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
[email protected]
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