Modern procurement has grown into an intricate, multi-tiered arena. While the global marketplace and technology have introduced efficiencies, opened markets, and availability to new suppliers, these same advances come with risks that must be managed.
In today’s environment, the presence of an effective contract compliance audit program is more critical than ever before. With an effective, mature contract compliance audit program in place, global enterprises can optimize business performance with strategic partners by replacing familiarity and blind trust with transparency, accountability, and earned trust. The following are the key mechanics of a mature audit program.
For even more details, check out our eBook, The Importance of a Mature Contract Compliance Audit Program.
Your organization can ensure your audit program possesses these vital mechanics by being consistent, socialized, and universal.
A mature contract compliance audit program occurs regularly, on a rotational basis, consistently validating that all key suppliers are complying with the terms of their executed contracts. Rather than ad-hoc audits when an issue has already arisen, rotational contract compliance audits will support ongoing monitoring efforts to reduce the risk of these events from occurring in the first place. Periodic and rotational contract compliance audits support ongoing monitoring efforts, which is an essential element of supplier management and enterprise risk management efforts.
Procurement is an area where many different players have valuable input to help bridge the gaps and optimize stakeholder alignment and the organization’s performance. Key stakeholders buy-in from business owners, finance, data security and privacy officers, internal auditors, legal, and the C-Suite will help your audit program perform to the best of its ability. While the mature audit program should have support from everyone, there should be one entity with clear ownership of the program. Programs without clear ownership and accountability may not follow through on audit discoveries and remediations.
An effective mature contract compliance audit program will subject all tiers of suppliers, both direct and indirect, to the same processes and best practices. When businesses only audit certain tiers of suppliers, areas of financial leakage and vulnerability go undetected. By consistently executing audits with all tiers of suppliers, the program ensures that the company’s contracts are operating as intended and negotiated savings are being received. In this way, the mature audit program is a win-win: The enterprise gains peak performance and protects the bottom line while the supplier maintains the integrity of its relationship with an important business partner by providing transparency and accountability.
Ensure That Your Company has a Mature Contract Compliance Audit Program in Place
To learn more about mature contract compliance audit programs, or to ask any questions that you may have, please reach out to our Contract Compliance Audit Services team. You can also check out our page for a full overview of the services we provide.
In our future blog post, we will cover how your company can benefit from a mature contract audit program.