What is the main purpose of a procurement audit?
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Audits are official inspections of a company’s accounts. Procurement audits ensure that procurement processes align with the company’s policies and procedures and are not corrupted in any way. Transactions are usually the main focus of audits.
Audits go through key indicators of procurement performance such as savings, compliance, timelines, etc., to gauge their efficiency. They can reveal which processes need to be fixed and which opportunities can be leveraged to cut down costs.
Similarly, audits keep a check on the external players of procurement as the process also includes going through contracts to see if vendors are following the terms and conditions of contracts. This is done to ensure compliance and let organizations determine which suppliers to replace.
The procurement department has to utilize a large portion of an organization’s revenue to procure goods and services, so inefficiencies create room for fraud. Audits track money trails to ensure no cash disappears from within the company, and the organization’s integrity is not compromised.
Audits require proper documentation for their successful execution. Organizations that deploy procurement software are at an advantage as advanced procurement solutions record audit trails digitally, ensuring that everything can be traced and central oversight can be maintained.
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