Contract Compliance Audits

You’ll find the use of contracts is crucial in almost every company, regardless of sector. Performing work for clients of any kind requires a contract to lay down the scope and parameters of an assigned task. The whole contract process can be daunting and tedious, but it must not be neglected just because the contract itself has been drafted. Companies should conduct intermittent contract compliance audits to ensure that all parties in the contract are performing as they have promised.

However, contract compliance audits aren’t often considered in contracted projects between two entities. Although it can be arduous, it’s necessary, and can help save you money by reducing risk and increasing productivity. Conducting an audit relies on three crucial factors: Timing, Scope, and Goals.


As is the case with most audits, it’s crucial to ensure you’re budgeting for time, as they can be a lengthy process. Audits should not be scheduled to occur concurrent with other complex processes such as tax season. It’s recommended that audits be conducted in small batches, such as those based on contract type. It’s also ideal to plan the timing of your audit around whenever you have the leverage to change the processes laid out in the contract.


One of a contract’s greatest foes is scope creep. To ensure that the scope is still well within control, you must review the terms—particularly areas you know to be pain points. It’s in this way that it’s a good idea to hire an external consultant, such as an accountant, to sit down and help assess how contracts are being managed for maximum efficiency.


In terms of why you’re conducting the audit, it’s a good idea to be clear why this particular contract might pose an audit-worthy risk. Is it too vague in its terms? Do you need to recover costs from the client, improve processes, or manage risks? Clearly identifying your pain points ahead of time can help with the auditing process so that your time and resources are better organized.

For more information or assistance with your contract compliance audits, contact Atherton & Associates, LLP.