CCP sets up its 'internal audit department'

The Competition Commission of Pakistan (CCP) has created the department of 'internal audit' with the aim to ensure transparency in the affairs of the Commission. According to the Annual Report-2010 of the CCP, issued here on Friday, there were two main reasons for establishing an internal audit department within the Commission.
First, in recent years, demand for greater transparency and accountability has resulted in the establishment (and strengthening of) internal audit procedures to provide a minimal level of assurance to management and protection from the possible adverse reports of external audit.
Second, a well-functioning, adequately resourced internal audit activity that would work collaboratively with the Corporate Affairs Division (CAD) would be a key resource in promoting the Commission's effectiveness, which is an essential prerequisite for ensuring sustainability of any institution.
The report said that the department prepared a proposal in May 2010 for the establishment of an Internal Audit Department that would assist the management of the Commission in controlling the various activities of the Commission by (i) reviewing the effectiveness and efficiency of operations with a view to bringing about continuous improvement; (ii) determining the reliability and integrity of financial and operational information; and (iii) protecting the assets of the Commission.
The IAD would have an independent status within the Commission. To ensure this independence and objectivity, the department would report functionally to an Audit Committee, comprising of two Members and one representative of the CAD, that was constituted by the Commission to review and monitor the internal audit functions as well the implementation of the findings in specific areas. Upon acceptance of the proposal by the Commission, the Internal Audit Department was established and the process to recruit the necessary staff had commenced by the end of reporting period.
The report further said that public procurement is the process by which a public agency purchases inputs in the form of goods, civil works and services for the purpose of investment in the public sector. The success of these investments depends on cost, quality and appropriateness of the inputs which is compromised when the procurement process is tainted with collusive bidding. Pakistan, because of its large public sector, spends an estimated 25 to 30 percent of its GDP on public procurement. With such an enormous public procurement volume, the importance of restricting an anti-competitive and corrupt practice such as collusive bidding is paramount. Transparency International Pakistan reckons that Pakistan can save $4 billion per annum by preventing corruption and collusion in public procurement. CCP is uniquely situated to investigate and prosecute bid rigging. It is the only statutory body in Pakistan that has a legal mandate to specifically prevent and prosecute collusive bidding in contracts, per Section 4 of the Competition Act. Taking this responsibility seriously, the prevention and prosecution of collusive bidding is a top priority for the CCP in the future.
The report further said that in most of the cases to date, where the Commission had investigated and prosecuted cartelisation, the related trade associations had frequently been discovered to be active facilitators, providing a forum for the members of the cartel. The Commission has developed some jurisprudence on the difference between legitimate and illegal practices undertaken by trade associations. The CCP has ruled that associations must take extreme care to avoid activities that violate our competition law. Discussion and decisions regarding purely business concerns like current and future pricing, production and other information exchange that could qualify as sensitive commercial information should be avoided as they could violate the Competition Act. The function of a trade association is not to ensure that each of its members has a profitable business. To implement this segment of its strategic vision, the CCP intends to issue guidelines for associations and undertake trainings in the private sector to prevent violation of the Act, CCP annual report added.