Auditing Outsourcing Contracts

Many organisations are reliant on the delivery of non-core services through outsourcing initiatives. However, the negotiation of an outsourcing contract can prove fraught, and the value of outsourced facilities debateable.

This unique course brings together the commonest issues, to provide a single source for a reviewer’s all round understanding of the risks and core controls.

Suitability and duration

Suitability: All levels

Duration: 1 day

Who should attend

This course is designed for all reviewers, particularly internal auditors, who need to review outsourcing agreements or outsourced contracts.

Benefits

Skills

After completion of this course, you will be able to:

• Demonstrate an understanding of the issues related to outsourced contracts
• Evaluate and audit a outsourced contract
• Form an audit opinion of the adequacy and effectiveness of a outsourced contract

Support Materials

This course is accompanied by a manual that includes full briefing notes.

Programme

Outsourced contracts – dynamics

• The intention and drivers behind outsourced contracts
• Lessons learnt from outsourced contracts

Outsourced contracts – issues – pre letting

• Right to audit and inspect
• Gathering information and collecting benchmarking data
• Pre-letting strategic objectives and benefits analysis
• Pre-letting risk analysis and due diligence
• Contract term and duration – penalties for early termination
• Right to terminate – renew - vary
• Authorisation and authority for binding, and for variations and amendments
• Survivorship – matters that continue after the contract terminates
• Treatment of staff and assets supplied or loaned under the outsourcing agreement
• Outsourcing partner commitments, warranties, performance bonds, and distribution of risk and loss
• Limitation of liability and waivers
• Indemnity against third party claims, insurance by partner, employer’s liability insurance
• Financial instruments, pricing, tariffs, invoicing and payments – the process, under, over and advance payments, payment of legal fees and costs
• Payments of commission to third parties and tied or independent status of outsourcing partner

Outsourced contracts – issues – post letting

• Installation, commissioning and acceptance
• Service Level Agreements and standard of performance - failure to perform
• Inter-party communications and co-operation
• Ownership of data and process
• Disputes and arbitration
• Termination states and procedures
• Third party funding withdrawal
• Non-exclusive remedies and liquidated damages

Outsourced contracts – issues – the review content

• Reviewing – opinion on effectiveness, performance, yield and value for money, accountability and administration
• Reviewing – opinion on governance, regulation, ethics and financial control
• Reporting on issues that cannot be corrected
• Reporting on risks that can be corrected
• Generating lessons learned structures