Contract Compliance Audits

To ensure that the terms and conditions of a contract are being performed as stipulated, it is crucial to conduct periodic Contract Compliance Audits.

A Contract Compliance Audit is a review and assessment carried out on an individual contract to verify compliance with the obligations contained in the contract, it’s a necessary part of the contracting process to ensure proper and timely performance. The contract generally defines the scope and requirements of the audit.

A Contract Compliance Audit is implemented to verify that the parties have complied with their obligations contained in the relevant contract documents, and it may:

• Review invoice amounts to determine if the correct amounts have been claimed and paid in accordance with the contract;
• Examine the contract Program to determine if works are being carried out in accordance with agreed timeframes;
• Verify that Notices have been issued in accordance with contractual timeframes; and
• Be used as a ‘lessons learned’ exercise, where identifying compliance issues in one contract allows the development and improvement in safeguards against breaches of other contracts.

One of the primary purposes of conducting a Contract Compliance Audit is to identify potential issues and to rectify them before they escalate into much larger issues. Before starting a compliance audit, you should go through a risk assessment process. This process highlights the cost and complexity of each agreement to determine which ones should be prioritized and audited first. It must be clear which contracts will be under review, the anticipated length of time that the review will take place, and the types of things that the review is seeking to assess.

You must establish what you hope to accomplish by examining a contract.

• Do you want to look for overcharges and inefficiencies?
• Do you want to see if deadlines and?obligations?are being met?

Whatever the reason, it’s critical to establish it from the outset to ensure your audit is productive.

The goal of an audit should not be to apportion blame or fault for mistakes or problems but to use the information gathered to improve things moving forward. After concluding the audit, everyone involved should debrief and address the primary areas that need attention and how the?contract compliance audit process?went.

Performing a Contract Compliance Audit can save the business time and money, as well as providing management with valuable knowledge and data to inform decisions moving forward.

Lewis Woolcott can provide a Contract Compliance Audit to meet your particular needs.??