CATE - Continuous Auditing based on Techn(olog)ical Evolution and Data Mining

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Initiatiefnemer(s):

The Flemish Audit Authority

Thema:

Digitalisering

Domein:

Economie

Status:

In voorbereiding

Contact:

The Flemish Audit Authority
Tony Mortier
T +32 2 553 75 79

PIP
An Schrijvers
T +32 486 35 43 99

Tabs

Uitdaging

The Flemish Audit Authority is responsible for auditing (financially and operationally) projects that are funded through European structural funds and Flemish co-funding. The following points are particularly notable during these audits:

The audits are carried out two years after the actual expenditure, which usually does not allow recovery of rejected expenditures. Earlier, faster and continuous monitoring / auditing allows a shorter response time, which means that in some cases the rejected expenses could still be recovered;
An operational / financial audit includes partly an editorial component, partly an executive and partly an interpretative component. There is a certain recurring system for the first two components, with little added value. Only the third component has a cognitive aspect. The entirety therefore has a certain "tick-off content", which on the one hand poses a risk, and on the other hand is not very cost effective;
All audit work must be done between +/- April and November (incl. two leave months within which the audit work must be carried out on a strongly reduced regime), as a result of which not all audits can be carried out with the available auditors. A significant proportion of audits therefore need to be outsourced. This outsourcing is done at a relatively high cost, for not always a significant added value;
When outsourcing, it is often noted that the performers of these assignments are often young auditors who have little or no knowledge of public procurement and state aid, which makes quality reviews by the Flemish Audit Authority very intensively and time-consuming, which is not the purpose of outsourcing.

In view of the above challenges, the aim of this project is - within the framework of the European regulations regarding audits on structural fund - to audit projects on a technological as well as a conceptual level and to rethink (how it is being rolled out to achieve a required degree of assurance) in order to achieve

greater level of assurance,
at a lower cost,
within a smaller time-frame,
with greater reporting added value and
lower loss of (European) resources.

The project CATE therefore includes both a methodological and a technological aspect.

Voorbereiding

CATE wants to rethink the audit process of the Flemish Audit Authority European Structural Funds methodologically and technologically. To focus on this ambition, Addestino Innovation Management was engaged in early May 2020. The needs and wishes are currently being further clarified, so that they can then be tested against the current technological potential through a market consultation.

The market consultation was organized on September 4th. Some 45 participants shared their views on the current technological potential to cope with the use cases presented. The presentation used during the market consultation can be found here.

The final report on the preparatory trajectory has been finalized early October and can be found here. An executive summary in English is available as part of the introduction.

This report will serve for the preparation of the procurement trajectory.

Aanbesteding

The procurement is now further detailed and is expected to be launched into the market in the first quarter of 2021.

The ‘innovation partnership’ procedure was chosen, which allows for the development of the solution and its implementation. This is a two-step negotiation procedure: selection and award.

The selection guidance was published on March 24th 2021 on e-notification. The candidatures are expected by 27 April 2021, at 10.30h at the latest.

Upon completion of the selection (beginning of May), the selected will receive the specifications with the request to submit a tender.

The start of the assignment is scheduled after the summer of 2021.

The partners are expected to fulfil the following objectives:
1. Have a thorough knowledge and experience in auditing and (innovative) technology (artificial intelligence, natural language processing, machine learning, RPA, OCR, databases,...).
2. Contribute to the vision and possibilities to fully renew the audit process (including how potential risks will be detected and predicted within projects), as well as the translation of this vision into technological regulations on AI, machine learning and data mining.
3. Install data sources on top of the data sources that the audit authority (the VAA) will share, in order to adequately feed the platform and the associated models.
4. Make an own investment in the form of co-financing. The VAA makes an investment at each stage of the project, and expects the partners to make their own contribution. The VAA aims at a partnership in which both the VAA and the partners make an equal contribution to the project, but the partners can make a proposal for this themselves.
5. Building and implementing the platform.

Uitvoering

The development of the project has been started mid March 2022 by Deloitte Consulting & Advisory.