries we can identify:
- Public Administrations- Public Bodies- Private Bodies
In this case, the risk level is connected to the presence of public controls and to the solvency capacity in case of recovery of sums wrongly paid.
Public Investment Verification Unit (UVER)
According to these factors we can identify different level of risk as follow:
High risk: Private Bodies Beneficiaries
Medium risk: Public Bodies Beneficiaries
Low risk: Public Administrations Beneficiaries
Public Investment Verification Unit (UVER)
Combining risk levels obtained considering type of operations (Macro process) and type of Beneficiaries we have the following:
Type of Macro Process Private Body Public Body Public Administration
Granting of funds and services to individualbeneficiaries with I .B.; H Mtraining with I .B.; H M LConstruction of public works with I .B. ; M LGranting of funds and services to individualbeneficiaries; H Mtraining; H M LConstruction of public works; M Lprocurement of goods and services with I .B. M Lprocurement of goods and services L L
Type of Beneficiaries
Public Investment Verification Unit (UVER)
We can now identify the values of the Inherent Risk (I.R.) for each risk level:
High risk: IR=1
Medium risk: IR=0,65
Low risk: IR=0,45
Public Investment Verification Unit (UVER)
Self control risk
The risk level has to be found in relation to the financial impact of irregularities detected during the administrative check regarding 100% of applications for payment
Public Investment Verification Unit (UVER)
We have set the following level of self control risk:
High self control risk: financial impact of irregularities detected during the administrative check over 30% of the reported expenditures
Medium self control risk: financial impact of irregularities detected during the administrative check between 10% and 30% of the reported expenditures
Public Investment Verification Unit (UVER)
Low self control risk : financial impact of irregularities detected during the administrative check under 10% of the reported expenditures
Public Investment Verification Unit (UVER)
According to previous factors we can now identify the values of the Self Control Risk (C.R.) for each risk level:
High self control risk: CR=1
Medium self control risk: CR=0,28
Low self control risk: CR=0,17
Public Investment Verification Unit (UVER)
We can now classify all operations, with eligible reported expenditure after the administrative check, in different group according to the general risk level(Inherent risk + Control risk) obtaining the following table
Public Investment Verification Unit (UVER)
Type of Macro ProcessPrivate Body
Public Body
Public Admin.
Private Body
Public Body
Public Admin.
Private Body
Public Body
Public Admin.
Granting of funds and services toindividual beneficiaries with I .B.; 1 0,65 0,28 0,18 0,17 0,11
training with I .B.; 1 0,65 0,45 0,28 0,18 0,13 0,17 0,11 0,08
Construction of public works withI .B. ; 0,65 0,45 0,18 0,13 0,11 0,08
Granting of funds and services toindividual beneficiaries; 1 0,65 0,28 0,18 0,17 0,11
Training; 1 0,65 0,45 0,28 0,18 0,13 0,17 0,11 0,08
Construction of public works; 0,65 0,45 0,18 0,13 0,11 0,08
Procurement of goods and services with I .B. 0,65 0,45 0,18 0,13 0,11 0,08
procurement of goods and services 0,45 0,45 0,13 0,13 0,08 0,08
Low self control riskHigh self control risk Medium self control risk
Public Investment Verification Unit (UVER)
Sampling activities are performed in relation to:- risk level- financial dimension- number of operation
Firstly we can identify our sample considering a higher rate of expenditures in connection with higher Risk level
Public Investment Verification Unit (UVER)
Case 1: Y 0.65, N < 100
High riskLow number of operations
The sample shall identify operations for over 30% of expenditures
Public Investment Verification Unit (UVER)
Case 2: Y 0.65, N > 100
High riskHigh number of operations
Firstly we organize operation in a decreasing order
The sample shall identify N1 operations for over 30% of expenditures of the first 100 biggest operations
Public Investment Verification Unit (UVER)
Than we identify N2 operations covering the 15% of expenditures of the group from operation 101 and operation 500
In the end we identify N3 operations covering the 6% of expenditures of the group from remaining operations
The number of operations in our sample will be N1 + N2 + N3
Public Investment Verification Unit (UVER)
Case 3: 0,17 Y 0.45, N < 100
Medium riskLow number of operations
The sample shall identify operations for over 20% of expenditures
Public Investment Verification Unit (UVER)
Case 4: 0,17 Y 0.45, N > 100
Medium riskHigh number of operations
Firstly we organize operation in a decreasing order
The sample shall identify N1 operations for over 20% of expenditures of the first 100 biggest operations
Public Investment Verification Unit (UVER)
Than we identify N2 operations covering the 10% of expenditures of the group from operation 101 and operation 500
In the end we identify N3 operations covering the 4% of expenditures of the group from remaining operations
The number of operations in our sample will be N1 + N2 + N3
Public Investment Verification Unit (UVER)
Case 5: Y < 0.17, N < 100
Low riskLow number of operations
The sample shall identify operations for over 10% of expenditures
Public Investment Verification Unit (UVER)
Case 4: Y < 0.17, N > 100
Low riskHigh number of operations
Firstly we organize operation in a decreasing order
The sample shall identify N1 operations for over 10% of expenditures of the first 100 biggest operations
Public Investment Verification Unit (UVER)
Than we identify N2 operations covering the 5% of expenditures of the group from operation 101 and operation 500
In the end we identify N3 operations covering the 2% of expenditures of the group from remaining operations
The number of operations in our sample will be N1 + N2 + N3
Public Investment Verification Unit (UVER)
This methodology ensure, in case of high number of operations (up to 1.800) that the sample will cover roughly 12% of expenditures for group characterized with an high risk level and roughly 4% of expenditures for group characterized with a low risk level
Public Investment Verification Unit (UVER)
Rate of expenditures to be checked on a sample basis considering risk level and number of operations
High Medium Low
Projects Y=0,65 0,17<=Y<=0,45Y<0,17
N1 for N=100 30% 20% 10%
N2 for 100<N<500 15% 10% 5%
N3 for N>500 6% 4% 2%
Risk level
Recommended