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Slovenian Audit Authority's Experience with Fraud Suspicion Cases

Learn from the Slovenian Audit Authority about their experience in auditing European funds and handling fraud suspicion cases. Discover the red flags, key procedures, and relevant case studies.

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Slovenian Audit Authority's Experience with Fraud Suspicion Cases

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  1.  EXPERIENCE OF SLOVENIAN AUDIT AUTHORITY WITH FRAUD SUSPICON CASESNataša PrahPrague, 3. November 2016

  2. INTRODUCTION • Audit Authority • Auditing European Funds • Fraud suspicions cases • Conclusions

  3. SlovenianAudit Authority

  4. Auditing European Funds Basis: • Legal framework (EC Regulations, National Regulations) • Guidelines EC (methodology, content of report, financial corrections,…) • Audit Strategy for the whole period and plans for particular accounting year Work of AA: • System Audits (Evaluation of the overall environment, internal control testing) • Audits of operations (substantive testing) Results of AA work: • Audit Opinion, accompanied by • Annual Control (Audit) Report

  5. Auditing European Funds Audits of operations: • Statistical sampling, • Selection of the operations, • Performing audits of operations, • Evaluation of result of individual audits, including: • Assessment of found errors and irregularities: it might be a fraud.

  6. Auditing European Funds Audit of operation (areas covered): • Selection of the operation; • Operation performance including on the spot check; • Eligibility of expenditures; • Public Procurement; • Audit trail and keeping the documents; • Irregularities and reimbursements; • Information and publicity rules; • Compliance with the Community policies.

  7. Auditing European Funds Procedures in case of suspicion of fraud: AA has an agreement with the Central General Police Office to whom it submit the suspicion in agreed form after issuing the final report. Suspicion of fraud is not indicated in the report as recommended by the OLAF guidance.

  8. Fraud suspicions cases CASE 1: Same equipment in two different operations (and related beneficiaries): • Two different projects, • Two different companies at the same address, • Related beneficiaries, • Same supplier, same equipment; • Project financed in 2010, criminal complaint submitted by the police to the prosecutor in 2013, court procedure still ongoing.

  9. Fraud suspicions cases CASE 2: Issuing fictive invoices (equipment prices!): • At the time of on the spot visit, which has been pre-announced, the equipment was not there, • Payment was seen as off-setting with the services provided to the supplier of the equipment, • No audit trail of the services provided,

  10. Fraud suspicions cases CASE 2: Issuing fictive invoices (equipment prices!): • Beneficiary‘s reaction, • Extended review; • Project financed in 2010, criminal complaint submitted by the police to the prosecutor in 2012, court procedure still ongoing

  11. Fraud suspicions cases CASE 3: Purchase of the old equipment instead of the new one (equipment prices!): • On the spot check raise the suspicion that the equipment was not new, that was confirmed by the producer when we contacted them, • Project financed in 2011, beneficiary return the money; • Criminal complaint against responsible person of the company is still in the process of preparation.

  12. Fraud suspicions cases CASE 4: Non-existence of the investment: • At the time of the on the spot check the investment (golf course with 9 holes) was not there, • Beneficiary‘s reaction; • Project financed in 2011, criminal complaint submitted by the police to the prosecutor in 2014, feedback from the prosecution office to criminal police not yet received.

  13. Fraud suspicions cases CASE 5: Prices of the equipment – related parties: • Beneficiary has bought equipment from the supplier – company, 100 % owed by the beneficiary, • During the on the spot check we got the invoice of the supplier‘s supplier with the half price for the same equipment; • Project financed in 2012, criminal complaint submitted by the police to the prosecutor in 2015, feedback from the prosecution office to criminal police not yet received.

  14. Fraud suspicions cases CASE 6: Document falsification: • Contracts, invoices, payments between beneficiary, supplier and producer of the equipment were in disparity – falsification suspicion, • possible reason: to show the purchase of equipment within the eligibility period; • Project financed in 2010, criminal complaint submitted by the police to the prosecutor in 2012, court procedure still ongoing.

  15. Conclusions Red flags: • Not clear audit trail • Related parties (companies or persons) • Market prices • Payment method: off-setting • On the spot review • Beneficiaries reactions - allegations of causing damage to them

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