1. A.V. Glazachev, Deputy Head of the Inspectorate of the Accounts Chamber of the Russian Federation INTOSAI Experience in Public Procurement Audit Activities of the INTOSAI Task Force on Procurement Contract Audit Topic of the Speech: 11th Forum on Knowledge Exchange in the Area of Procurement (8 – 12 June 2015, Batumi, Georgia) ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

2. 2 INTOSAI Task Force on Procurement Contract Audit The Task Force was established upon the initiative of the Accounts Chamber of the Russian Federation and the US Government Accountability Office The decision to establish the Task Force was approved at the 64th Meeting of the INTOSAI Governing Board and the 21st INTOSAI Congress For reference: INTOSAI is the International Organization of Supreme Audit Institutions (hereinafter referred to as SAI), which includes more than 190 countries ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

3. 3 The main reasons to establish the INTOSAI Task Force on Procurement Contract Audit the need to improve and increase the transparency of national contract systems the prospective viability of the topic of public procurement from the viewpoint of the international cooperation inside INTOSAI the importance of the contract system as one of the tools to ensure efficient implementation of the social and economic government policy substantial amount of the public procurement market (10 – 15% of GDP in the OECD countries and 25 – 30% of GDP in developing countries) SAIs’ obligation to inform the society and citizens of how public funds are spent, including spendings on public procurement (Lima Declaration of INTOSAI Guidelines, the Resolution of the 66th UN General Assembly) ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

4. 4 The need for participation of the Accounts Chamber of the Russian Federation in the Task Force activities is caused by:  the adoption of the new version of the Federal Law “On the Accounts Chamber of the Russian Federation” (No. 41-FZ dated April 5, 2013), which determined the powers of the Accounts Chamber in the area of public procurement audit  the adoption of Federal Law No. 44-FZ “On the Contract System in State and Municipal Procurement of Goods, Works and Services” dated April 5, 2013  a significant number and amount of violations in the area of public procurement identified during control activities  the increased need to expand the exchange of experience with other SAIs in the contract audit area ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

5. 5 The powers of the Accounts Chamber of the Russian Federation: (according to Federal Law No. 41-FZ (Article 14) audit of procurement of goods, works and services carried out by auditees to assess the feasibility of planning procurement for public needs, the feasibility and efficiency of said procurement the audit includes compliance with the terms of contracts pertaining to timing, volume, price of contracts, amount and quality of goods, works and services to be procured, as well as procedure of pricing and efficiency of the contract management system ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

6. 6 The powers of the Accounts Chamber of the Russian Federation: (according to Federal Law No. 44-FZ (Article 98)  performing audit of procurement (review, analysis and assessment of information about the legality, appropriateness, justification and timeliness, efficiency and effectiveness of spendings on procurement under contracts that are planned to be concluded, have been concluded and have been performed)  summarizing the audit findings, including determination of the causes of identified deviations, violations and weaknesses, preparation of proposals on the elimination thereof  placing the summarized information on the findings of a completed audit in the area of public procurement in the unified information system ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

7. 7 Main violations identified by the Accounts Chamber of the Russian Federation in the public procurement audit  lack of justification and overestimation of the initial (maximum) contract price  conclusion of a contract with a single supplier (contractor, provider) without tendering and request for quotations  unjustified amendment of the terms of the contract during its execution  execution of a contract without taking into consideration the requirements of the terms of reference, with failure to comply with deadlines and of inadequate quality  failure to claim penalties for non-performance (inappropriate performance) of a contract For reference: as a result of audits in the area of procurement carried out by the Accounts Chamber of the Russian Federation in 2013, about 500 various violations were identified to the total amount of 233 billion rubles. ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

8. 8 INTOSAI Task Force on Procurement Contract Audit Task Force members are the SAIs of 13 countries (Azerbaijan, Armenia, Belarus, Georgia, Zambia, Kazakhstan, Kirghizia, China, Latvia, Portugal, Russia, Slovenia, RSA) SAIs of 11 countries are willing to join the Task Force The Accounts Chamber of the Russian Federation:  heads the Task Force Secretariat  is a coordinator of the activities of the Task Force The Accounts Chamber of the Russian Federation:  heads the Task Force Secretariat  is a coordinator of the activities of the Task Force ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

9. 9 The results of the first meeting of the Task Force (Moscow, Russian Federation, June 2014)  the Terms of Reference and the Work Plan for 2014 – 2016 were approved  the proposed structure of the web page of the Task Force was approved (taking into account the planned activities and the format of representing the results of the work)  the exchange of experience took place regarding the peculiarities of public procurement audit in various countries For reference: the next meeting of the Task Force is planned to be held in June 2015 in Bulgaria. ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

10. 10 According to the Terms of Reference The mission of the Task Force: to coordinate activities of SAIs - INTOSAI members to develop universal approaches and procedures of public procurement audit Strategic objective: to assist SAIs in assessing the efficiency and effectiveness of public procurement Objectives: 1)To develop general principles of the audit of public procurement in accordance with the fundamental INTOSAI documents 2)To prepare practice guidelines on the audit of public procurement. To develop the system of information exchange pertaining to said issue. ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

11. 11 The main activities planned by the Task Force for the period of 2014 – 2016 development and information content of the ongoing site (page) of the Task Force analysis of the international experience and methodological framework of organization and carrying out of procurement audit preparation, refining and updating of the INTOSAI glossary pertaining to public procurement preparation and implementation of pilot projects in the area of public procurement preparation of practice guidelines on public procurement ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

12. 12 The results of the activities of the Task Force in 2014-2015  the section on the activities of the Task Force on the official site of the Accounts Chamber of the Russian Federation was put into service and its filling with content is being carried out;  R&D* entitled as “Development of the Framework of International Standard of the Contract Audit Based on the Study of International Experience and Methodological Framework of Audit in the Area of Public Procurement” was prepared;  a draft INTOSAI glossary pertaining to public procurement was prepared;  the plan of implementation of pilot projects on the audit of public procurement is being formed on the basis of proposals received Note: R&D - research and development work ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

13. 13 Proposals on pilot projects on the audit of public procurement (initiatives of the SAIs of Russia and Portugal) Note: SRE - Statutory and Regulatory Enactments Name of the projectObjectives of the projectDeliverables Analysis of “best practices” of preliminary audit (control) of public contracts concluded and preparation of proposals on implementation thereof 1. Review of SREs* regulating preliminary audit. 2. Drawing-up of a list of main areas and issues of preliminary audit Recommendations: - on the implementation of a “sheet of main areas and issues of preliminary audit”; - on the improvement of SREs regulating preliminary audit. ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

14. 14 Proposals on pilot projects on the audit of public procurement (initiatives of the SAIs of Russia and Portugal) (continued) Name of the projectObjectives of the projectDeliverables Analysis of changes in substantial provisions of public contacts during the implementation thereof, including the assessment of legality, justification and efficiency of such changes 1. Review of SREs governing the procedure for amending contracts. 2. Preparation of summarized information on the amount and nature of amendments introduced. 3. Assessment of legality, justification and efficiency of amendments introduced (depending on the type thereof). 4. Development of a “map of risks” arising due to the amendment of contracts Recommendations: - on the implementation of a “map of risks” arising due to the amendment of contracts; - on the improvement of SREs governing the procedure of amending contracts (if necessary). ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION

15. 15 11th Forum on Knowledge Exchange in the Area of Procurement (8 – 12 June 2015, Batumi, Georgia) Topic of the Speech: ACCOUNTS CHAMBER OF THE RUSSIAN FEDERATION