Fraud risk checklists of Sicily

The fraud checklists developed by the Sicilian MA feature indicators with particular reference to awarding procedures and payment claims. The checklists include 23 questions on award procedures, and 12 questions regarding payment claims.

The checklist covering award procedures, features the following structure:

1) Selection of beneficiaries

• Conflicts of interest
• False declarations on behalf of candidates
• double funding

2) Implementation and control

• Corruption and illicit payments
• Violation of tender procedures
• Manipulation of technical specifications
• Leaking of bid data
• Bid rigging, unbalanced offers and manipulation of offers
• Unjustified single supplier source
• Split purchases
• Improper mix of contracts

By way of example, you can find some questions below related to selection of beneficiaries in award procedures:

• Did the selection respect the policy on conflict of interest, including a personnel declaration and measures for guaranteeing that this policy is respected? Did the operator in charge of the contract submit a conflict of interest declaration? Is it presented in a comprehensive manner?
• Have any cases of undeclared conflict of interest and sequential actions been detected?
• Did the screening of project applications include an examination of all supporting documents and self-declarations?
• Were intermediate or temporary declarations checked through public databases (Project Identification Code, Region's beneficiary database, etc.)?

The questions in the checklist on bid rigging, unbalanced offers and manipulation of offers include the following:

• Was the winning offer too high with respect to estimated costs, published prices, similar services, average industry prices and correct market prices?
• Were losing bidders used as subcontractors?
• Are there unusual structures in the bids (e.g., offers are divided in exact percentages, the most advantageous offer is just below the threshold of acceptable prices, persistently high prices from all bidders, evident connections between bidders)?

The checklist for payment claims features the following sections:

1) Incorrect charging of costs

2) Incomplete pricing practices

3) False, inflated or duplicate invoices

4) Supply of ghost services

 The following are samples of questions covering fraud risk assessment in payment claims:

• Is the cost of labour/service/supply excessive or unusual?
• Is the cost of labour/service/supply not proportional to the contract's advancement?
• Does the contractor present incomplete or inadequate documentation?
• Do prices appear too high compared to similar contracts, price lists or average industry prices?
• Are there invoiced goods/services which cannot be identified or calculated?
• Is there a receipt for invoiced goods or services?
• Do the invoiced goods correspond to an order? Is the order contestable?
• Concerning invoices: Do prices, article descriptions or amounts conform to the contract?
• Do some invoices feature the same amount, figures, date etc.?
• Is the payment linked to a group of subcontracted companies in a “cascade” system?
• Are any payments made to off-shore companies?

The full content of the Italian original version of the checklists can be downloaded from https://www.euroinfosicilia.it/misure-antifrode-del-po/ by accessing the ZIP file “DDG n.572/2019”at the bottom of the page and opening the folder “Checklists (October 2019) “  ”Allegato 2A_Affidamenti Dlgs 50_rev“ and “Allegato 3A_Rimborso_OpBeSe_rev“.

In addition to the checklists, the MA deploys a “fraud risk self-evaluation tool”, which is a matrix designed to carry out fraud risk assessment in accordance with the methodology defined by the EC and approved in 2017, together with a risk assessment self-evaluation Working Group responsible for the formulation of ad hoc antifraud proposals and mitigating actions (https://www.euroinfosicilia.it/p-o-fesr-sicilia-20142020-approvazione-dello-strumento-di-autovalutazione-rs_fraud_risk_assessment_acadg_v-01giugno2017-ed-istituzione-del-gruppo-di-lavoro-per-lautovalutazione-del-rischio-fr/). The Sicilian MA has examined the option to use the ARACHNE data mining system and integrate it to the above-mentioned self-evaluation tool: this would allow better verifications and better consolidation of search results during fraud investigations, thus improving the efficiency and the accuracy of anti-fraud strategies as a whole. Merging these tools would, however, require a significant time investment together with the allocation to the project of an ad hoc team of IT experts.

One of the key challenges to the fruitful adoption and dissemination of anti-fraud practices is the significant shortage of internal staff supporting their systemic application. It is therefore central to the success of such strategies to adopt measures to reinforce human resources operating in this area, which is often insufficient. It is equally important to train all public administration entities in the proper application of tools like ARACHNE, fraud checklists and the self-evaluation matrix.

An important precondition for the practice to yield continued positive systemic results is the strengthening of the administrative capacity of the MA and Intermediate Bodies (IB). This includes increasing the general awareness about the availability of existing tools, training MA/IB staff about their correct use and encouraging coordinated action between departments and among institutions.