Establishing a Foundation of Trust by Integrating Contract Compliance Audit Programs into Operations (Part Two of Three) [Graphic Recording]
August 23, 2016 - By: SC&H Group
With the volume and complexity of today’s indirect spend categories, transaction counts, and contract terms, the validation process can be exceedingly difficult. And, even though various planning and accounting systems have controls in place to monitor transactions, they are not always effective. The benefits of integrating a contract compliance audit program to clarify assumptions and strengthen supplier relationships are featured below in part two of our new graphic animation series.
When it comes to third-party transactions, the validation process is complex. Indirect spend can be fragmented across many subcategories, with specific characteristics sourced by different individuals. Contract terms have to be matched to transaction details, and volumes can reach into the tens or hundreds of thousands. And, these activities must be completed across disparate departments and systems.
To simplify the process and monitor transactions, organizations often use controls through their Enterprise Resource Planning and accounting systems.
However, those safeguards may not be as effective for all contract structure and compensation models, as not all goods or services have a specific unit price or quantity that is easily measured or monitored.
So, how can you ensure that you are truly receiving the negotiated contract value?
Contract compliance audits can clarify assumptions, allowing companies to confirm that all parties are performing in line with negotiated terms. Also, an audit program can enhance transparency, accountability, and trust—critical to any healthy, productive relationship.
Ultimately, by making contract compliance audits an integral part of your corporate DNA, you can mitigate losses associated with non-compliance and uncover risks that often go undetected. In the end, this process can establish good governance while helping to build and protect shareholder value.
Want more information about contract compliance audits and the benefits of adopting this powerful but often overlooked tool? SC&H Group’s Contract Compliance Audit Services white paper discusses how to implement a contract compliance audit process and manage an audit strategy with limited resources. Click here to read this white paper today.
To learn more about how SC&H Group can help you reduce costs and develop greater trust, transparency, and accountability with third-party suppliers, click here.