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Adrienn Nagy dr. Leader Corporate Services Business Supervision and Process Management

Procurement Audits. Adrienn Nagy dr. Leader Corporate Services Business Supervision and Process Management Bu dap est 14/11/2007. AGENDA. What is Audit about? Procurement Lifecycle Audit Audits in 2006-2007 Recommendations Audit Effects Process Transparency Ethical Behavior.

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Adrienn Nagy dr. Leader Corporate Services Business Supervision and Process Management

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  1. Procurement Audits Adrienn Nagy dr. Leader Corporate Services Business Supervision and Process Management Budapest 14/11/2007

  2. AGENDA • What is Audit about? • Procurement Lifecycle Audit • Audits in 2006-2007 • Recommendations • Audit Effects • Process Transparency • Ethical Behavior

  3. Ca. 30 Procurement Audits Prepared Audits 2006-2007 GCFO CS Director Procurement Leader Audit Initiated by Audit performed by: Inter-business Subsidiary Audits MOL Romania + Follow-up Branch Audits Pakistan/Kazakhstan Moscow + Follow-up Logistics Road transport; Rail / Barge Chemical Road;Bitumen Road+ Follow-up CS Business Supervision Procurement Process Procurement Policyelaboration (Moscow) / update / supervision Retail Tebodin project management regionalContract execution BT Pipeline Technical specification • Set-up in Q3 2005 • Monitor Procurement Practices • Introduce and unify best practices • Yearly Audit Plan and single initiations to investigate • Audit Report with Recommendations • Audit Follow-up • Regulations update, Process improvement Contract testing: compliance, archiving Tank cleaning Bid evaluation ITIT Procurement General Notebook Tender 2007 Audit Outcomes affect: Procurement processes Suppliers Relations • Contact for Suppliers complaints, networking • Advises on Transparency, Ethical and Procurement Process issues • Cartel Risks; follow-up, risk mitigation • Breach of Contract supervision Practices

  4. Procurement Lifecycle Audit AUDIT Investigates the complex Procurement Process 3. Bidding Evaluation 4. Contracting 2. Bidding Procedure 5. Contract Performance Guarantee issues, Eventuel Breach of Contract Negotiation and communication with Suppliers AUDIT RECOMMENDATIONS Fair & Reliable 1. Supplier pre-qualification 6. Post-evaluation of Supplier Performance GRADING Basis for Invitation to Bid (ITB)

  5. Process compliancewith laws and Group regulations Process rationality and efficiency Inputfor decision making Opens discussion on future procedure, introduces new best practices New control point elaboration AUDIT FOLLOW-UP! Impact of Audit Recommendations PROCESS MONITORING AND FEEDBACK TO PROCUREMENT AUDIT RECOMMENDATIONS PROVIDE

  6. PositiveEffects of Audit Recommendation Initiates Procurement Process Changes & Practices • How to communicate suppliers in a bidding process – fair procedure & international standards • Enforce open gates principle – always invite newcomers from the relevant market • New Group level Ethical Code • Draft Procurement Ethical Code • Affects Change in Regulatory Environment Process Transparency & Ethical Behavior

  7. TRANSPARENCY and Procurement What is to be TRANSPARENT? Why to enhance TRANSPARENCY? Common Business Value Duly Keeping Processes & Deadlines Open Gates Principle TRANSPARENT Communication with Suppliers

  8. MOL ensures that Suppliers are familiar with the Procurement Processes, deadlines. OPEN GATES PRINCIPLE: market surveys and invitation of new Suppliers NO Cartels / effective detection / MOL surveys Supplier activity and has the possibility to submit Cartel suspicion to National Competition Authorities or even to the EU Commission MOL expects fair and complete documentation, correct pricing from Suppliers in a Bidding Keep deadlines, do not wait for the last seconds when submitting your documents in a Bidding NO Cartels / individual pricing / ensure individual strategic behaviour in the bidding Correct Contract Performance / warranty issues / influences evaluation and the fact that you get on the invited list for the next Bidding! Process Transparency - We expect the same Approach! MOL OFFERS YOU ARE REQUESTED TO

  9. ETHICS and Procurement Corporate Ethics Group level OBLIGATIONS & EXPECTATIONS NEW MAIN Source: MOL Group Ethical Code International Standards & Best Practice Ethical Code is to be attached to all contracts for signature

  10. Ethical Behavior We expect the same Approach! Mutual Trust and Respect • All information with regard to relations between MOL Group and its suppliers is considered confidential. • We will not misuse our position in the marketplace, • Creating equal conditions for all our business partners. • We expect our Bidding and contracted partners to act in the same manner. • Avoid personal financial interests and do not misuse occupied position. • Honesty and Integrity • We condemn any form of bribery or the acceptance of unlawful business advantage • We discourage the offering of gifts, and we forbid our employees to accept them. Conflict of Interest Prohibition of Unlawful Advantage Ethical Code is attached to all Procurement Contracts but have to stick to it throughout the Bidding Process!

  11. Contact & Thank You for your attention! PROCUREMENT AUDIT helps MOL Group Procurement to be EXCELLENT in the CEE Region. § § adnagy@mol.hu

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