Public meeting the Private - Integrity Survey 2017

2017-12-18 12:00:00   |   Author: Dr. Vargha Bálint Tamás

SAO of Hungary has carried out its annual Integrity Survey for the seventh time in 2017. The Survey assesses integrity risks and controls of public sector organizations. This year 3346 organizations provided data for the survey, thus tripling the initial number of participants that did join at the beginning of the project.

Evidence of the study demonstrates that participation in the survey in itself has a positive effect on integrity consciousness; frequent respondents index levels measuring control deployment was found to be more than 12 percentage points higher than control levels of organizations participating a single time.


Frequency of participation in the survey and development of risk and control index levels - 2017



A trend is observed comparing survey results of five years before, to our recent findings: Average integrity risks of Hungarian public institutions did decline, while average control levels remained unchanged. Consequently the proportion of risks unaddressed by controls have decreased, therefore systemic integrity levels have gradually strengthened. Control and risk figures were also affected by reorganizations, amendments in the legal status, narrowing/broadening of mandate.


The study does focus on five areas where integrity risks of the public meeting the private are considered to be particularly significant. Accordingly, the study did assess integrity of public service providers, public authorities, public procurements, employment of external expertise, and business relations between state organs and private entities.


Risks and controls in public services

Assessing the integrity of public services is of paramount importance from the perspective of public trust too. Public services may be jeopardised by significant pressure of corruption, as citizens can have strong incentive to receive services provided under the most favourable conditions. According to results of the study, providing public services in exchange for service fees, and applying equity embodies significant integrity risks, whereas among certain types of institutions excessive demand for the public service constitutes a major vulnerability. Integrity is enhanced by the fact that in most cases organizations prepare official delivery acceptance certificates when clients are entitled to receive benefits in cash or in kind. Regulating conflict of interest does also have a positive impact on integrity. However merely one third of institutions did establish a system of managing complaints and whistleblowing. Failing this it is hardly probable that a conduct breaching integrity can be reported, or mismanagement may be corrected. In addition to this under-regulation of accepting gifts, invitations, and trips sheds light on a major shortcoming of public sector institutions’ integrity. Only one quarter of those institutions that face excessive demand for the services they provide, did issue a regulation on accepting gifts, invitations.


Risks and controls of organizations exercising official powers

Among these institutions those that are entitled to exercise discretion or equity require closer examination. Risks are further exacerbated at organizations that deal with administrative offences, or issue expert opinions. According to results 42 percentage of respondents (1413 organizations) exercise official powers, 83 percentage thereof issues permissions, two third executes official investigations, and more than a half of them prepares official expert opinions. 78 percentage declared that it does posses discretionary rights, whereas 71 percentage stated to exercise equity as well. Ministries and local administrative organs show high risks, nevertheless their control levels do also exceed the average. However risks of local governments – being above the average combines with control levels below average, whereas low risks at judiciary are covered by high control levels. Findings of the study confirm that protection of external whitsleblowers and regulating special controls of exercising public authority are not sufficiently established.


Risks and controls of public procurement

Respondents of the 2017 survey have carried out nearly twenty two thousand public procurement proceedings as contracting authorities. Results have revealed that level of competition can be considered to be fair, as in an average of 83 percentage of public procurement proceedings carried out by respondents, three or more bidders  participated. Our study pointed out that weakness of competition in public procurements is accompanied with shortcomings and irregularities established by the Public Procurement Authority or by Court. Among organizations that have been condemned by a competent authority in a final and binding decision, initiated public procurements in a greater proportion where less than three bidder did participate. Results of the study suggest that sectors conducting more proceeding above the EU threshold, and institutions carrying out numerous procurements bear more risk too.


Evolution of integrity

Spreading and consolidation of the culture of integrity can also be traced in amending the legislation. Especially in the past seven years pieces of new legislation, guidelines, professional codes of ethics did implement previously unknown mechanisms that  strengthen integrity, whereas controls that used to be "soft" by nature are by now mandatory provisions.


Erzsébet Németh audit supervisor

Balint Vargha auditor