Procurement Audit
A practical starting point for reviewing whether purchases are properly planned, approved, competitively sourced, received and paid for while protecting the organisation from waste, fraud and supplier risk.
What are we trying to establish?
Determine whether the procurement process provides reasonable assurance that goods and services are genuinely required, appropriately approved, competitively and transparently sourced, received as specified, accurately recorded and purchased at reasonable value while complying with applicable policies and contractual requirements.
Risks worth paying attention to
Purchases may be initiated or approved outside delegated authority.
Conflict of interest, related suppliers or bid manipulation may compromise sourcing.
Weak competition or poor price validation may result in avoidable cost.
Payments may be made for goods or services not actually received.
Transactions may be divided to avoid approval or tender thresholds.
Excessive dependence on one supplier may create continuity and pricing risk.
What should you request?
- Procurement policy, procedures and approval authority matrix.
- Approved procurement plan and departmental budgets.
- Purchase requisitions and purchase orders for the audit period.
- Request for quotation or tender documents, bids received and bid evaluation records.
- Approved supplier list, supplier onboarding files and due diligence records.
- Contracts, service level agreements and price agreements.
- Goods received notes, delivery notes and service completion evidence.
- Supplier invoices, payment records and relevant general ledger extracts.
- Purchase order report showing supplier, requester, approver, value and dates.
- Vendor master data and changes made during the audit period.
- Exception, emergency and single-source procurement records.
Do not start testing before understanding the process.
- Who can request, approve, source, receive and pay for purchases?
- Are incompatible duties separated between procurement, receiving and accounts payable?
- What determines the number of quotations or tender method required?
- How are new suppliers verified and approved before activation?
- How does the organisation identify conflicts of interest and related parties?
- How are prices compared and negotiated?
- Can a purchase order be created after an invoice or delivery has already occurred?
- What evidence confirms that goods or services were received before payment?
- Who can change supplier bank details and how are changes independently verified?
Practical tests you can perform
Understand the process
Walk through selected purchases from request to payment. Identify systems used, control points, responsible officers and manual interventions.
Test approvals
Select a sample of purchases and compare requisition and purchase order approvals with the approved authority limits.
Test competitive sourcing
For sampled transactions, verify required quotations or bids were obtained, evaluated consistently and approved before supplier selection.
Analyse purchase splitting
Search for repeated purchases to the same supplier, for similar items, by the same requester and within short periods just below approval thresholds.
Review supplier master data
Check duplicate names, addresses, bank accounts, telephone numbers, tax identifiers and unusual links between suppliers and employees where data is legitimately available.
Perform three-way matching
Compare purchase order, evidence of receipt and supplier invoice for description, quantity, price and date before payment.
Review exceptions
Analyse emergency, retrospective and single-source purchases. Establish whether the reason was valid, approved and supported.
Check contract compliance
Compare invoiced prices, quantities, service levels and payment terms against contracts or agreed price lists.
Things that should make you look deeper
- Purchase orders raised after invoice or delivery dates.
- Repeated awards to the same supplier without clear justification.
- Several quotations with similar formatting, contact details or wording.
- Transactions repeatedly falling just below approval thresholds.
- New suppliers receiving significant business shortly after registration.
- Supplier bank details changed shortly before payment.
- Frequent emergency purchases for items that should be predictable.
- Goods received notes prepared without independent evidence of receipt.
- Payments made despite missing purchase orders, contracts or receiving evidence.
- Large price differences for the same item within a short period without explanation.
Questions that can open up the process
- How do you know the purchase was genuinely needed?
- What prevents someone from choosing a preferred supplier?
- What happens when only one supplier can provide the item?
- How do you know the quoted price represents reasonable value?
- Who confirms that what was delivered is what was ordered?
- What procurement exceptions occur most often, and why?
- Which part of this process still depends heavily on one person?
Need the complete procurement checklist?
This page gives you the starting point. Steal My Checklist contains ready-to-use audit procedures designed to help you structure fieldwork across procurement and other business areas.
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