Third-party audits
Evidence of which partners bill, report and behave as their contracts require, what is owed back and which relationships need action.
Right-to-audit reviews of distributors, vendors, contract manufacturers, franchisees and agents against their contracts and your code.
Most distribution, supply, franchise and agency contracts give the company a right to audit. Few companies use it. Meanwhile, partners report their own sales, claim their own incentives and certify their own compliance.
We plan audits by partner risk, then test invoices, claims, stock, sales reports and records against what the contract allows. Site visits and interviews show whether the partner operates as described, and whether it follows your code of conduct and anti-bribery terms.
Findings are quantified where money is involved, so that overbilling, inflated claims and unearned incentives can be recovered. The audits also show which partners to grow, which to fix and which to exit.
Your contracts give you audit rights, and you need to know whether partners are billing, reporting and behaving as agreed.
Signs we see most often
- 01Contracts include audit rights that have never been exercised.
- 02Distributor, franchise or agency claims are rising faster than sales.
- 03Royalties or revenue shares rest on the partner's own reports.
- 04A contract manufacturer's costs, yields or scrap cannot be verified.
- 05Agents act for you with government officials or customers.
- 06A partner has been the subject of complaints or whistle-blower reports.
Scoped in writing, run by one accountable team.
Every engagement starts with agreed questions, a reporting line and a confidentiality protocol. The steps below are how this service usually runs; we adapt them to your matter.
- 01TierRank partners by risk and value and agree the audit programme.
- 02NotifyInvoke audit rights under the contract and request records.
- 03TestTest invoices, claims, stock, sales and records against the contract.
- 04VisitVisit sites, verify operations and interview the partner's staff.
- 05QuantifyQuantify amounts owed back and breaches of the contract.
- 06ActReport findings and support recoveries and contract actions.
Evidence of which partners comply, what is owed back and which relationships need action.
- A risk-tiered audit programme
- An audit report for each partner
- A schedule of amounts recoverable
- Compliance findings against the contract and your code
- Recommendations to grow, fix or exit each relationship
The law and frameworks this work is aligned to
- Indian Contract Act, 1872 for the enforcement of audit and termination clauses
- Prevention of Corruption Act, 1988 s.9 on adequate procedures for associated persons
- Aligned to ISO 37001 controls on business associates
- US FCPA and UK Bribery Act 2010 s.7 for groups with international exposure
References show the standard the work is built to. They do not imply accreditation or endorsement by the bodies that publish them.
This is a summary of the service. For a deeper understanding of how it would work for your organisation, please reach out to us.
Talk to a BDI partnerWhere this service meets BDI's technology.
The platforms below record, monitor or act on the work this service produces.
Questions clients ask before we start.
What if the contract has no audit clause?
We can still test the partner's claims against your own records and the market, and recommend audit rights for future contracts.
Will an audit damage the relationship?
A well-run audit is professional and predictable. Most partners accept it when the scope is clear and the findings are discussed openly.
Which partners should be audited first?
Those with the most money or risk running through them: high claims, high discounts, government touchpoints or a history of complaints. The risk tiering sets the order.