Nine Key Times an Oil and Gas Company Should Consider a Contract Compliance Audit [White Paper]
December 14, 2016 - By: SC&H Group
Today’s energy executives face an array of market challenges, from low oil prices and sub-par global economic growth to increased operational complexity, production costs, and regulatory burdens, according to a recent DNV GL survey of industry executives.
However, sometimes the greatest risks are those that go undetected.
For instance, given the daunting complexity and remote locations of many oil and gas projects, companies often must turn to third-party firms to help provide necessary equipment and deliver complex services. While the resulting supplier relationships can be beneficial, they are highly susceptible to contract non-compliance.
In fact, with the intricate nature of multi-year contracts with non-hydrocarbon vendors, undetected non-compliance is easily overlooked and can quickly erode both transparency and an organization’s margins.
In this white paper, we discuss nine of the most common scenarios and indicators—either intentionally or unintentionally—that signal it’s the right time for oil and gas companies to conduct a contract compliance audit. Following are three of these indicators.
- If you are making a major spend or investment, such as building a new production facility or launching a global advertising campaign, prudent management of contract compliance at project inception will help ensure ultimate success.
- When contract terms are complex, compliance becomes more difficult. In these cases—especially contracts with non-hydrocarbon vendors that provide parts, materials, and services—audits are invaluable for ensuring compliance with contract terms and operating procedures.
- If your organizational structure is decentralized, resulting in contract “ownership” residing in various business groups, it is easy for each of those groups to assume that compliance is managed by another part of the organization. Audits provide an opportunity to ensure compliance protocols are consistent across the organization.
A well-timed contract compliance audit can uncover significant financial savings (e.g., overbillings, unused funds), as well as improve efficiency, transparency, and internal controls.
To learn more about the importance of a well-timed audit, the three scenarios highlighted above, and the six others that should prompt a contract compliance audit, download the full white paper today.
Need to call an experienced auditor to look at your contracts? Or do you want to learn more about how contract compliance audits can help improve third-party transparency, accountability, and efficiency? Contact SC&H Group’s Contract Compliance Audit team here.