Auditing Public Procurement Roles of the Office of the Auditor General of Thailand

in Ensuring Transparency and Accountability in Public Procurement

Dr. Sutthi Suntharanurak Office of the Auditor General of Thailand

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Outline

• Background of Public Procurement in Thailand

• Auditing Public Procurement of OAG Thailand

• Looking Forward to Improve Auditing Public Procurement in Thailand

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Background of Public Procurement in Thailand

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Regulation of the Office of the Prime Minister on

Procurement of 1992 (ROPMP)

Fairness

Prudence

Transparency

Accountability

Main Actors in Public Procurement in Thailand

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The Public Procurement

Office (PPMO)

The Committee in Charge of Procurement

(CCP)

Office of the Auditor

General of Thailand

(OAG)

National Anti-Corruption

Commission (NACC)

Government Agencies

Public Procurement Method in Thailand

• Price agreeing (negotiating) method

• Price inquiry (selective tendering) method

• Competitive bidding (open tendering) method

• Special (limited tendering) method

• Special case method

• Electronic procurement (E-auction)

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Factors of selecting procurement method

• Value of Contract

• The nature of good or services

• The urgency of the procurement

• E-Auction Over THB 2 Million (Approx USD 50,000)

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Government Procurement website www.gprocurement.go.th

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Auditing Public Procurement of OAG Thailand

• Office of the Auditor General of Thailand is the supreme audit institution (sai) in Thailand.

• Under the Organic Act of State Audit B.E.2542 (1999), OAG has a mandate to audit public procurement.

• The Lima Declaration of Guideline on Audit Precepts

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Section 21 of Lima Declaration

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Value and Benefit of Auditing Public Procurement

1. Ensuring accountability and transparency

2. Preventing improper procurement practices

3. Improving upon past procurement performance

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Audit Approach

Regularity Audit Performance Audit

Financial Audit Compliance Audit Value for Money

Auditing Public Procurement of OAG Thailand

• OAG Thailand have conducted compliance audit in public procurement.

• We established Procurement and Investigative Office (PIO) to serve public procurement audit.

• The main objective of auditing public procurement is to ensure that the procurement process of goods and services including public works have been conducted the public procurement law & regulations.

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Three Phases in Public Procurement Audit

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1 • Audit of Preparation of Procurement Plan

2 • Audit of Tendering and Awarding Processes

3 • Audit of Contract Management

Three Perspectives for auditing public procurement

To obtain value for money

To support competitive public procurement market

To ensure transparency process

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Audit Method in public procurement

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Document Verification

Physical Observation

Tendering Observation

Auditing of Preparation of Procurement Plan

• The Notification of State Audit Commission about making preparation of procurement plan of audit entities B.E. 2546 (2003)

• The audit objective is to enhance the good governance in the public procurement system of audit entities.

• Audit Method Documentary Verification

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Audit of tendering and awarding process

• The audit objective is to examine the accuracy of tendering and awarding processes under relevance laws and regulations.

• Audit Method Document Verification

Tendering Observation

• Audit criteria Transparency

Accountability

Fairness

Competitive

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Main Processes which auditor will examine

1

• The Identification of needs Document Verification

2 • Bidding Process Document Verification and Tendering observation

• Under transparency, fairness, non-discrimination, and competition

3 • Estimating cost Document Verification

• Under reasonable cost

4

• Evaluation committee Document Verification

• Under issues of avoiding conflict of interest, fair decision for selecting of awarding bidder

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Audit of Contract Management

• The audit objective is to examine the execution of public procurement contract.

• Audit Method Document Verification

Physical observation

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Audit Phase

Audit Method

Documentary Verification

Tendering

Observation

Physical

Observation

Preparation of procurement plan

/

Tendering and awarding processes

/

/

Contract management

/

/

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Some audit findings in Public Procurement

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• The audit entities did not prepare procurement plan.

• At requirement stages, the audit entities had inadequate review of existing and required inventory.

Preparation Procurement Plan

• The specifications are not clearly defined. (Lock out specification)

•A very limited number of offers received. Limited competition

•Document indicates unusual involvement of an official.

•Suspicious about conflict of interest

•Evidence of early receipt of information by some contractors

•Request for proposal is not properly advertised.

•Bid rigging or Collusion among bidders

•Unusual handling of bidding process

•Evaluation criteria are not consistent for different bidders.

•Exceptions to the tender deadlines

•Excessive project cost

Tendering and Awarding Processes

•Project has been unused.

•Changes in a contract result in a large increase in the cost of goods and services

•Changes made without adequate information.

•Unwarranted contract extension

•Complaints about the quality of goods and services received

•Inadequate inspections and quality assurance of goods and service received

•Dubious invoices

Contract Management

Audit Finding in Public Procurement

Fiscal Year*

Number of cases of audit finding

Volume

(Billion Baht)

2012 1,183 13.35

2013 1,865 27.13

2014** 1,065 5.51

Source: Office of the Auditor General of Thailand

* In Thailand, the fiscal year is started at 1st October till 30 September.

** The data is showed between 1 October 2013 and 30 April 2014.

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Audit Reporting

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Office of the Auditor

General of Thailand State Audit Commission

Parliament

Council of Ministry

Audited entities

National Anti-Corruption

Commission

OAG and Citizen Engagement in Public Procurement

Public Procurement Watch with OAG

http://procurement-oag.in.th/

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Looking forward to improve auditing public procurement in Thailand

Auditing

Public Procurement

To encourage the integrity of procurement system

To reduce the risk of corruption in public procurement

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Looking Forward in Auditing Public Procurement

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Compliance Audit in Public Procurement

Performance Audit in Public Procurement which focused on 3Es-Economy, Efficiency and Effectiveness

Good Governance in Public Procurement which is under concept of transparency, accountability, supporting competition, and citizen engagement

Procurement Performance Model

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