Contract agreements with suppliers and partners have become exceedingly complex and require keen oversight to ensure that all terms are being met effectively.
In fact, it is estimated that businesses lose millions of dollars a year due to contract leakage. As such, it is important to understand the processes and controls that can identify or prevent financial losses and limit exposure to risks due to contract non-compliance.
This is where contract compliance audits play a key role in supporting good governance, increasing transparency, and protecting negotiated cost savings. In addition, they can help ensure the long-term stability of partner and supplier relationships – especially when the audit outcomes are fair to all parties.
These are some insights from a recent SC&H Group podcast interview with Patrick Gahagan, a Principal in the Contract Compliance Audit Services (CCAS) practice. Patrick also discusses an interesting phenomenon called the “Sentinel Effect,” which is very common in the wake of contract compliance audits.