A contract audit is a systematic review of contract compliance, performance, and value capture. Recovery-oriented audits produce material findings in year one on almost every spreadsheet-driven portfolio. The Contract Performance Management stack turns that one-time recovery into a continuous discipline for the CFO.
How it works
Contract audits move on three fronts at once. Pricing audits reconcile invoiced amounts against contracted rates. Obligation audits reconcile deliverables, milestones and service credits against what was signed. Rebate audits reconcile earned entitlements against what was actually claimed and settled with the counterparty. Overpayments, unclaimed rebates and un-drawn MDF balances all surface here.
The mechanic depends on structured contract data. External audit firms specialising in AP recovery, supplier audits and IFRS 15 revenue certification produce material findings in year one from spreadsheet-only source data, because the contract terms sit in PDFs and the reconciliation is manual. A working system stores each clause as a machine-readable formula and runs the reconciliation continuously, so audit findings shift from year-end shock to daily exception queue.
Why it matters
Audit is where the CFO sees the contract-versus-transaction gap in cash terms. On a EUR 200 million annual spend book the industry-average 19% leakage across earned rebates alone puts about EUR 3.8 million a year at risk; the best-in-class 3-7% band puts residual leakage at EUR 600,000 to EUR 1.4 million. External audit fees consume a meaningful share of the recovered value, and the recovery is one-off. A continuous audit surface, plumbed into ERP and revenue-recognition reporting under IFRS 15, keeps the value on the balance sheet without the annual scramble.
How Vendortell handles it
Vendortell runs contract audit as a continuous capability inside its Contract Performance Management platform. Every posted invoice, every earned rebate and every service credit reconciles against the contract clause in real time, so audit findings surface as exceptions the moment they occur, not twelve months later. See the contract repository or the Financial Contract Intelligence layer to see where continuous audit sits in the stack. Onboarding runs in 30 days.
FAQ
How is a continuous contract audit different from an annual external audit?
The annual external audit is retrospective and one-off. A continuous audit runs every posting against the underlying contract terms and surfaces the exception the same day. Same reconciliation logic; different cadence and different cost profile.
What findings does a contract audit typically produce?
Overpayments against contract price, unclaimed rebates and MDF balances, missed price protection, unearned service credits and non-compliance with delivery or notice terms. Recovery-oriented audits produce material findings in year one on almost every spreadsheet-driven contract portfolio.
Does contract audit feed IFRS 15 revenue recognition?
Yes. Under IFRS 15 the transaction price includes variable consideration, and variable consideration on the sell-side is where rebate accruals, volume incentives and price protection sit. A continuous contract audit produces the structured evidence the auditor needs to accept the recognised revenue as defensible.
Which team owns contract audit?
Finance owns the policy, procurement or commercial supplies the contract terms, internal audit sets the assurance model and the CPM platform runs the daily reconciliation. External audit firms remain useful for periodic certification, but the day-to-day surveillance moves in-house.
