Why Internal Audits Are a Key Part of Your Contingent Workforce Program—And How to Run Them

Leading HR and procurement teams understand the importance of mitigating compliance risks in a contingent workforce program. It’s one of the principal reasons why many organizations decide to use a vendor management system (VMS).

According to Deloitte’s 2021 Contingent WorkforceClient Insights report, organizations from different industries are leaning towards contingent labor because it provides better access to qualified and diverse talent. On the other hand, the document also points out compliance as a key concern for those organizations. Companies do not want to risk making a mistake in the process or failing compliance with their respective contingent labor regulations.

Implementing the proper processes and protocols will protect your organization from any legal consequences due to noncompliance. Internal audit programs are a big part of that prevention protocol.

Why Should You Implement Internal Audits?

A strategy essential to any extended workforce program is to set up internal audits to make sure your compliance requirements are met (along with the legal requirements of governments wherever you operate!). This will prepare you for when actual federal audits occur as well.

Equally importantly, audits can provide objective feedback on how your program is performing. This can help to prevent issues within the program, such as overspending or poor onboarding. It also gives you great insight into areas of improvement.

How Often Should You Conduct Internal Audits?

Audits help you to confirm that vendors are following the policies set by your contingent workforce program. Depending on the size of your program, vendor audits should occur annually or potentially even biannually.

An audit should cover 10% of your extended workforce. Examine every compliance item in your list, verifying that all activities were successfully completed as per your company’s standards. This process will help you check the quality of your vendors and identify risks.

Even with audits conducted once or twice per year, checking a small random sample more frequently ensures your contingent workforce program is in tip-top compliance. You may additionally want to conduct a spot audit quarterly, checking just two or three candidates’ documents.

What You Need to Prepare for an Internal Audit

While having technology in place to keep track of your compliance documentation is important, checking those documents regularly through an audit is crucial. Auditing your program regularly allows you to catch any errors or outdated documents.

Establish a checklist and document your audit process so that nothing gets missed. Your requirements will be different from those of other organizations, and requirements can even vary by department. For example, a healthcare facility may require several vaccinations for all of its workers, with nurses requiring a current license, while its cafeteria workers may need food handling safety certification.

Basic checklist items (sample):

  • Drug screening
  • Background checks
  • Pre-engagement agreements
  • Role-specific certifications

For a more advanced sample checklist, download VectorVMS’s example vendor audit checklist. It’ll work as a starting point when designing your audit process. Once you have your list ready, a VMS will allow you to incorporate all of your standard requirements into the system to create a complete audit trail.

MORE ABOUT AUDITS | ‘3 Must-Have Supplier Audits for Any Successful Extended Workforce

Choosing the Right Program

You can choose to fully manage your program internally like 39% of organizations in the US currently do (as reported by Staffing Industry Analyst’s 2022 Workforce solutions Buyers Survey). However, not every organization can handle an entire program without help.

It’s common for companies to fully outsource operations to a Managed Service Provider (MSP). However, there’s another alternative that can help you improve the quality, efficiency, cost, and talent acquisition of your program. That’s VectorVMS’s Shared Managed Services (SMS) program.

If the whole process seems overwhelming, a hybrid management program like VectorVMS’s Shared Managed Services might be right for your organization. In a hybrid service model, while you continue to manage the program in-house you’ll also have access to a team of extended workforce management experts. Your program manager will act as an extension of your team, and can provide everything from consulting and strategy to management of day-to-day VMS activities and compliance audits.

SMS SUCCESS STORIES | ‘Customer Snapshots: Shared Managed Services Success Stories

Learn More About Risk Mitigation and Compliance

Audits are one of the most important ways to guarantee a successful extended workforce program. Nevertheless, to achieve optimal compliance, other processes come into play.

Do you want to learn more about compliance and risk management? Download our ebook ‘4 Ways to Ensure Your Internally-Managed Contingent Workforce Program Is Compliant’. With this resource, you will discover the importance of other processes including: identifying essential requirements, maintaining good communication, and implementing good tracking technology.

If you need advice on which VMS solution is right for your company, contact our experts today. We’re sure we can provide the help you need!