Practice category: Systems and tools
Contact: Managing Authority of National Operational Programme PON GOV
Fraud risk(s) countered:
- Conflict of interest
- Avoidance or manipulation of public procurement procedures
- Double funding
- Manipulation of project costs
Context and objective(s)
The Italian National Operational Program “Governance and Institutional Capacity” (PON GOV) is managed by the Italian Agency for Territorial Cohesion alongside two intermediate bodies (IB): The Department of Public Service within the Presidency of the Council of Ministers and the Ministry of Justice. The Audit Authority (AA) is the Ministry of Economy and Finance while the Certifying Authority (CA) role is carried out by a specific department within the Italian Agency for Territorial Cohesion. The PON GOV program allotted a budget of EUR 805 million during the period between 2014 and 2020 and supports capacity‑building and innovation of all Public Administrations. 80% of the resources have been earmarked for the less developed Regions (Basilicata, Calabria, Campania, Puglia and Sicily).
In 2017, the Italian Agency for Territorial Cohesion set up a fraud risk evaluation group (Gruppo di Valutazione del Rischio Frode – GVRF-group) in the PON GOV program with the aim to minimise the risk of fraudulent behaviour, to continuously assess potential fraud risks and to adopt adequate preventive and corrective measures.
The GVRF group based its work on the fraud risk self-assessment tool from the EC guidance note of EGESIF n.14-0021-00 published on 16/06/2014 . The EC self-assessment tool covers the likelihood and impact of specific and commonly recognised fraud risks particularly relevant to key processes such as:
The EC general methodology for the fraud risk assessment follows 5 main steps:
The Target risk refers to the level of risk after considering the effect of any current and planned controls. It is the risk level that the MA considers tolerable.
Description of the practice
Considering the EC guidelines, the specific objectives of the GVRF-group of the PON GOV program were to:
The MA as well as the CA and IB participate in the GVRF group. The group is composed of:
When AA authorities audit the completed risk assessment, they do not take a direct role in deciding on the level of risk exposure but participate in the assessment process in an advisory role or as observers.
The methodological approach to the process rolled out in the following sequence:
The GVRF group referred to the descriptive document accompanying the self-assessment tool, which was initially published in the EC note EGESIF 14-0021-00, as "additional" to the excel tool. This descriptive document outlines:
The purpose of this "additional" document is to facilitate the reading of the assessments (numerical only) shown in the tool and to allow a clear and accurate examination of the conclusions reached.
The Fraud Risk Self-Assessment system of PON GOV tool was presented as a best practice in the main public administration networking event in Italy called FORUM PA 2018.
Key success factors
- The members of the GVRF group were chosen based on high-level expertise and had clearly recognised competencies. This is relevant because the audits done by the AA take into consideration the level of expertise of the group members – see Annex 4, point C.1.1 of EGESIF guidance. The composition was deliberately of transversal character and this diversity was an advantage when integrating different institutional views into the monitoring activities, as it makes the anti-fraud strategy more exhaustive.
- The GVRF group was further supported by a technical restricted sub working group aimed at sharing methodologies, interpretations of possible doubts/clarifications as well as the process of developing individual evaluation tools. While having only one GVRF group, the decision was taken to create 3 separate self-assessment tools within the PON GOV program, so that each IB and MA could have its own self-assessment tool.
- It is essential to ensure the necessary independence and objectivity of self-assessments. The GVRF group let each MA/IB carry out its own work independently and perform its own in-house analysis, risk mapping and risk assessment of fraud that may be linked to their projects.
Challenges encountered & lessons learned
The GVRF group faced the following challenges:
- There is an enormous volume of documentation and information to be processed in order to make the GVRF group self-assessment as accurate as possible. The GVRF group relied on a coordinating unit in the MA for assistance. This unit took care of the collection and documentation of the information sources during the risk assessment process and supported the self-assessment process (one of the most demanding aspects of the process because of the sheer number of documents to be collected and analysed).
- The task of carrying out in-depth assessment of potential fraud risks in the life cycle of a project is not easy. the assessment must include the selection of the operation, the implementation of the project, the control, as well as payment and certification of expenditure (so-called process and risk mapping).
- the group required the active involvement of different areas / structures / offices / departments and related staff (example: Tender & purchasing office, Personnel office, Budget office, Payments office, Manager transparency and anti-corruption).
Potential for the transferability
The fraud risk self-assessment system (we understand the "system" to mean both the process / methodology and the tools) can be transferred to other EU Member States because the success factors (GVRF group composition, operational organisation of activities, working methodology and tools used) are in fact replicable with due adjustments needed.
The fraud risk self-assessment tool (and the accompanying report) can be further adapted to the distinctive features of each program, making its assessment and monitoring functions more targeted and methodical. For example, one could introduce new risk factors and, consequently, new control points / mitigating actions aimed at potential fraud risks that could occur in the selection, implementation, control and certification phases of EU projects.
Other EU countries may have one program managed by different structures of MA and IB (such as Spain). For these countries it would make sense to have a single GVRF group, composed of representatives of the different administrations, each of which have their own assessment tool (not a single self-assessment tool for the entire program). As the PON GOV practice shows, each administration can customise and adapt the tools to its specificities and, therefore, work in an independent and objective way.