Coping with and adopting to emerging issues and trends in procurement audit and risk management

Procurement and Audit notes revision

As the new requirements from stakeholders emerge, procurement auditors must adopt best practices in ensuring that procurement audit practices are in compliance. Some of the suggested best practices in procurement audit includes;
1. Audit planning- In audit work planning, the focus should be on key deliverables, risks and activities as well as the impact of various risk factors. The audit will ensure assessment of internal assurance systems and associated risk management structure and processes. Modern audit services are therefore focussed on recorded risk strategies that shows well documented objectives, structures and processes. This requires close examination of corporate risk registers and its highlights of grade andlikely impact of risk on the organization. It also establishes likely controls together with those responsible for managing these risks.
2. Adoption of Risk Register- Procuring entities need to maintain a good portfolio of all the potential and known risks associated with the procurement function. This may be generated from past experience and from sheer intuition from procurement work. A very crucial step in procurement audit is an examination and appraisal of risk registers in order to provide an assurance that all procurement matters are covered. All should be covered in the register including relatively low value contracts, late contracts and their likely impact in major goals.
Risk registers are typically required to identify;
• Current procurement contracts with suppliers that are of strategic importance and specific to services.
• Each and every important procurement activity planned for near future.
• Important policies to the organization such as sustainability policies.
• Any strategic projects that could have serious repercussions for the image of the organisation if they fail.
3. Determination of risk management structures-Establishment of a framework consisting of cross functional team responsible for mapping possible risks, determining their probability and loss factors. Auditors should already be aware of the level of risk maturity achieved by their organisations, and in particular, the extent to which risk management and controls assurance policy are embedded into their culture and operations. This will determine, when planning audit work, whether reliance may be placed on management’s assessment of risk or whether they need to compile assessments themselves.
4. Legislative framework: – Compliance with applicable obligations from national and international standards – Regulations, documentation, and tools to support implementation
5. Improving organizational structure and management competence: – streamlining and collaborating into procurement management system regulatory system for improving skills and training system.
6. Improving procurement operational practices – Enhancing the efficiency of procurement operations and practices and functionalities by putting in place contract administration and dispute resolution provisions
7. Creating transparency and accountability of procurement system: – setting and improving internal control and assurance system for efficiency, professionalism and ethics.

Review Questions
1. Discuss five emerging issues and trends in procurement audit
2. Discuss five roles of a procurement audit committee
3. Explain the advantages and disadvantages of audit committees
4. Describe the Challenges and opportunities posed by the emerging issues and trends in procurement audit and risk management
5. Discuss ways of coping with and adopting to emerging issues and trends in procurement audit and risk management

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