Governance & Audit of Procurement Contracts

Abstract

Procurement involves the process of selecting vendors, establishing payment terms, negotiation of contracts and ultimately, the actual purchasing of the goods and/or services. It is concerned with acquiring all goods and services that are vital to an organization. Procurement contract is a written agreement between a buyer and a seller where the buyer agrees to buy the goods and/or services from the seller in exchange of certain consideration. In a manufacturing sector, a significant amount of revenue gets siphoned out in the name of contract and procurements and the same may vary from 55 % to 65 %. Hence, a transparency is essential which helps to curve such expenditure. A regular internal audit of the contract & procurement activities is essential in order to maintain the transparency and efficiency and to keep control over such unproductive expenditure. This will, in turn, help in the revenue improvement plan and improve the financial management of the corporate. A well defined policy on contract & procurements and its regular audit will help the organization to bring and to maintain clarity in each procurement.

This research paper plans to make an exhaustive study of Governance & Audit of Procurement Contracts.