The word ‘audit’ can often invoke anxiety for many individuals and businesses.
On top of the anxiety, not knowing what to expect during the audit process can create apprehension. Apprehension leads to worry. Worry leads to potential and actual errors in financial or other records, as well as compliance issues. All of those issues can be uncovered during an audit, along with ‘unforced errors’ that may not paint a fulsome picture of your organisation, its staff and operating procedures. Audits also require significant time and resources to prepare for, which may disrupt regular operations. For individuals without much experience with or about audits, this can increase uncertainty about how to prepare and what will be evaluated. Those factors will exacerbate the inherent worry, anxiety and apprehensions that will arrive with the auditors.
So why do we need audits? The answer is yes. In fact, auditors and audits can help organisations significantly uplift their day-to-day operations. One key objective of auditing is to provide assurance to stakeholders. Audits can also serve a constructive purpose, providing insights into financial health and compliance, identifying areas for improvement, and sometimes even confirming that practices are sound and in good order.
Using contracts as an example, the key challenges organisations typically face can be summarised as follows:
Through audits, organisations can assess the effectiveness and efficiency of their contract management processes – and address some of the key challenges, outlined above. And as to the upside? It starts with uplifts and improvements to the ways that the Commonwealth Government manages and saves on public expenditures. Considering that the Australian Government awards on average 70,000 contracts each year with an annual total value in the range of $50 billion to $70 billion,[1] there’s a lot to be gained through audits and reviews of contracting processes. Those gains can have flow on effects not only to savings for taxpayers, but also in improved – and potentially expanded services.
As to the how – and what auditors will use as a benchmark? Start with the Commonwealth Procurement Rules (CPRs), which provide a clear and effective framework for effective contract management in Australian government agencies. For those who are new to audit and feel anxious about reviews, my simple advice is to get to know the CPRs inside-out. Knowledge is not only power, but it can help reduce the uncertainty in dealing with what is, likely, the number one issue on the Australian National Audit Office’s agenda – ensuring agencies get value-for-money, along with a heightened focus on transparency and accountability.
In the current Australian Government context, sound contract management is essential to achieving value-for-money from procurements. As such, contract audits are particularly important for the following reasons:
In the evolving landscape of Australian governance, contract audits play a vital role in effective contract management and they can play an essential part in building trust, ensuring compliance, identifying risks, enhancing performance and maximising the impact of public expenditure. By unlocking insights from audits, organisations can optimise their contractual relationships, drive strategic decision-making, and create significant value in their operations. Emphasising the importance of regular audits fosters a culture of accountability and continuous improvement, essential for long-term success. So don’t feel anxious, feel empowered when the auditors come knocking, but be prepared and open to ways of improving how your organisation operates.
Synergy Law utilises its extensive industry insights and expertise of its skilled consultants to help government agencies implement tailored procurement and contract management practices. Contact us to learn more about how we can work with you to achieve the best outcomes for your organisation.
