How to A Conduct Contract Compliance Audit

The number of contracts a business handles depends on its functions. Large entities have more active contracts than smaller organizations. You should check the contract performance regularly regardless of your entity size. Established outlets delegate this role to the legal department. 

Monitoring your company contracts will protect the business from unnecessary risks. You can quickly identify systematic problems that can be expensive if not corrected on time. So, how do you handle a contract compliance audit?

Regular Auditing

Auditing long-term agreements periodically is a cumbersome task. You must complete this process to ensure your contracts comply with the requirements. Also, these audits are paramount when merging entities or acquiring new businesses. You should provide the new partner with a report on all the agreements you sealed when entering into a merger or partnership. The same is needed when ending a partnership to prove that you sealed meaningful agreements.  

Regular auditing will save time and ensure all key contracts are included. Complete this process when not handling complex activities like budgeting or compiling taxes. Use supporting documents to confirm that an agreement took place.

Set Audit Goals

Create specific, realistic, achievable, time-bound, and measurable goals for your contract audit. Identify which agreements will undergo the auditing process and what you will review. The agreement analysis will help you identify obsolete contract parts and areas that require adjustment. 

List what you want to accomplish from the audit process. Ensure you have the necessary resources to work effectively and efficiently. Plan the contract auditing process and notify the relevant departments. All units should provide the needed agreement documentation on time for easy evaluation.     

Analyze Company Documents

Agreement compliance audits involve analyzing financial, sales, procurement, customer care, and account data. You need accurate information to compile the compliance report. Currently, companies are storing data online, which you can easily retrieve. 

Ensure that the details are complete and accurate. In case of sensitive information, you should confirm with printed documents. Meet with the department heads regularly to stay updated with their operations and signed contracts. Introduce a policy in the organization requiring staff to file and upload contracts for transparency. Limit the number of staff who can access the business contracts.   

Hire a Compliant Auditor

Consolidating and collecting the needed documents for contract compliance auditing is an involving task. Involved staff will have to forego their duties to complete this project. In the long run, this might cost your entity. 

Thus, consider outsourcing a compliant auditor. The professional will bring their resources and expertise to handle the task professionally. Also, these experts will relieve your employees from the stress of collecting data. They will use the correct contract details to develop an accurate agreement compliance report. 

Moreover, these auditors will guide you on how to protect your agreements and reports. They will take you through the risks you might experience due to poor contract management and auditing. 

Conclusion

Regular contract compliance auditing is vital to any establishment. Get a competent professional for this task and invest in automated file systems. Introduce a transparency culture in your organization to encourage the staff to notify relevant authorities when they seal a deal.