How do you react when you hear the word audit? In my earlier years as a multiple global category leader for HP, the word struck fear in my heart. Over the years, however, that fear turned into annoyance, which eventually turned into appreciation.
I recently read that less than half of corporate travel and meeting programs get audited by program owners. This troubled me because if you’re not self-auditing your suppliers and programs, you’re likely to fail a corporate finance audit. These corporate audits can be either scheduled or unscheduled, with unscheduled audits using the element of surprise to gauge whether a targeted spend category and program is operating within fiduciary guidelines and standards as well as identifying any gaps that need attention.
I was speaking to a big tech company recently that just re-signed with the travel management company it’s worked with for five years. The new contract is for a three-year extension, and I assumed the managers did periodic audits of their TMC to ensure that agreement terms, conditions, and financials were in line with the master agreement, especially with global partners servicing the account. Imagine my surprise when they disclosed to me that they’d never done a self-audit! The comment that really shocked me was, “We’ve worked with them for many years and we trust them.”
Just so we’re clear, no matter how solid your relationship is with suppliers, best practice is to audit your program and support suppliers annually, or at least bi-annually. Doing so ensures that when the program gets audited by corporate finance, it’s more likely to pass. Skipping self-audits is like playing Russian Roulette: Your support suppliers could be forming bad habits or doing things that are costing you money or, worse, unintentionally putting you and your company in harm’s way.
Self-audits also send a strong message to your partners that they need to pay attention to their service level agreements and statement of work, and double check the financials to make sure nothing egregious is flagged when they get audited. Without any “fear or annoyance” of an impending audit, the natural tendency is to drift into bad habits because there are no consequences.
Here are a few things to consider when deciding on self-auditing your programs:
Hire an independent third party to do the audit. Asking your existing supplier partner to audit itself is inviting the fox to guard the henhouse. Do you really think that supplier is going to point out service and financial gaps, risking loss of credibility and integrity as a preferred partner?
There’s usually a small cost, but in 95 percent of the audits I’ve seen, the process uncovers more in the losses and gaps than the initial fee, often paying for itself and then some. Even if this isn’t the case, you can sleep better at night knowing your program is operationally and financially optimized.
Check background and references. A consultancy team that includes people who have managed their own travel and/or meeting programs can be invaluable because they know where to look for potential problems.
Over the years my feelings about audits have gone from fear, to annoyance, to appreciation. Challenge yourself to adjust your attitude and appreciate the value that audits bring to every corporate program. They often uncover process, service, and financial gaps that only serve to make your program(s) better. They force integrity to the forefront of aligned objectives for both buyers and suppliers. Last but not least, they drive true transparency of the program, both operationally and financially. In this day and age of fiscal responsibility, Sarbanes-Oxley, and everything else, all audits should be appreciated, not feared.