The Compliance Audit of Public Procurement in Romania: Guidelines and Findings

1. THE COMPLIANCE AUDIT OF PUBLIC PROCUREMENT PERFORMED BY THE ROMANIAN COURT OF ACCOUNTS CRISTINA BREDEN – Director ROMANIAN COURT OF ACCOUNTS Directorate for Audit of Public Procurement, Methodology and Professional Training

2. 1. INTRODUCTION 2. THE LEGAL REQUIREMENTS FORCOMPLIANCE AUDIT OF PUBLIC PROCUREMENT 3. THE ROMANIAN COURT OF ACCOUNTS AND THE NATIONAL STRATEGY FOR PUBLICPROCUREMENT • THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENT • COMPLIANCE AUDIT FINDINGS • THE GUIDELINE FORCOMPLIANCE AUDIT OF PUBLIC PROCUREMENT PREPARED IN COLLABORATION WITH OTHER EU SAIs

3. 1. INTRODUCTION EUROPEAN UNION = Internal single market The EU MemberStateshave to implement in their national legislation: Directive 2014/23/EU (award of concession contracts) Directive 2014/24/EU (public procurement) Directive 2014/25/EU (procurement by entities operating in the water, energy, transport and postal service sectors) Principles deriving from these directives: Equal treatment Non-discrimination Mutual recognition Proportionality Transparency Public entities from EU state members have tocomply withtherequirements of a competitive contract award processandto taketheirdecisions in a transparent way,with equal respect forallparticipants.

4. 1. INTRODUCTION • Directive 2014/23/EU (award of concession contracts) • Directive 2014/24/EU (public procurement) • Directive 2014/25/EU (procurement by entities operating in the water, energy, transport and postal service sectors) Obligations imposed on EU state members: • Advertising the procurement publicly (OJEU) • Adopting procedures providing open and transparent competition (proportionality) • Using non-discriminatory technical specifications • Allowing sufficient time for submission of interest expressions and tenders • Applying clear, objective and notified criteria • Equal treatment of biders

5. 1. INTRODUCTION In most of the EU Member States, public procurement represents 14% of GDP. But, public procurementis a riskarea for fraudandcorruptionandtheseusuallyresult in themisuse of public funds. Supreme Audit Institutions(SAIs) audit the use of public funds and, depending on mandates, may also audit compliance with principles of sound financial management and value for money.

6. 2. THE LEGAL REQUIREMENTS FORCOMPLIANCE AUDIT OF PUBLIC PROCUREMENT

7. PRESIDENT OF THEROMANIAN COURT OF ACCOUNTS Directorate for audit of public procurement, methodology and professional training (22 public auditors) 3. THE ROMANIAN COURT OF ACCOUNTS AND THE NATIONAL STRATEGY FORPUBLIC PROCUREMENT • Measure no. 1: To ensure adequate human resources, training, • guidelines Unit 1 Methodology, training, reporting Unit 2 Compliance audit of public procurement Training programme on audit of public/sectoralprocurement, concesions of services and works (over 65 courses in the past 2 years = over 1000 auditors) • Monitoring the public procurement system and the audit findings • Communicating risk factors • Reporting Compliance audits of public procurement (on the basis of risk factors communicated to the Romanian Court of Accounts - complaintsandpetitions)

8. 3. THE ROMANIAN COURT OF ACCOUNTS AND THE NATIONAL STRATEGY FOR PUBLIC PROCUREMENT • HARMONIZATION OF PUBLIC PROCUREMENT PROCEDURES • the legal mandate and the basic function of the Romanian Court of Accounts, • the internal regulations of the Romanian Court of Accounts, • the provisions of the legislative package in the field of public procurement, sectoralprocurement and concessions of works and services, approved in 2016, • National standards issued based on international auditing standards, • the auditprocedures used by the Audit Authority, as well as • the ex-ante procedures used by the National Agency for Public Procurement. • Measureno. 2:To establish a coordinating mechanism with the Audit Authority (audit of EU funded projects) to align audit procedures AUDIT AUTHORITY ROMANIAN COURT OF ACCOUNTS Directorate for audit of public procurement, methodology and professional training Synthesis, methodology and audit quality Unit

9. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENT The Guideline on audit of public procurement was issued based on: • the legal mandate of the Romanian Court of Accounts • ISSAI 100 • ISSAI 400 • ISSAI 4000 • National regulationsregarding public procurement

10. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENT Documentation, Comunicaction, Quality control • Objectives of compliance audit of public procurement • Elements of complianceaudit (three parties of the audit, subject matter, authorities and audit criteria, type of assurance) Initialconsiderations • Judgementandprofessionalskepticism • Audit risk • Materiality • Documentation • Comunication • Quality control • Management and skills of the audit team • General principles ofcompliance • audit • Understanding thenature of theauditee’sactivity • Evaluation of the entity's internal control system • Assessment of audit risk and risk of fraud • Selection of public procurementcontracts/frameworkagreements • Compliance audit strategy • Compliance audit plan • Planning of compliance auditof public procurement

11. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENT • Documentation, Comunicaction, Quality control • Applying audit procedures • Obtaining audit evidence • Assessment of audit evidence Execution ofcompliance audit Reporting • Preparation of the complianceauditreport, includingthe entity's management point of view and therecommendations • Decision including measures to be implemented by management of auditee • Referral to prosecution bodies • Follow - up • Enforcement of recommendations and follow-up

12. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENT - AUDIT CHECKLISTS Planing of the procurement process • Did the public authority identify the necessity of goods/services and works correctly, based on needs? • Did the public authority calculate the contract value accurately? • Did the public authority elaborate the annual procurement plan in connection with its budget allocations? • Are adequate and legal financing arrangements taken (an adequate budget in place)? • Was the contracting strategy issued? • Are internal control systems in place? • Did the public authority decide for an appropriate and admissible procurement procedure?

13. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENTAUDIT CHECKLISTS Procurement procedure • Was timely and equal access to contract documents and information provided to all candidates? • Are pre-qualification criteria properly defined? • Are the evaluation criteria relevant? • Were the procurement documents comprehensive, transparent and non-discriminating? • Have the tenders been assessed on the published criteria only? • Was a formal review of tenders received undertaken? • Was the suitability of candidates accurately assessed? • Were the documents received scrutinised for completion and adherence to stated conditions before the tenders were evaluated? • Were bids properly evaluated?

14. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENTAUDIT CHECKLISTS Procurement procedure • Did the chosen procedure ensure competition, transparency and equal treatment? • Was the outcome of the award process properly reached and communicated? • Was the submission of variant tenders accepted and duly ruled? • Was confidentiality ensured when necessary? • Where applicable, did the public authority adequately manage experts employed to assist in the procurement process? • Was the contract awarded to the right bider based on the outcome of admissible and acceptable bids’ evaluation? • Was transparency assured through communication at each stage?

15. 4. THE GUIDELINE FOR COMPLIANCE AUDIT OF PUBLIC PROCUREMENT AUDIT CHECKLISTS Implementation and monitoring of contract • Is the execution of the contract adequate and does this comply with the provisions of the contract? • Were any identified modifications to contracts or additional works or deliveries admissible without the need for a new procurement procedure? • Is the execution of the contract adequately managed and monitored? • Are procurement processes well organized and documented?

16. 5. COMPLIANCE AUDIT FINDINGSin year 2017, for year 2016 budget

17. 5. COMPLIANCE AUDIT FINDINGSin year 2017, for year 2016 budget

18. 5. COMPLIANCE AUDIT FINDINGSin year 2017, for year 2016 budget

19. 5. COMPLIANCE AUDIT FINDINGSin year 2017, for year 2016 budget

20. 6. THE GUIDELINE FORTHE COMPLIANCE AUDIT OF PUBLIC PROCUREMENT PREPARED IN COLLABORATION WITH OTHER EU SAIs The Directorate for audit of public procurement, methodology and training collaborated with representatives of other Supreme Audit Institutions from the European Union’s MemberStates on the updating of the Guide on the audit of public procurement, on the basis of the new European directives on public procurement, as well as the case-law of the European Court of Justice.

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