Audit assessment of the effectiveness of public procurement procedures

Iryna Drozd; Mariia Pysmenna; Nataliia Pohribna; Nataliya Zdyrko; Anna Kulish

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Iryna Drozd Taras Shevchenko National University of Kyiv
Mariia Pysmenna Flying Academy of National Aviation University
Nataliia Pohribna Faculty of Economics, Taras Shevchenko National University of Kyiv
Nataliya Zdyrko Faculty of Accounting and Audit Vinnytsia National Agrarian University
Anna Kulish Kyiv National Economic University named after Vadim Hetman

Keywords:

Audit, Public Procurement, Risks, Audit Assessment, Efficiency

Abstract

The article seeks describing the benefits and challenges faced by auditors in assessing the effectiveness of public procurement procedures in terms of applying the methodology for calculating efficiency, economy and effectiveness, taking into account the risks of procurement in e-auctions. Quantitative risk parameters are calculated using data of probabilistic indicators of procurement risk assessment according to the ratio of the number of relevant procedures (sub-threshold and above-threshold) to the total number of procurement procedures. Statistical valuation methods are used for the cost risk assessments and calculation of the aggregate risk indicator of public procurement. The calculations are performed using the data of the open e-procurement system ProZorro for all announced procurements in 2018-2019. We analyzed the methods, indicators and the extent to which the study of the public procurement effectiveness via bibliographic and case studies is performed. As a result, the majority of methods cover four components of assessing the public procurement efficiency - targeted efficiency, cost-effectiveness, organizational efficiency, efficiency of budget expenditures for public procurement. This does not provide an assessment of the automated systems’ impact on the procurement procedures results and on possible savings due to the use of certain procurement procedures. To comprehensively assess the procurement efficiency in e-bidding, the authors propose considering four key risks: the risk of cancellation of the procurement procedure, the risk that the procurement procedure will not take place, the risk of appealing the procurement, the risk of disqualification. As a result of risks calculations under the sub-threshold and above-threshold procurement, individual values of risks and their aggregate indicator are determined. This will adjust the scope of audit procedures to verify individual procurements and identify weaknesses in the procurement management system. We believe that the methodology of auditing the procurement effectiveness, taking into account the quantitative and qualitative parameters of procurement risks, will be a useful audit tool to determine the effectiveness of the use of public funds under individual procurements and identify areas of cost-effectiveness for the state budget funds.

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