Process for Performing a Vendor/Contract Audit: What Should be Considered and How to Plan, Perform and Report Results of a Vendor Audit

Why Should You Attend:

With an increased focus on outsourcing services within organizations, awareness of contract terms and conditions and how to audit them are invaluable to organizations. Taking a proactive stance on performing vendor audits on contracts can result in real dollar savings to organizations, not to mention invaluable comfort to Management that outside vendors are performing in accordance with terms and conditions of given contracts. This course will provide you with a basic understanding of different contract terms, different ways to determine the scope of the audit given contract terms and conditions, how to plan, perform and report results of a vendor audit. Examples of templates will be provided for every step of the audit process.

This course will spend some time discussing different contract terms and the risks associated with them, for example "Cost-Plus", "Fixed Fee/Lump sum" and "Time and Materials". We will discuss the proper breakdown in time spent on a typical vendor audit and where the focus of that effort should lie. Examples of real-life vendor audit issues and how they were discovered and resolved will be shared. Additionally, we will discuss an example of an audit program, vendor confirmation letter and contract brief. From start to finish, the vendor audit can result in real dollar savings to your organization and should be an area of focus for any organization with significant contracts with outside vendors.

Vendor/Contract audits require a certain skill set to understand the terms and conditions of a contract between a Company and any given vendor where products or services are outsourced. Understanding the risks that are inherent within them is the first step in developing audit objectives and steps. The primary focus of the audit is the vendor (third party) activities pertinent to a contract. A majority of the fieldwork on these types of audits will likely be performed at the Vendor's office and this is a significant advantage to the auditor.

Learning Objectives:

• To understand how to perform vendor/contract audits and start to finish instructions and templates on how to perform this type of audit given the risks involved in contracts.

Areas Covered in the Webinar:

• Identify and collect essential pre-audit background information

• A basic understanding of the most popular types of contract terms and conditions

• The process of reviewing contracts to develop audit objectives

• Turning audit objectives into audit steps and an audit program - Audit Planning

• Reviewing the contract and putting together a "Contract Brief"

• Fieldwork performed at the vendor's office - critical advantage to auditors

• How to successfully identify and plan the vendor audit report to provide results to both management and the vendor.

• Real life examples will be shared from the instructors' extensive background in this area.

Who Will Benefit:

• Internal Audit personnel involved in audits of third-party contracts
• Internal Audit Management
• Professionals responsible for performing third-party contract audits
• Management concerned with vendor performance

Marna Steuart
Consultant, Colorado Public Utilities Commission

Marna Steuart has been in the audit industry for over twenty years. Ms. Steuart began her career with a big four firm as an external auditor, then as an internal auditor in different capacities in various industries. Ms. Steuart has performed collective bargaining contracts, and construction contract audits of several third-party contracts. She has also performed vendor contract audits of purchase power contracts and third-party vendor contracts for services throughout her career as an internal auditor. She has firsthand knowledge of where to look in a contract for possible risks and of case studies that would save thousands of dollars’ for organizations.

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