1. Risk analysis (UVER)

2. Public Investment Verification Unit (UVER)

3. 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.

4. Public Investment Verification Unit (UVER) Inherent risks (IR) of the management system are mainly related to: - number of activities into the macro- process - complexity of activities - number of administrative documents handovers - number of entity involved and number of level of responsibility - time planned to implement operations

5. Public Investment Verification Unit (UVER) Control risks (CR) are mainly related to: - organization chart for routine check (first level) and competence of professionals involved - presence of all point to be checked in accordance to audit trail - information from routine check (first level) - information from previous controls performed by the Certifying Authority

6. Public Investment Verification Unit (UVER) According to these factors we can identify different level of risk (High risk/Medium risk/Low risk) associated with a value expressing the likelihood of irregularities. Italian Court of Account defines, for Inherent Risk (I.R.), the following: High risk - 1 Medium risk – 0,65 Low risk – 0,45

7. Public Investment Verification Unit (UVER) In the same way Italian Court of Account defines, for Control Risk (C.R.), the following: High risk - 1 Medium risk – 0,28 Low risk – 0,17

8. Public Investment Verification Unit (UVER) Risk assessment is performed for each risk factor in every management and control process by multiplying IR*CR. Than the risk level of the process is counted as arithmetic mean of all risk factor in the specific process. Similarly the risk level of a group of operations is counted as arithmetic mean of level risk of all processes

9. Public Investment Verification Unit (UVER)

10. Public Investment Verification Unit (UVER) The risk level of the process is counted as arithmetic mean of all risk factor in the specific process.

11. Public Investment Verification Unit (UVER) The risk level of a group of operations is counted as arithmetic mean of level risk of all processes

12. Public Investment Verification Unit (UVER) In the example the risk level of 26% is to be considered as an intermediate level with reference to the following

13. Public Investment Verification Unit (UVER) The risk level of an Operational Program is the weighed mean of all risk level with reference to the financial weight of each group of operations

14. Public Investment Verification Unit (UVER) At the end of the assessment a judgement on the effectiveness and reliability of the management and control system has to be set out.

15. Public Investment Verification Unit (UVER) The Annex IV of the regulation 1828/2006 state that “ …the audit authority first evaluates the reliability of the systems (high, average or low) taking into account the results of systems audits, so as to determine the technical parameters of the sampling, in particular the confidence level and the expected error rate. The combined level of assurance obtained from the systems audits and the audits of operations should be high. The confidence level used for sampling operations should not be less than 60 % with a maximum materiality level of 2 %. For a system evaluated as having low reliability, the confidence level used for sampling operations should not be below 90 %. The audit authority should describe in the annual control report the way assurance has been obtained.”

16. Public Investment Verification Unit (UVER) The confidence level related to the reliability suggested are:

17. Public Investment Verification Unit (UVER) Sampling the operations pursuant art. 17 EC Regulation 1828/2006