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Data analysis & risk analysis in support of anti-fraud policy

Objective

Specific Objectives

Report on assessment of quality of data on cases of irregularities and frauds reported by Member States to have been committed against the Structural Funds and estimation of irregularities and frauds in payments from the Structural Funds.

Further development and application of methodologies for the distinction between cases of fraud and other irregularities on the basis of data reported to the Commission by Member States.
Planned Deliverables

1. Report on assessment of data quality on cases of irregularities and frauds reported by Member States to have been committed against Structural Funds, and estimation of amounts paid irregularly or defrauded;

2. Fine-tuning, application of methodologies and report on the distinction between cases of fraud and other irregularities on the basis of data reported to the Commission by Member States for the period 1998-1999;

3. Continuation of the work towards building SAS and VBA macros as tools for data description and exploration of large databases.

Specific deliverables to DGs:

As 1 and 2 above.

As a result of the research:

Copyrights on software (described in 3 above) for the exploration of large databases.

Summary of deliverables 2001: 31/12/2001

Data Analysis Sector (2001). Errors in Data on Cases Communicated by Member States to the Commission with a view to Case Types and Data Types reported. To be delivered by November 15, 2001.

Development of SAS and VBA macros as tools for data description and exploration of large databases and documentation.
(i) Compilation of various descriptive statistics to be cross-classified by variable name and dataset;
(ii) Cross-classification of signals detected in pairs of categorical variables together with appropriate marginal frequencies;
(iii) Automated construction of thesauri for categorical variables in databases with capabilities to screen against infrequent categories.

Output Indicators and Impact

In its annual report on the fight against fraud for 1999, pp. 26-27 of "Protecting the Communities' Financial Interests, the Fight against Fraud, Annual Report 1999", COM(2000) 718 final, Brussels 8.11.2000, the Commission makes explicit reference to work already done under the project and the Administrative Arrangement 14785-1999-02 A1CA ISP BE as follows:

OLAF entrusted the Joint Research Centre with a technical and scientific project to analyse the reports made by Member States in the period 1993-1997. The analysis provided the following results

As matters stand, the distinction between fraud and irregularity cannot, therefore, be made with any real precision. Closer analysis of the typology of irregularities and amounts involved confirms that the Member States' current practice is mot in line with the objective of securing equivalent protection of financial interests throughout the European Union. The Commission is duty-bound to call on the Member States to follow a more closely harmonized approach make a clearer distinction between fraud and other irregularities.

The importance of this work is also highlighted in the European Parliament's resolution A5-0078/2001 on the Commission's 1999 Annual Report 'Protecting the Communities financial interests - the fight against fraud' (COM
(2000) 718-C5-0066/2001- 2001/2036(COS)), rapporteur Herbet Bösch, European Parliament, "Texts Adopted at the sitting of Wednesday 14 March 2001", Provisional Edition PE 301.342, pp. 60-65, as follows:

[The European Parliament] Notes with concern that Member States' practices vary greatly when it comes to reporting cases of fraud and irregularities; calls therefore on the Commission to:

[...]
(c) develop a clear methodology classifying the degrees of financial irregularity from unintentional administrative oversight to premeditated fraud in order to obtain a clearer picture of the scale and nature of the issues to be addressed in protecting the Community's financial interests;[...]".
Summary of the project

This project develops and implements methods and techniques in data analysis, risk analysis and statistical data mining on both dedicated data bases of reported cases of irregularities and frauds and publicly available databases with a view to the estimation of fraud, detection of patterns and trends and assessment of data quality. Methods and results are communicated to OLAF, selected OLAF partners, and academic groups.

Rationale

This project contributes to the protection of the financial interests by applying and developing statistical techniques for the efficient and objective extraction of knowledge from relevant and large databases. Results of the project extend and enrich the range of proactive approaches to fraud control.

Funding Scheme

JRC - Joint Research Centre research

Coordinator

Institute for the Protection and Security of the Citizen
Address

Ispra
Italy