Why Procurement Organizations Can Benefit from Working with Internal Audit – Part 2

Spend Matters welcomes this guest article by Santosh Reddy of GEP.

I was at a conference recently where nearly 500 professionals from the industry gathered to share their thoughts about the challenges and solutions related to sourcing, procurement and technology in their respective companies. One of the speakers in those sessions touched on the topic of a strong relationship with internal audit that created both the opportunity and work for her sourcing team.

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I had a brief chat with her after the session to hear some examples. A show of hands during the session proved a good percentage of the audience interacts with internal audit in some potential, and this allowed for some interesting follow-up conversation later during the sessions. This is also Part 2 of my earlier blog on internal audit.

I am capturing some of my takeaways in this blog:

  1. The opportunity to swoop in and save the day: Auditing has a lot to do about data collection, organizing, analyzing and arriving at the results. Typically, the results start taking shape much before they are announced. By getting a sense of the results, sourcing teams can prepare a business case using spend analysis, opportunity assessment and success stories to become involved. When the results are announced, it provides the opening and a platform for sourcing to swoop in and save the day for business functions.

  1. Sales team: A good relationship that resulted in favorable outcomes on other instances will only encourage internal audit to trust sourcing with more work. As the drivers of compliance, internal audit teams sometimes have the authority to mandate changes to improve compliance. If their findings on any audit are non-compliant, they might encourage or mandate the related business functions to work with sourcing and drive better compliance.

The question to ask here is, “Why would internal audit support sourcing teams?” The answer lies in the challenge the auditors face. When it comes to auditing procurement spend, auditors are often challenged by the lack of data, low forensic capabilities to deal with distributed and often incomplete purchase and invoice information, low expertise in procurement operations and the business functions they might be evaluating. The biggest challenge, however, is a lack of time. Yet sourcing teams do just this – deal with spend data and find ways to improve spend under management. Auditors will be more than happy to enroll sourcing team’s support if it means less work and better results for them.

The first step, though, lies with sourcing teams to encourage internal audit to realize the value we bring to the table. So go ahead, talk to your Internal Audit team and post some results.

For more interesting thinking on procurement, visit the GEP Knowledge Bank.

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