The issue of compliance with external expenditures by companies is a worldwide problem. Corruption is often talked about. The first reaction of many people is the procurement department. In fact, every department involved in the outsourcing expenditure procurement project is possible.
How to effectively avoid this problem?
Top-down implementation of compliance management and related tools in the area of external spending is necessary:
Compliance management is mainly carried out from three aspects:
Shaping the right values and corporate culture
Enterprises with advanced management systems first strategically shape the correct ethics and professional ethics in their values, corporate documents, and programmatic guidance documents. Let non-compliant behaviors lose the soil for survival.
Rigorous procurement process design
The rigorous process design of the procurement function department is a solid foundation, and the advanced and rigorous procurement process design can greatly squeeze rent-seeking space for non-compliance such as corruption and is a systematic preventive measure.
Strict auditing system and tools are a powerful guarantee
Designing a scientific and rigorous anti-corruption compliance audit checklist based on this is a powerful guarantee.
Target
In order to improve our internal procurement operation system, the establishment of a compliance audit checklist can periodically or irregularly proactively identify various procurement violations, suspicious cases or problems in procurement. Beside this feature (as a reporting tool), the manifest should also serve as a compliance tool:
The Purchasing Compliance Officer is deemed to be considered "compliant" for all non-listed reports.
Due to the complexity and lack of transparency of procurement transactions, the most prone to corruption in procurement companies and government activities.
Purchasing compliance checklists constitute an important part of corruption risk management. Regardless of the strategy in the procurement process, in terms of preventing and detecting fraud and preventing corruption, they can guide purchasers to complete transparent and effective procurement and transactions, and effectively help systematic identification , Assess and report violations.
The Compliance Checklist reflects good practices in providing a set of guidelines for the evaluation of procurement processes and compliance with procurement rules. They usually revolve around the main stages of the procurement cycle, usually
Covers the various risks associated with each stage, using red markers and "flashing" indicators. To successfully implement a compliance checklist tool, the checklist should be designed to be easy to participate, easy to use, and easy to apply.
Design procurement compliance checklist
Purchasing is an important executive department for major external expenditures of most enterprises and government departments. Incentives in sellers' market competition, imperfect procurement processes, and the complexity of transactions provide possibilities and opportunities for rent-seeking behavior. Corruption in procurement can take many forms, and every key environment of the procurement process can be penetrated. However, procurement risks are often difficult to identify in a timely manner, because the number and complexity of transactions involved often require high-level professionals to pay attention to the various stages of the transaction. In addition, the corruption planning process in procurement is complex, technically challenging, and often abused by people familiar with the rules of the game. The lack of proactive anti-corruption measures further exacerbates challenges in many organizations' risk management processes. Therefore, good, transparent and responsible procurement systems need to ensure effective control, complaint and review mechanisms to ensure that decisions are made in compliance with procurement regulations.
What is a procurement compliance checklist?
The procurement compliance checklist is a type of corruption risk management tool that can be used to effectively monitor the procurement process and identify and determine the effective identification of fraud and corruption risks throughout the entire procurement cycle of procurement. They are based on the organization's existing procurement processes, and they have many potential benefits for managing the risk of corruption, including fraud prevention and proactive identification:
They strengthen existing corporate guidelines and policies that are followed and implemented at all stages of the procurement process;
They can help transform fair, open, transparent, competitive and other corporate guiding ideas into specific procurement implementation steps and management goals
They provide procurement staff with specific guidance on how to design procurement processes to minimize the risk of fraud, corruption and anti-competitive behavior;
They allow tracking of purchasing decisions and help identify violations and provide alerts through alert and indicator systems;
They support a consistent procurement process;
They can be used as a tool to review procurement processes and assess compliance with existing guidelines
Content and structure of the procurement compliance checklist
The procurement compliance checklist reflects the procurement process, based on an overview of the procurement process and the potential risks and vulnerabilities associated with each stage. In addition to monitoring compliance with procurement guidelines, they can also
Managing procurement activities makes the procurement process more effective and transparent. According to a commercial anti-corruption portal, transparent and effective procurement processes can have three basic principles:
Fairness: All qualified suppliers should have equal opportunities to participate;
• Transparency: All procedural steps are based on open, predictable, known and written procedures, including the processes and standards used to award contracts to ensure that all bidders are treated equally;
• Traceability: The transparent procurement process should also take into account open and independent competition mechanisms.
At the operational level, these principles should be translated into effective records and maintained appropriately at every stage of the procurement cycle to ensure that all bidding, procedures, assessments and awards documents are available in a timely manner.
The scope of the compliance checklist includes:
• Open bidding opportunities;
• Record the specific needs of the product or service: technical specifications / specifications, etc .;
• Clearly describe the contract award process, terms and conditions, evaluation criteria for contract award, etc ;
• Submit a sealed bid at the specified date, time and place;
• Evaluate bids or quotes and proposals impartially by the evaluation project team without interference from other personnel;
• The contract award process is fair, just and transparent;
• The contract award decision shall be recorded and kept and the bidders shall be informed of the reasons for the failure and the decision basis;
• Effectively monitor contract implementation.
Compliance checklists typically surround key stages of the procurement cycle, including:
1) Determine the needs;
2) Define contract specifications;
3) Bidding process / inquiry, price comparison, supplier selection process;
4) the award of the contract;
5) Contract management and implementation.
Interpretation of procurement risks and red flags
The first step in developing a procurement compliance checklist is to map the risks and identification indicators of various procurement cycles related to each stage and the red flags used to detect violations.
The most common schemes used to manipulate corruption include bribes, kickbacks, various forms of manipulation, collusion, and influencing bid evaluation results. The World Bank's Anti-Fraud and Anti-Corruption Manual states that corrupt procurement projects often involve multiple
The type of misconduct is first bribery, followed by manipulation of bids and ultimately fraud to cover up the plan.
10 places where corruption often occurs:
• Complaints from bidders and others are an important source of information for investigations leading to the discovery of fraud and corruption.
• Split the target into multiple small-amount contracts to avoid higher-level review of procurement decisions or competitive bidding.
• Abnormal bidding patterns, such as unexplained inflated bids, whole or unnatural numbers, obvious rotation of successful bidders, etc., clearly indicate collusion bidding.
• Deceptively high agency fees can be used to disguise corrupt payments, such as unnecessary intermediary intervention.
• Suspicious bidders offer multiple fictional companies or shadow bidders and can get higher prices by manipulating competition.
• An unreasonably selected lowest bidder may manipulate the bidding project with significant subsequent risk.
• Unreasonable and / or duplicate sole suppliers should carefully review purchasing decisions, especially if these requests are for urgent reasons.
• Changes to the terms and values of the contract. The contract should be carefully reviewed with regard to the process of selecting or signing the price, quantity or type of product or service.
• Changing multiple contracts and changing orders. Contracts that have been signed but have not delivered the products or services of the quality level specified in the contract can indicate that the contract is risky.
• Poor quality or undelivered goods and services are strong evidence of fraud and corruption.