contracts audit 1737
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Hello,
I have been assigned to a newly created function within my company and that is Contracts / vendor audit. The objective of this is to assess risk areas and ensure compliance to contractual guidelines.
There seem to be alot to achieve in this new function as there has been cases in the past where vendors over billed the company through different ways. One of the clauses I should be looking at in any contract is the COST mark up basis services.
Would anyone have guidelines in order to proceed further and/or provide real cases or experiences.
Thanks,
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I only presume that you are aware of the provisions of the Relevant IAS/ FASB for revenue recognition on contracts.
Since i am from india, i can certainly give you a link of the relevant Accounting standard(AS and on construction contracts.)
icai.org/icairoot/resources/as_index.jsp In this link, please click on AS7Construction contracts revised 2002.
this can give you valuable guidance on Cost contracts.
On the Risk assessment part, a small but practical advise would be to look it with a ’ What can go wrong’ against each of the contractual clauses( obviously only those which would have a financial impact) and get a clarificaion w.r.t the safeguards against each of these points.
Think always from the management perspective, and align the clauses either for the good of only your company or a win-win for both your company and the other party to the contract.
Would have sounded like lot of theory, but was just my personal approach to handling contracts.
Hope this helped