By Kevin Iwamoto, Senior Consultant
How do you react when you hear the word audit? In my earlier years as a multiple global category leader for HP, the word struck fear in my heart. Over the years, however, that fear turned into annoyance, which eventually turned into appreciation.
I recently read that less than half of corporate travel and meeting programs get audited by program owners. This troubled me because if you’re not self-auditing your suppliers and programs, you’re likely to fail a corporate finance audit. These corporate audits can be either scheduled or unscheduled, with unscheduled audits using the element of surprise to gauge whether a targeted spend category and program is operating within fiduciary guidelines and standards as well as identifying any gaps that need attention.
I was speaking to a big tech company recently that just re-signed with the travel management company it’s worked with for five years. The new contract is for a three-year extension, and I assumed the managers did periodic audits of their TMC to ensure that agreement terms, conditions, and financials were in line with the master agreement, especially with global partners servicing the account. Imagine my surprise when they disclosed to me that they’d never done a self-audit! The comment that really shocked me was, “We’ve worked with them for many years and we trust them.”
Just so we’re clear, no matter how solid your relationship is with suppliers, best practice is to audit your program and support suppliers annually, or at least bi-annually. Doing so ensures that when the program gets audited by corporate finance, it’s more likely to pass. Skipping self-audits is like playing Russian Roulette: Your support suppliers could be forming bad habits or doing things that are costing you money or, worse, unintentionally putting you and your company in harm’s way.
Self-audits also send a strong message to your partners that they need to pay attention to their service level agreements and statement of work, and double check the financials to make sure nothing egregious is flagged when they get audited. Without any “fear or annoyance” of an impending audit, the natural tendency is to drift into bad habits because there are no consequences.
Here are a few things to consider when deciding on self-auditing your programs:
Over the years my feelings about audits have gone from fear, to annoyance, to appreciation. Challenge yourself to adjust your attitude and appreciate the value that audits bring to every corporate program. They often uncover process, service, and financial gaps that only serve to make your program(s) better. They force integrity to the forefront of aligned objectives for both buyers and suppliers. Last but not least, they drive true transparency of the program, both operationally and financially. In this day and age of fiscal responsibility, Sarbanes-Oxley, and everything else, all audits should be appreciated, not feared.
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