Insights Magazine Volume IX - Page 21

Other Harmful Risks Every organization should be aware of and actively manage some of the most common risks of a contract review: 1. Reputation – Third-party contractor through their actions, or lack thereof, damages the reputation of the organization. to be exposed in a contract review. A contract review provides a cost- effective avenue for identifying and mitigating risk to your organization. As seen in the St. Louis Business Journal online edition 2. Performance – Third-party contractor fails to meet timelines and/or fails to perform in accordance with the terms of the contract. 3. Compliance – Third-party contractor fails to comply with laws and regulations governing the performance of the contract. 4. Non-Conforming Goods or Services – Third-party contractor delivers goods or services that do not conform to the contract specifications. 5. Change Order Abuse – Third- party contractor increases the price or extends and expands the contract scope through the use of multiple change orders. 6. Cost Mischarging – Third- party contractor charges the organization for costs (material or labor) that are not allowable, reasonable, nor allocable to the contract. 7. Data Breaches – Third-party contractor, either intentionally or through the ineffectiveness of its information technology security and controls, mismanages critical organization or customer data. Many organizations do not have the necessary processes or controls in place to address the risks of contracting with outside third- parties. The above risks are likely Ronald Steinkamp CPA, CIA, CFE, CRMA, CGMA, CCA, CCP Partner in Charge, Public Sector Advisory Services Brown Smith Wallace 314.983.1238 rsteinkamp@bswllc.com 19