Frequently Asked Questions
What is a contract compliance Audit?
Broadly, a contract compliance audit is performed to assess whether parties have complied with the terms and conditions of their contractual relationship. Audits may be conducted retrospectively several months or years after the transactions occur or in real-time as work is performed.
Most often, parties want to confirm they were billed correctly for services provided or paid correctly for their share of production, revenue, or royalties. Tests are designed to examine supporting documentation and model payment calculations to gain assurance that billings or revenue payments comply with the underlying agreements. Variances are documented and reported to facilitate resolution.
AMS-PAR has conducted thousands of contract compliance audits. Contact us to discuss your needs.
Why should I conduct a compliance Audit?
Your company should consider adding contract compliance audits to its risk management program. Some of the reasons to conduct an audit include:
- Deterrence – when suppliers, contractors, and employees know audits are being conducted, the temptation to deviate from the contract or business norms is .
- Financial recoveries – mistakes happen, and some contracts are difficult to administer. Audits will help recover errant payments and money due, identify the root cause of the error, and make recommendations to minimize the risk of future errors.
- Process improvement – some audits are conducted to assess whether the commercial terms of a contract can be modified to improve business practices.
Additionally, supporting documentation needed to validate the transactions may not be provided or sufficiently detailed. Conducting an audit may be the only way this information will be made available.
Compliance audits will help you understand your control environment and improve your business processes; information needed to reduce corporate risk.
AMS-PAR has conducted thousands of contract compliance audits. Our compliance audits are usually self-funding and are completed without interrupting your staff’s normal routine.
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What benefits should I expect to receive from an AMS-PAR Audit?
In addition to deterrence, an AMS-PAR compliance review will produce two primary benefits. First, your company will realize financial recoveries resulting from billing errors, improper revenue distributions, and contract misinterpretations. Second, and equally important, you will receive a root-cause analysis of the procedures and contracting processes or interpretation that caused the errors. Ensuring these gaps are addressed will improve your bottom line for years to come.
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HOW WILL AN AUDIT AFFECT MY BUSINESS RELATIONSHIP WITH MY SUPPLIER OR PARTNER RELATIONSHIP?
Although audits can be intimidating and stressful, we work collaboratively with those we audit to minimize the discomfort. We recognize errors may be made and monies may be due, but we try to identify why the error was made rather than assigning blame. We are interested in preventing the error from reoccurring. We find this audit approach positively affects business relationships.
Reviewing commercial relationships is a common business practice. Vendors, contractors, and business partners value their relationship with your firm. They work hard to ensure they comply with their contractual obligations. Most discrepancies result from human error or differences in contract interpretation, and we find that suppliers quickly resolve errant billings.
While our audits may identify process improvements that impact billing accuracy, suppliers often take the opportunity to share ways in which our clients can improve operational efficiencies. We encourage open dialogue with those we audit. In response to quality surveys, contractors and suppliers frequently state the AMS-PAR audit approach is superior to others.
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How is an AMS-PAR Audit different from other Audit?
All potential service providers offer widely differing levels of scope and review intensity. At AMS-PAR, we offer our clients a higher level of assurance that their engagement objectives will be met through proper planning, execution, and supervision. We believe clients are best served by customizing our review to meet their specific and distinct needs. Each audit is unique and receives personalized attention.
Our staff will work with you to understand your objectives, concerns, and business practices. Once the objectives are defined, we will carefully select a team with the right skill set from our resource pool and design a testing approach to ensure your objectives are met and concerns investigated. Technology will be leveraged to review your transactions more effectively and efficiently. Our tools permit us to analyze data that others cannot.
Our report will address the observations and findings identified during the audit and provide insight into concerns raised and opportunities to strengthen controls and the commercial relationship. Each claim will be well documented and include resolution recommendations.
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WHAT INFORMATION WILL BE IN THE REPORT?
Our reports serve a dual purpose. They provide management a recap of the audit results, insight into pre-engagement concerns, and contracting and payment processes, and recommendations for strengthening processes and contract language. The report also clearly explains the specific errors noted during the audit and includes sufficient detail needed to facilitate timely resolution. We take great care to prepare a meaningful report for our clients.
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My staff reviews invoices prior to making payment. Why should I pay AMS-PAR to conduct a compliance Audit?
Your review is a good initial step. Unfortunately, the information you receive is often not sufficiently detailed or supported to verify the accuracy of invoices. Certain transactions require specialized expertise or the ability to analyze large datasets to identify data interdependencies. Your company may not have the expertise, analytical tools, or especially the time needed to interrogate and vet these transactions.
The types of data needed to verify certain transactions include equipment registers, payroll records, shipping detail, price indices, and product cost information. An audit may be the only way to obtain this information.
AMS-PAR has conducted thousands of compliance audits. We have the expertise, analytical tools, and time needed to thoroughly analyze even the largest datasets.
Contact us to see how we can help ensure you only pay what is appropriate.
How much effort does this take on my part? Do I have the time and resources?
AMS-PAR recognizes that your staff are busy and have other job responsibilities. We take this very seriously, and our audits are designed to minimize client time requirements. Once the engagement objectives are established and relevant information (e.g., contracts, payment detail, remittances, etc.) are obtained, AMS-PAR will work independently with minimal disruption to your staff. The communication plan will be established early and tailored to meet your needs.
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How Do I get Started
Click on the “Contact Us” button in the banner and complete the requested information. An AMS-PAR resource will contact you shortly to discuss how we can help you achieve your contract compliance needs.