What to Know About a Vendor Audit
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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Carlos Gomez, an audit manager and one of the faces of the PKF Texas Contract Compliance Services team. Carlos, will come back to the Playbook.
Carlos: Thanks, Jen.
Jen: Carlos, in previous editions we’ve talked about vendor management audits. What are those and how do those help a company in this type of situation?
Carlos: Typically, our clients benefit from having some visibility into their vendors with a vendor audit. It will help you identify any key issues and maybe recover some expenses that you happened to lose that weren’t in line with the agreement.
Jen: So, how does a vendor audit actually work?
Carlos: Well, we would first go in and look for some red flags based upon the contract, identify the more higher risk areas, and then some areas of risk that may not be as beneficial, but we’ve learned from our experiences where there are gray areas.
Jen: So, what should a company consider if they are thinking about doing a vendor audit?
Carlos: Yes, of course. Obviously, there’s red flags, like if they’re not reporting or there’s a change in charges you get a lot of charge backs. There’s companies that have an entire department that are dedicated to fighting charge backs.
Jen: And which vendor should actually – the company, should they be auditing? Is it all vendors or just a few?
Carlos: You could do this with trend analysis or, kind of, in our assessments, where you see spikes in either expenses or shares of revenue. There are certain ways to find higher risk and a little bit more cost-efficient types of audits.
Jen: Perfect. Well, we will get you back to talk a little bit more about that soon. Sound good?
Carlos: Thanks, Jen, yes ma’am.
Jen: For more information about this topic, visit PKFTexas.com/ContractCompliance. This has been another thought leader production brought to you by PKF Texas the Entrepreneur’s Playbook. Tune in next week for another chapter.