Service providers can instruct third parties to carry out their own audits and the service provider makes the results available to its customers. Frequent audits of this type are Service Organization Controls (SOC) 1 and 2, ISO 27001 certifications and reliability obligations according to the International Insurance Commitment Standard (ISAE) 3000 standards. Timing is important if you opt for a contract review. The ideal time to run a trial is if you have leverage to restore any overpayments or modification processes. The ability to carry out these actions may be influenced, among other things, by your relationship with your distributor. An outside perspective can also help you identify all the terms of your contract that your partners can`t follow. One of the goals you must meet when reviewing a contract is to balance your own interests with your partner`s in order to maintain a productive professional relationship. If you do not have the resources to recruit a team of external consultants or a lawyer, you should try to base the contract on previous experience with other partners. Contract audits are often linked to maintenance and work contracts.
System audits are particularly important and are generally funded by capital expenditures. The review section of a service agreement contains the provisions that define the right of access and the verification of one party to the information of another party in order to determine whether that party agrees with the agreement. Depending on the scope of the review fee, the review section can range from one paragraph to the entire exhibition to the contract. How many times can the audited party conduct audits? Depending on the length of the contract and the nature of the services received by the client, an annual review may be appropriate. In other cases, the auditing entity may require more frequent audits, for example. B when the audit entity is active in a highly regulated area and government authorities need access or if the controlled party has a history of infringement. In addition, the audit party should consider whether it needs audit fees after closing. The latter is typical of fee trials and usually lasts up to one year after the end of the contract. This report addresses some key issues when it comes to developing appropriate review law provisions. Parties should review the types of review fees that may be required as part of a service agreement and develop audit fees accordingly.
Before you consider a contract, you need to identify your goals. There are many advantages and benefits to carrying out contractual control. These benefits include deterring fraudulent activities, recovering expenses, managing your risk and improving your business processes. To get the most out of the test, be sure to identify some potential exposure areas. It is important to clarify whether cooperation costs are covered by a review by royalties due under the agreement. If the taxes do not cover the costs of the review under the agreement, it may be useful for the audited party to reimburse its costs to the audited party if the review leads to findings of non-compliance. It is not uncommon to include in the royalty review provisions a threshold whereby the costs of the review are borne by the non-compliant party (for example). B if the exam gives a difference between 5 and 10% for the service fee).
Ideally, you have the enormous resources you have to recruit a team of outside consultants or a lawyer to help you review your contracts. The main advantage of an advisor or lawyer is that this team or individual would have seen many contracts similar to yours and would be able to use their experience in the field to zero on all the problematic features of your contract.