Internal audits provide immediate benefits to compliance by verifying your internal controls and procurement policies (as well as the performance and policies of your vendors) are in line with your own policies, industry standards, and legal requirements. A formal audit program also improves documentation, making follow-up easier and allowing you to pursue continuous improvement with consistent and clear benchmarks for corrective actions. Internal audit procedures support effective risk assessment and management by exposing risk generated by sub-optimal purchasing processes, rogue spend, compliance failures, and fraud. Every roadblock removed and process optimized is another step toward optimal performance, reduced risk, and a healthier, more profitable business. Process and Operational Efficiency GainsĪudit procedures introduce continuous monitoring and review to your workflows, bringing continuous improvement with them.An internal auditor (or assembling an internal auditing team), cross-trained in procurement but from (an)other department(s), provides a complete and accurate review of procurement activities and procedures while ensuring objectivity. Just as it would be folly for employees to give their own performance reviews, trying to evaluate the purchasing department from within will likely be both a fruitless labor and a glaring conflict of interest. Clarity, Transparency, and Objectivity.To ensure it’s the former, you need a procurement audit to document, measure, and evaluate how well your internal controls and procurement methods function.Īn internal audit benefits your company in four ways: Why You Need a Procurement Internal Audit Programįrom purchase orders to contract management to supply chain issues, your purchasing department can be a goldmine of strategic insights and productivity-or a minefield of impending disaster. A procurement internal audit program allows you to review and analyze your procurement procedures in order to: identify areas in need of improvement ensure compliance with internal controls, industry standards, and legal requirements and reduce risk, fraud, and waste through procurement process optimization. If you’re not measuring, or even tracking, your procurement performance, you’re missing out on more than just data. The efficiency and efficacy with which your procurement team manages sourcing and connects with other departments such as accounts payable, production, and finance can have a major impact on your company’s strategic decision making, compliance, and ability to compete in a crowded global marketplace. It may not get as much attention as marketing, sales, or R&D, but your procurement department is a crucial part of your company’s success.

Internal audit process steps