Fraud Risk Assessments

AuthorMélissa Campagno - Goya Razavi - Brian Kessler - Léna Bonnemains - Olga Mala
Study on the implementation of Article 125(4)(c) of the CPR in the Member States
3. Fraud Risk Assessments
3.1 FRA process
This section provides an overview of the organisation, processes and procedures implemented by
authorities to guide the preparation of the FRA. When characterising the practices of authorities,
this section focuses on a subset of 47 OPs out of the sample of the 50 OPs where the
authorities have conducted a FRA. First, this section looks at the organisation of the FRA and
the involvement of IBs, or other authorities such as the CA and the AA. Then, t he analysis focuses
on the effort and approach taken by a uthorities across the EU to develop the FRA template based
on our sample of 50 OPs and sub-set of 47 OPs that conducted a FRA .
Different approaches to collaboration between IBs and MAs during the FRA process
were identified across OPs. Und er the CPR, MAs and CAs have the possibility to delegate
responsibilities to IBs. This includes anti-fraud and anti-corruption responsibilities, such as
conducting a FRA. In our sample of 50 OPs, authorities of 38 OPs have delegated certain
responsibilities to t he IBs. Out of these OPs, authorities of 28 OPs delegated partial or full
responsibility of conducting a FRA to t he IBs (74%). For four OPs out of 28 (14%), MAs had
delegated the full responsibility for compiling a FRA to the IBs. Howev er, as MAs provided limited
assistance in the FRA filling process, it lead to inconsistent FRA approaches across IBs and lack of
consolidated FRA at the level of MA.
For 24 OPs out of 28 OPs that delegated to the IBs responsibilities to conduct a FRA (about 86%),
MAs c onducted the FRA together with IBs. The strength of the cooperation varied greatly across
OPs. In fact, some MAs provided IBs with guidance and advice on how to approach their FRA
during a dedicated workshop, and collected notes prepared by IBs summarising the process and
outcome of their self-assessment. In other OPs, the IBs only provided some input on potential risk
areas and were only consulted on the FRA process.
For 10 OPs where IBs have responsibilities, the MA conducted the FRA on its own, thereby limiting
its ability to obtain a comprehensive overview of all the fraud risks and measu res at OP level.
In most OPs (40), authorities took an active approach to developing their FRAs. An
active approach means that authorities have taken a proactive approach to complying with the EU
legal framework. For exa mple, they have been setting up an FRA self-assessment team, completing
sections of the FRA template and defining controls to for categories and sub-categories of fraud
risks On the contrary, unde r a passive approach, authorities have done the min imum. For example,
some have only filled in the sections of the FRA related to detected instances of fraud from the
previous programming period, leaving the majority of risks and sub-risks u nassessed. Only a
handful of authorities in the sample took this passive approach (6).23 The choice of active or passive
approach is not correlated with the MS’s Corruption Perception Index (CPI) score (please see
Approach for more details on the CPI used for this study). Indeed, out of the six MS that adopted a
passive approach, two are perceived as relatively less corrupt, one as medium and three as
relatively highly corrupt. One explanatory factor for the passive approach of MS with lower
perceived corruption is their perception of the FRA as an additional administrative burden.
23 For four OPs, the chosen approach could not be assessed.
For about 23% of the OPs who have IBs in MS in which corruption is perceiv ed as relatively
low or medium (according to the Transparency International Corruption Perception Index
(CPI)CPI (see Approach for detailed methodology on CPI), the MA fills in the FRA on its own,
without relying on IBs. Among MS with high perception of corruption, fewer (around 6% of
OPs) took this approach. This shows the application of the proportionality principle, as these
countries could have higher risks of corruption and fraud.

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