A procurement audit is a systematic review of an organization's procurement processes and practices, designed to identify areas of improvement and ensure compliance with laws, regulations, and internal policies. Conducting a procurement audit can help organizations to identify inefficiencies, reduce costs, and improve overall performance.
Here are the steps to conduct a procurement audit:
- Define the scope of the audit: This includes determining which procurement processes and practices will be reviewed, as well as the time period that will be covered by the audit.
- Identify the audit team: This should include a mix of internal and external personnel, such as procurement professionals, auditors, and subject matter experts.
- Review procurement policies and procedures: The audit team should review the organization's procurement policies and procedures to ensure they are up-to-date and compliant with laws, regulations, and internal policies.
- Review procurement records and documentation: The audit team should review procurement records and documentation, such as purchase orders, invoices, contracts, and supplier agreements, to ensure they are accurate and complete. This will also help to identify any areas of inefficiency or non-compliance.
- Interview relevant personnel: The audit team should conduct interviews with relevant personnel, such as procurement professionals, suppliers, and internal stakeholders, to gather information and identify any issues or areas of improvement.
- Perform testing and sampling: The audit team should perform testing and sampling of procurement transactions to ensure they are accurate and compliant with laws, regulations, and internal policies.
- Identify findings and recommendations: The audit team should identify findings and recommendations for improvement and present them in a clear and concise manner.
- Follow up and implement recommendations: The final step is to follow up on the audit findings and recommendations and implement any necessary changes to improve procurement processes and practices.
It is important to note that procurement audits should be conducted regularly, at least once a year, to ensure that procurement processes are efficient, effective and compliant with laws and regulations.
For example, GE regularly conducts procurement audit to ensure compliance with laws and regulations, and improve overall performance. This has helped the procurement organization at GE identify areas of inefficiency, reduce costs, and improve overall performance.
FactWise offers procurement SaaS solutions to a global client base of small and mid-sized product manufacturing companies, with a strong focus on enhanced transparency for leaders (up to 31%) and increased payment compliance (up to 93%). We are committed to creating a truly distinctive procurement platform that delights users and provides sustainable positive impact to the organizations we serve.