Procurement Audit

Course overview

Course outline

1. 1Day 1: Procurement Audit Fundamentals, Governance and Risk Assessment

   • Understanding the purpose and scope of procurement auditing and its contribution to governance, financial control, operational efficiency, and value for money

   • Mapping the procurement lifecycle from requirements identification and sourcing through contract award, purchasing, delivery, invoicing, and payment

   • Evaluating procurement governance structures, purchasing policies, delegated authorities, ethical standards, and compliance requirements

   • Identifying inherent and residual procurement risks associated with expenditure, supplier dependency, operational continuity, fraud, and contractual obligations

   • Developing risk-based procurement audit objectives, scope, criteria, and testing priorities using procurement expenditure and control information

   • Practical workshop: Preparing a procurement risk assessment and risk-based audit plan for a selected organisational purchasing process

2. 2Day 2: Auditing Supplier Sourcing, Tendering and Contract Award

   • Reviewing procurement planning, sourcing strategies, market research, and the justification of competitive or non-competitive purchasing methods

   • Evaluating supplier registration, qualification, due diligence, financial assessment, and conflict-of-interest controls

   • Auditing requests for quotation, tender documentation, technical specifications, bid submission procedures, and evaluation criteria

   • Testing supplier selection and contract award decisions for transparency, consistency, authorisation, and compliance with approved procedures

   • Identifying red flags involving restrictive specifications, bid manipulation, supplier collusion, unjustified sole-source awards, and evaluation irregularities

   • Practical exercise: Reviewing a procurement tender file to identify control weaknesses, compliance exceptions, and potential supplier selection risks

3. 3Day 3: Auditing Purchase-to-Pay Processes and Financial Controls

   • Evaluating controls over purchase requisitions, purchase orders, approval limits, purchasing budgets, and expenditure commitments

   • Testing segregation of duties across purchasing, supplier master data maintenance, goods receipt, invoice processing, and payment authorisation

   • Reviewing receiving documentation, quantity verification, quality acceptance, and discrepancies between orders and delivered goods or services

   • Auditing invoice validation, three-way matching, payment approvals, supplier bank detail changes, and accounts payable controls

   • Applying procurement transaction analytics to identify duplicate payments, split purchases, unusual prices, unsupported transactions, and purchasing policy violations

   • Practical workshop: Performing purchase-to-pay audit tests using illustrative procurement transactions, supplier records, invoices, and payment data

4. 4Day 4: Contract Compliance, Supplier Performance and Procurement Value

   • Auditing procurement contracts for approved terms, pricing conditions, delivery obligations, performance requirements, warranties, and change control provisions

   • Evaluating supplier performance management through delivery reliability, quality results, service levels, corrective actions, and contract compliance

   • Reviewing contract variations, extensions, price adjustments, claims, and additional expenditure for appropriate justification and approval

   • Assessing procurement efficiency through purchasing cycle times, sourcing effectiveness, expenditure analysis, and supplier concentration

   • Applying value-for-money auditing principles to evaluate economy, efficiency, and effectiveness in procurement decisions

   • Case study: Conducting a contract and supplier performance audit to identify commercial risks, operational weaknesses, and opportunities for procurement improvement

5. 5Day 5: Procurement Audit Reporting, Fraud Indicators and Continuous Monitoring

   • Evaluating procurement audit evidence and distinguishing isolated transaction errors, systemic control weaknesses, compliance failures, and potential fraud indicators

   • Developing audit findings with clear criteria, conditions, causes, consequences, supporting evidence, and practical recommendations

   • Communicating procurement audit results to management, procurement leadership, audit committees, and relevant governance stakeholders

   • Establishing corrective action plans, management responsibilities, implementation deadlines, and audit follow-up procedures

   • Designing continuous procurement monitoring indicators and dashboards covering purchasing compliance, supplier performance, transaction exceptions, and procurement risks

   • Capstone exercise: Developing and presenting a Procurement Audit Report and Improvement Plan covering audit scope, risk assessment, testing results, control deficiencies, fraud indicators, recommendations, and follow-up priorities