Ensure periodic audits are conducted to assess contract compliance and overall performance
1. Purpose of Contract Audits and Reviews
a. Why Conduct Audits?
- To verify that contracts are being implemented in accordance with agreed terms.
- To evaluate contractor and internal team performance.
- To identify compliance issues, financial discrepancies, or operational gaps.
- To ensure that contract data and documentation are current and complete.
- To provide recommendations for future contract improvements and risk management.
b. Scope of Review
- Covers active, amended, renewed, and completed contracts.
- Includes related documents: invoices, deliverables, correspondence, amendments, payment records, and performance reports.
- Focuses on legal, financial, and operational compliance.
2. Types of Contract Reviews and Audits
a. Internal Compliance Audits
- Conducted by SayPro’s Internal Audit or Compliance Unit.
- Focus on:
- Adherence to procurement and contracting policies.
- Alignment with donor or regulatory requirements.
- Documentation completeness and proper approvals.
b. Quarterly Contract Performance Reviews (SCMR-1)
- These are structured reviews held quarterly as part of the SCMR-1 process.
- Contracts are evaluated based on:
- SLA/KPI performance.
- Timeline adherence and milestone achievement.
- Financial performance vs budget.
- Risk management actions and outstanding issues.
c. External or Donor Audits
- Initiated by external stakeholders (e.g., donors, auditors, partners).
- Emphasis on:
- Value for money (VfM) and cost-effectiveness.
- Transparency and fairness in procurement and contracting.
- Proof of results and impact.
3. The Audit and Review Process
a. Preparation and Planning
- A Contract Audit Schedule is developed annually and updated quarterly.
- Contracts are selected based on:
- Value and risk exposure.
- Duration and complexity.
- Donor or stakeholder requirements.
- Audit objectives, timelines, and checklists are shared with relevant departments.
b. Document Review
- Key documents retrieved from the Contract and Procurement Management System (CPMS):
- Signed contract and amendments.
- Invoices and payment records.
- Vendor performance reports.
- Internal memos and change requests.
- Risk registers and corrective action plans (CAPs).
c. Field Verification (if applicable)
- For service delivery or infrastructure-related contracts:
- Site visits may be conducted to verify physical progress.
- Beneficiary or end-user interviews may be included.
d. Stakeholder Interviews
- Auditors may interview:
- Contract Managers.
- Finance and Procurement teams.
- Vendors or third-party implementers.
4. Reporting and Recommendations
a. Audit Report Contents
Each audit or review report includes:
- Executive summary of findings.
- Compliance ratings (e.g., Fully Compliant, Partially Compliant, Non-Compliant).
- Detailed findings by category (e.g., Financial, Operational, Legal).
- Risk assessment and impact analysis.
- Recommendations and required corrective actions.
b. Corrective Action Planning
- Where non-compliance or performance issues are identified:
- A Corrective Action Plan (CAP) is created with responsible parties and deadlines.
- The CAP is tracked in CPMS and reported on in future QCM cycles.
5. Integration into SCMR-1 and QCM
a. Quarterly Review Inclusion
- Findings from audits are presented in the SayPro Quarterly Contract Management (SCMR-1) meetings.
- Action items from these reviews are logged, monitored, and closed in the following quarter.
b. Continuous Improvement
- Audit outcomes contribute to:
- Policy updates and process improvements.
- Staff capacity-building in contract management.
- Better procurement planning and vendor selection in future cycles.
6. Documentation, Traceability, and Retention
a. CPMS Archiving
- All audit reports, supporting evidence, and CAPs are uploaded to CPMS.
- Linked directly to the contract profile with full version history and access logs.
b. Retention and Accessibility
- Audit documentation is retained as per SayPro’s Document Retention Policy (minimum of 5–7 years).
- Documents are accessible to auditors, managers, and executive leadership based on role-based permissions.
7. Benefits and Strategic Value
- Improved Governance: Promotes transparency, ethical conduct, and compliance with organizational and donor standards.
- Early Risk Detection: Identifies issues before they escalate into disputes or financial losses.
- Informed Decision-Making: Provides leadership with accurate insights for renewals, terminations, or renegotiations.
- Reputation Management: Demonstrates accountability and professionalism to donors and external stakeholders.
Conclusion:
Audits and contract reviews are essential components of SayPro’s contract lifecycle, helping ensure that agreements are executed with integrity, efficiency, and value. By embedding this function into the SayPro Monthly January SCMR-1 and the Quarterly Contract Management system, SayPro not only meets compliance standards but continuously strengthens its internal controls and strategic delivery outcomes.
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