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This document discusses the complexities and risks associated with procurement processes, emphasizing the importance of integrity, transparency, and proper oversight. It highlights common pitfalls such as corruption, inefficiency, and lack of oversight, providing insights on managing risks and improving procurement practices for better outcomes and accountability. The text underlines the need for ethical procurement systems, efficient processes, and emphasizes the role of financial managers in ensuring integrity. It also explores various risk areas, governance issues, and pressure points within procurement operations, urging professionals to prioritize trust, transparency, and accountability in procurement activities.
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What compromises Procurement Integrity?A Risk-based Approach J Graham Joscelyne ICGFM - Miami April 2003
What is the Perception? • Transparency • Process • Result • Proper oversight • Fairness • Good use of taxpayers money • Good control
But, what we sometimes find is… • Greed • Inefficiency • Lack of proper oversight • Bureaucracy that acts as a cover-up • Corruption But, procurement still ‘happens’
And, to complicate things… • It’s learned, not studied • There’s a shortage of specialists • It’s often disconnected from the Financial Management function • It’s not seen as a career enhancer
But, while Procurement volumes grow… • Decentralization is being pushed • Money is fungible • Fewer ‘eyes’ on the process • Old systems for new processes • Less accountability • Scale and complexity goes up too Risks also increase significantly
What are we talking about? Look at the impact of war alone • Weapons • Replenishment ($? Billion out of $74bn) • Purchase (1991 - $10bn: 1992 - $11bn: 1993 - $20bn) • Logistical needs in the field • Reconstruction • Development • Food aid • FAO - $86.7 million • WFP - $1.3 billion And all this needs to be spent in a hurry
For a time like this and beyond… Need procurement systems that are: • Ethically based • Words and action the same • Transparent • Efficient • Reliable • Disciplined At all times, trust must be built
A Role for the Financial Manager? Risks you can, look out for… • Lack of a tender process • Unclear selection criteria • Unresolved legal issues • Confidentiality is ignored • Agreed process is circumvented
Other risk areas to consider… • Are policies in place? • Has a procurement plan been developed? • Is there a criteria for weightings • What is being done about conflict of interest, before it occurs? • What about corruption? • Checks and balances throughout? • Does the scope of works match the selection criteria?
Overarching Risks • Poor governance structure • Government interference • Decentralization • Unscrupulous contractors • Window-dressing
Particular Pressure Points • Poor procurement process • Lack of evidence • Poor record-keeping • Lack of database on particular vendors • Lack of quality control • Outcomes of little interest
Like a gold ring in a pig’s snout is a beautiful face on an empty head.Proverbs 11 Watch out for this – it is quite common
Conclusion • We can’t stop the spending but we can address the risks • We can’t avoid the weaknesses, but we can highlight the effects It is our professional duty
