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Compliance Risk Assessment in Mongolia Uncovers Significant Vulnerabilities

A recent risk assessment conducted by the Asian Development Bank (ADB) has identified significant vulnerabilities and risks in Mongolia’s public financial management, procurement, and anticorruption systems.

Key Findings

  • Mongolia’s legal, policy, and institutional frameworks remain inadequate to mitigate or obviate risk in national and sectoral systems.
  • Limited capacity to implement development policies and reform, as well as interventionist central planning and political interference, introduce additional vulnerability and risk.
  • Lack of capacity, knowledge, and adequate training among professional procurement officers leads to corruption and irregularities in fund flow management.

Corruption and Irregularities

  • Corrupt practices affect project design, procurement, and implementation, resulting in poor quality projects.
  • There is evidence of corrupt practices in the health sector development projects.

Mitigation Measures

The ADB has developed a risk assessment and management plan for Mongolia’s health sector development projects. The plan includes:

  • Providing training on ADB financial management procedures to key staff
  • Clearly delineating responsibility among project team members
  • Supporting internal audit functions

Transparency in Procurement Processes

  • All contract awards will be made public by posting on the project website and at www.e-procurement.mn
  • Spot reviews of procurement and financial procedures will be implemented to ensure compliance with anticorruption measures.

Governance Risk Assessments and Management Plans

The ADB has approved its second Governance and Anticorruption Action Plan (GACAP II), which aims to improve its performance in implementing governance and anticorruption policies in sectors where it is active. As part of this plan, the ADB requires the preparation of governance risk assessments and management plans for country partnership strategies, programs, and projects.

Implementation

The risk assessment and management plan for Mongolia’s health sector development projects will be implemented through a series of measures aimed at:

  • Strengthening institutional capacity and effectiveness
  • Improving transparency and accountability in project operations
  • Reducing corruption