Even small organizations may be hundreds or thousands of\nactive contracts at any one time. It is critical that regular contract\ncompliance audits are performed to protect your business from unnecessary risk.\n\n\n\n\nA contract compliance audit can help you discover systemic\nproblems that are costing you money in non-compliance penalties. It can also\nreveal the overpayment of fees. \n\n\n\nPerforming a contract compliance audit doesn\u2019t have to be\nonerous. If you follow a few basic principles, you can easily conduct a thorough\naudit without disrupting your operations. \n\n\n\n\nHow Often Should You\nAudit?\n\n\n\nMany companies are unsure of how often they should be\nconducting contract compliance audits. The best practice is to have at least\none audit a year. If you have a significant number of contracts, you may want\nto conduct a quarterly or semi-annual audit.\n\n\n\nThe first contract compliance audit is always the most\ndifficult. But, once you have a system and a set of operating procedures in\nplace, future audits will be smoother and faster. \n\n\n\nSetting the Scope of\nthe Audit\n\n\n\nOne of the first things you need to do is set the scope of the audit. The scope\nof the audit is the amount of time you will devote to the review and the number\nof documents that you will review. \n\n\n\nWhile you could choose to review every single contract, that\nis not the point of an audit. Instead, you want a representative sample of the agreements.\nThis will show if there are systemic issues and give you a general idea of how\nwell your entire portfolio of contracts is performing. \n\n\n\nObjectives of the\nAudit\n\n\n\nMany companies confuse the concept of audit objectives with\nthe scope of the audit. But, these are not related at all.\n\n\n\nThe objectives of your audit are the guiding goals for the\nprocess. Objectives could be to examine contracts for cost overruns or late\ndeliveries. Another objective could be to make sure the company is not\noverpaying non-compliance penalties. Sometimes you may want to see if your\npartners are fulfilling their obligations. \n\n\n\nThe objective of an audit should not be to find someone in\nyour organization to blame for issues. It should be to evaluate the contracts\nagainst some standard. \n\n\n\nNot every audit has to have the same objectives. \n\n\n\nGet online in minutes, implement in hours, realize ROI in weeks! Easy-to-use, helps you increase productivity, contracts & revenue. Available anywhere, anytime & on any device.Try a Free Demo today! \n\n\n\nCollaboration\n\n\n\nIf you are going to have a successful audit, you need to\nencourage cooperation and collaboration with every part of the company. \n\n\n\nThe audit team will need to talk with managers and employees\nto fully evaluate the contracts they are analyzing. This is one of the reasons\nthe objectives of the audit need to be precise. It will help focus the examination,\nand it will reassure employees that they are not under investigation.\n\n\n\nAudits can cause organizational anxiety. The audit team and senior\nmanagement need to communicate to everyone that it isn\u2019t a fault-finding\neffort. They need to encourage collaboration and explain the audit is just to\nmake sure the company is operating as efficiently as possible. \n\n\n\nAnalyzing Audit\nResults\n\n\n\nOne of the biggest mistakes a company can make is not doing\nanything with the audit results. After an audit has been conducted, the\nmanagement team needs to do three things:\n\n\n\nCreate an action plan based on the resultsComplete the actions in the planRevisit the audit results and action plan after the completion of the actions\n\n\n\nAn audit is a tool for discovering hidden issues. But a contract compliance audit is a waste of time if the executive team fails to take any action based on the findings.