Contract Management Solutions Make Contracts Audit Ready

Whether you experience an internal or external audit, contract management solutions undoubtedly help mitigate the arduous preparation time. Audits keep the business under constant checks and evaluation, which can lead to improvements. Auditors require mass amounts of information, paper, files formatted in a specific way, supporting documentation, data, and proof points. The process is made easier and more efficient with contract management solutions. A smooth audit process naturally occurs when contracts are centralized, standardized, and systematically managed within contract management software and integrated with enterprise legal management.

Information Required During Auditing Process

The auditing type usually determines the exact documents required during the process. These documents are considered essential during the audit process:

• Company objectives
• Financial statements for multiple years
• Contracts initiated, closed and maintained by the company
• Terms agreed upon with different stakeholders
• Risk Management Program
• Security policies
• Vendor management guidelines and contracts
• Incident management and disaster recovery documents

You can easily manage most of these documents using contract management solutions that track the contracts, deliverables, milestones, and the actual implementation phase. Overall, contract lifecycle management software makes the entire process less time-consuming.

What Makes an Audit Successful?

Irrespective of the audit type, certain characteristics must be managed in an audit to make it successful. These include:

Objectivity

Objectivity deals with a clear statement by the auditor that the processes in the organization are transparent and comply with the law. Providing the supporting documents for each transaction or contract makes objectivity possible.

Timeliness

The auditors complete the entire process within a specific time range. Timeliness is of the essence, and the company must provide relevant details without wasting time.

Support from Management

Auditors don’t understand how organizations operate. Importantly, they need supporting documentation and answers so they can understand. Cooperating and providing more information than is often required helps make for a successful audit.

Types of Audits in a Business

A business can undergo multiple audit types, including but not limited to the following types:

Information System Audits

This audit type is related to the IT domain. It specifically analyzes whether the technology and resources used by a business can secure the digital assets of a business or not. Professionals analyze the hardware, software and processes to ensure the organization’s integrity.

Financial Audits

These are the most prominent forms of audit that require evaluating the financial statements and their compliance with the law. Such an audit is often conducted to protect the rights of the shareholders.

Internal Audits

Internal audits can be done to analyze internal processes and mechanisms, specific to a department or an entire organization. Such audits usually have an oversight role in the organization where malpractices or loopholes are identified.

Data Protection Audits

As the data protection laws vary, so do the audit procedures for data protection. Different states require compliance with different standards to ensure privacy and user data protection.

Tips to Prepare for an Audit

Preparation for an audit is not a one-time activity. You have to be on your toes the entire year to ensure everything is in place to make the auditing process easier. Here are a few steps to prepare for an audit:

• Whatever audit you plan for, be ready from the first day and arrange documents properly because you will have to support everything with evidence.
• Apart from the availability of supporting evidence or the required documents, you must take care that you keep clean records. Saving non-essential documents will create excessive data to review, making things hectic.
• While you could schedule a formal internal audit, or your schedule is committed to regular external audits, complete random system checks of transactions, documentation, contracts, and more.
• Provide relevant training that will help your team anticipate what to expect.
• Use digital software to prepare for an audit. Manual document preparation creates wasted time and resources. Contract lifecycle management software creates repositories of each contract that are readily accessible, always available and in a checklist for easy reference.

Contract Management Solutions Achieve Audit Readiness

Using contract management solutions helps the team be compliant with rules and standards. When they are in place, the following activities are more convenient:

Gathering Documents Becomes Easier

Contract Lifecycle Management solutions make it easy to gather information in a central repository where you can store all audit-related records. When the auditor requests a document, the contract lifecycle management software enables ease of access.

Data Redundancy is Removed

By using contract lifecycle management solutions, you do not have to worry about repetitions, format and outdated information. The software uses automated rules to help with data accuracy.

Time and Resources are Saved

When everything is handled automatically using contract lifecycle management solutions, you will save resources and time, eliminating non-compliance with laws.

Complete History Available

There is 24/7 access to the complete history of contract versions, actions, and life cycles to ensure who made edits, changes and when. Previous versions of documents can be easily restored with greater ease through contract management solutions.

Standardized Language Demonstrates Compliance

Contracts created through contract management solutions have standardized language, which will portray contract compliance to the auditor during the process.

Notification Feature

The automated notifications feature in contract lifecycle management solutions ensures control over performance and risk management and helps maintain audit-ready status.

With the use of contract management solutions in your organization, you can expect to save a lot of time and money while going through the audit process. Finding all the relevant information in the digital format can enhance the productivity of the audit process.

Contact LexisNexis® CounselLink® to learn more.