Study of Small and Medium Enterprises in Azerbaijan - IFC

6.6 Recommendations
6.6.1 Establish an efficient system of government control
An efficient system of government control includes three components:
1) a risk assessment system;
2) a standard procedure for conducting inspections and presenting findings, addressing
also frequency and duration of inspections;
3) checklists to be used by inspectors based on revised and up-to-date regulations
on the technical requirements for compliance.
Expected Impact
With these elements in place, the system of government control will be able to
perform its main function, which is to encourage compliance with the law and prevent
violations.
6.6.2 Implement risk-based selection mechanisms of SMEs to
be inspected
On the basis of risk assessment, the volume of inspections can be reduced without
endangering the public. This approach has three elements:
1. Each control authority identifies, within the scope of its area of expertise, potential
public and environmental safety hazards inherent in the range of business
activities. The authority then categorizes businesses according to the degree that
such hazards typically exist in those businesses;
2. For each category, the frequency of inspections is determined based on the
potential risk: high-risk businesses are inspected often, medium-risk businesses
are inspected much less often; and low-risk businesses are exempt from
inspection;
3. Where a business falls into a risk category to be included in the list of planned
inspections, the frequency of inspections of a particular business further depends
on its record with respect to inspection findings. Thus, if a business consistently
abides by all applicable laws, it need not be inspected as frequently.
The degree to which actual risk is a factor in targeting businesses for inspection reflects
the degree to which best practices are operating in the country.
In international best practices, the control authorities focus on high-risk and highoccupancy
enterprises such as chemical plants, cinemas and theaters, railway stations,
educational facilities, supermarkets, and businesses where there is a high probability
of non-compliance because of previous violations.
A risk-based inspection system must be flexible enough to include some exceptions
with regard to random inspections. However, the authority to conduct such inspections
should be limited so as not to allow government agencies to undermine the
underlying principles of the risk-based approach. A random inspection should be
conducted only if there is a clear threat to the public or the environment, under very
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St u d y o f Sma l l a n d Me d i u m Ent e r p r i s es in Az e r b a i j a n