We are frequently called in to assist clients who have problem contracts and projects due to weak audit and assurance work. Often this is triggered by a sudden, unexpected increase in outturn costs due to a failure in commercial control.
The biggest issue arising in these situations, with the most long-term impact is often damage to reputation – both corporate and personal.
The risks associated with weak audit and assurance work…
Issues and problems may be missed:
• Questions may later arise as to why didn’t the project team and its advisers spot the problems and address them
• Directors lose confidence very quickly in the senior management team. Often project managers will be given very little time and opportunity to mitigate problems
• Directors are forced to surprise stakeholders to ask for more funds to cover budget overspends
Inappropriate and inflated audit “findings” can create mistrust and damage relationships
Wasted contractor time (taking their eyes off delivering the Contract)
Wasted management time & money
• Management start to fire-fight, causing stress, expense and wasted time
The biggest issue arising from these problem contracts and projects, however, is often damage to reputation for both clients and senior individuals within the organisation.
The Importance of corporate governance…
One of the most effective ways to avoid unpleasant commercial surprises is to implement a regime of robust corporate governance. In particular objective, independent and expert audit of commercial controls enables clients to:
• Have a clear unbiased view of the quality of commercial risk management
• Spot problems early and deal with them quickly and effectively
• Manage stakeholders where problems are unavoidable
Use credible people with the right experience and qualifications
You wouldn’t want to ask a Chartered Accountant to carry out detailed design work or implement a health and safety programme. We are though, quite good at auditing and providing assurance.
After three years of on the job audit training; professional audit exams; Institute accreditation; obtaining post qualification experience to gain a practicing certificate and continuing professional development you would expect us to be! (Admittedly the workings of the, International Auditing and Assurance Standards Board is not a great topic of conversation at a party.)
Many organisations are now seeking to provide audit and assurance services without any relevant professional background. Whilst quantity surveyors, engineers and project managers add huge value to major programmes in many ways … they aren’t trained auditors.
Using trained, qualified and experienced auditors will give you robust and reliable assurance and will allow you to take action on problems before they get out of hand and most importantly help you protect your corporate and professional reputation.