Conducting a Successful Purchasing Audit

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A purchasing audit is not just a formality, it's a strategic tool that every organization with a procurement function should be using to assess and elevate performance. In this practical and insightful session, supply chain expert Michael Gozzo will guide you through the critical differences between internal and external audits, helping you understand why regular audits are essential and how often they should be performed. You'll also learn who should conduct the audit and the key qualifications necessary to ensure a credible and effective review.

Beyond theory, this webinar will walk you through the actionable steps to organize your own purchasing audit, how to properly document your findings, and, most importantly, how to turn those insights into improvements. Whether you're seeking better compliance, greater efficiency, or an up-to-date view of procurement best practices, this session will give you the tools and confidence to make purchasing audits a consistent and valuable part of your operations.

Your Benefits for Attending:
  • Gain critical insights into what is causing performance issues.
  • Understand how to get a clear picture of your purchasing performance and how to use that data to improve operations.
  • Learn how to use audits to ensure you're aligned with the latest and most effective purchasing practices.
  • Gain a disciplined mechanism for ensuring compliance with required procedures and policies.

This webinar will help you confidently implement purchasing audits as a strategic tool, leading to increased efficiency, improved compliance, and better decision-making across your procurement function.

Level: Basic
Format: Live Webcast
Instructional Method: Group Internet Based
NASBA Field of Study: Management Services (2 hours)
Program Prerequisites: None
Advance Preparation: No
  1. Introduction
  2. Content 00:01:54
  3. What is an Audit 00:03:41
  4. Auditing Principes 00:04:50
  5. Audit 00:05:44
  6. Types Of Audits 00:05:44
  7. Internal Audit 00:06:45
  8. Why Perform An Audit 00:09:06
  9. Benefits Of An Audit 00:09:19
  10. Competitive Advantages 00:11:03
  11. Purchasing - Profit Center 00:12:47
  12. Strategic Planning Questions 00:14:39
  13. Strategic Questions 00:16:50
  14. Strategic Questions Continued 00:18:32
  15. Who Is To Do It? 00:19:41
  16. Characteristics Of An Auditor 00:20:03
  17. How To Do An Audit 00:21:43
  18. Audit Result Summary 00:24:30
  19. Numerical Scores 00:26:46
  20. Internal Audit Report 00:28:25
  21. During The Audit 00:32:45
  22. Corrective Action 00:34:46
  23. How To Do An Audit 00:36:54
  24. Pitfalls That Can Damage The Program 00:37:11
  25. Survey Samples 00:42:04
  26. Developing Criteria For Supplier Selection 00:42:33
  27. Selection Criteria 00:44:37
  28. Supplier Checklist 00:47:05
  29. Checklist Continued 00:48:54
  30. The Supplier Survey 00:51:44
  31. Who To Do Survey? Organization 00:53:43
  32. Organization Continued 00:57:18
  33. When To Re-Survey 00:59:46
  34. When To Do An Audit 01:04:52
  35. Developing Sources Of Supply 01:05:04
  36. Qualifying The Supplier 01:06:05
  37. Financial Considerations 01:07:42
  38. Performance Evaluation 01:10:14
  39. Evaluation Continued 01:11:57
  40. Procurement 01:14:09
  41. Purchasing Administration 01:17:49
  42. Measures Of Improved Supplier Performance 01:18:49
  43. Reporting & Documenting Results 01:21:17
  44. Benchmarks Of Purchasing Performance 01:23:12
  45. Purchasing Ethics In Supplier Relationships 01:25:17
  46. Supplier Related Quality Costs 01:25:29
  47. Supply Related - Internal  01:27:54
  48. Supply Related - External 01:29:00
  49. Benchmarks 01:30:49
  50. Appraising & Controlling Purchasing 01:32:15
  51. Conclusion 01:34:37
  52. Recap 01:35:14
  53. Q & A 01:32:26
  54. Closing Remarks 01:36:51
  55. Presentation Closing 01:40:55

  • Michael W. Gozzo

    Michael W. Gozzo

    Michael W. Gozzo provides consulting and training services to all levels of management and is a Supply Chain Specialist including Purchasing (Supplier Collaboration), Inventory Control and Production/Operations Management.  With many years of practical international experience, he offers a supe [...]

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ISM Credit

Institute of Supply Management

This program may be used for Continuing Education Hours (CEH) toward recertification for programs offered by the Institute for Supply Management®, including the Certified Professional in Supply Management® and Certified Professional in Supplier Diversity®.

ATAPU Credit

Aurora Training Advantage is offering continuing education points designed to recognize dedication to training and excellence in purchasing.

QPANJ Credit

Qualified Purchasing Agent - New Jersey

  • Audit 00:00:07, 00:02:09,  00:04:56, 00:05:50, 00:09:26, 00:18:48, 00:24:21, 00:32:49, 00:41:48, 00:54:53, 00:57:28, 01:04:10, 01:14:15
  • Benchmarking 01:23:27
  • Business Management System (BMS) 00:06:45
  • CIP - Continual Improvement Process 00:48:14
  • Contract 01:00:07, 01:15”37
  • Corrective Action (CA) 00:34:57
  • Cost 01:09:46, 01:16:21, 01:26:39
  • External Audit 00:05:51
  • Fixed Assets 01:09:35
  • Incentive Stock Options (ISO) 00:03:56, 00:06:24, 00:09:00, 00:29:54, 00:33:47, 00:50:05, 01:00:32
  • Internal Audit 00:05:52, 00:06:57
  • Inventory 01:15:41
  • Lead Time 00:11:46, 01:11:54
  • Maintenance Repair Overhead (MRO) 00:13:37
  • Procurement 00:17:08, 00:59:01, 01:08:09, 01:14:23, 01:25:22
  • Purchase Price Variance (PPV) 01:16:23
  • Situational Analysis 00:14:54
  • Supplier 00:13:59, 00:15:30, 00:47:10, 00:50:32, 00:59:09, 01:06:14, 01:18:58
  • Supplier Managed Inventory (SMI) 1:15:40
  • Supply Chain 0047:44
  • Total Cost 01:16:31
  • Total Quality Management (TQM) 00:48:07
  • Vendor Management Inventory (VMI) 00:13:53, 01:15:40

Audit: A formal examination of an organization's or individual's accounts or financial situation

Business Management System (BMS): A multilevel hierarchy of business solutions that represent how a profit-oriented organization will carry out different functions (like Sales, Purchasing, Marketing, Staffing) to accomplish a task and achieve a goal successfully.

CIP - Continual Improvement Process: A continual improvement process, also often called a continuous improvement process, is an ongoing effort to improve products, services, or processes. These efforts can seek "incremental" improvement over time or "breakthrough" improvement all at once.

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

Corrective Action (CA): To remove the root cause and prevent a problem from ever happening again.

Cost: The sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location

External Audit: An external audit is an examination that is conducted by an independent accountant. This type of audit is most commonly intended to result in a certification of the financial statements of an entity. This certification is required by certain investors and lenders, and for all publicly-held businesses. The objectives of an external audit are to determine:The accuracy and completeness of the client's accounting records; whether the client's accounting records have been prepared in accordance with the applicable accounting framework; and whether the client's financial statements present fairly its results and financial position.

Fixed Assets: Assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment.

Incentive Stock Options (ISO): Incentive stock options, are a type of employee stock option that can be granted only to employees and confer a U.S. tax benefit. ISOs are also sometimes referred to as statutory stock options by the IRS. ISOs have a strike price, which is the price a holder must pay to purchase one share of the stock.

Internal Audits: Internal audits evaluate a company's internal controls, including its corporate governance and accounting processes. These audits ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection.

Inventory: A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale. Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilization.

Lead Time: The number of days from when a company places an order for supplies, to when those items arrive.

Maintenance Repair Overhead (MRO): Maintenance expenses incurred to maintain and repair equipment directly related to the manufacturing process are considered manufacturing overhead expenses. Maintenance expenses related to equipment and premises outside of manufacturing are non-manufacturing overhead.

Procurement: Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. Procurement is used to ensure the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared.

Purchase Price Variance (PPV) : Purchase Price Variance represents the difference between the actual price and the standard price, multiplied by the quantity purchased. The formula is: Purchase Price Variance = (Actual Price – Standard Price) x Actual Quantity.

Situational Analysis: A detailed examination of a company's market presence based on internal and external factors.

Supplier: A supplier is an entity that supplies goods and services to another organization. A supplier is usually a manufacturer or a distributor. A distributor buys goods from multiple manufacturers and sells them to its customers. Similar Terms. A supplier is also known as a vendor.

Supplier Managed Inventory (SMI) : The Supplier Managed Inventory (SMI) process is a supplier-driven replenishment and planning process. With the SMI module, suppliers can view and manage inventory levels, shipping as required to maintain the ideal inventory level at the customer site. SMI reduces the customer's responsibility to monitor inventory and contact the supplier.

Supply Chain: A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.

Total Cost: Total cost is the total expenditure incurred to produce some type of output. From an accounting perspective, the total cost concept is more applicable to financial reporting, where overhead costs must be assigned to certain assets.

Total Quality Management (TQM): Total quality management consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on-demand products and services that customers will find of particular value."

Vendor Management Inventory (VMI): A supply chain agreement where the manufacturer or supplier takes control of the inventory management decisions for the seller or retailer.

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Frequently Asked Questions

A purchasing audit is a systematic, structured examination of an organization's procurement function that assesses compliance with policies and procedures, operational performance, supplier relationship quality, and alignment with industry best practices. Unlike financial audits that focus on accounting accuracy, purchasing audits evaluate the entire procurement ecosystem—from how suppliers are selected and qualified, to how purchase orders are managed, to how supplier performance is measured and improved over time. Organizations should conduct purchasing audits regularly—typically annually or biannually—because procurement is one of the most significant sources of organizational cost, risk, and value. Regular audits uncover compliance gaps before they result in fraud, wasted spend, or regulatory violations. They identify process inefficiencies that may not be visible during normal operations, such as unnecessary maverick spending, poor contract compliance, or suboptimal supplier terms. Audits also provide a disciplined mechanism for benchmarking purchasing performance against industry standards and identifying competitive advantages. Supply chain expert Michael Gozzo covers all of these dimensions in Aurora Training Advantage's Conducting a Successful Purchasing Audit webinar, equipping procurement professionals with practical frameworks for implementing audit programs as a strategic performance tool.
Internal and external purchasing audits serve complementary purposes and differ primarily in who conducts them and the nature of their findings. An internal purchasing audit is performed by individuals within the organization—either dedicated internal auditors or purchasing personnel conducting self-assessments—and is typically focused on continuous improvement, policy compliance verification, and process optimization. Internal audits are generally more frequent and lower-cost, and they benefit from the auditors' familiarity with organizational context, making them effective for operational monitoring and identifying incremental improvement opportunities. An external purchasing audit is conducted by independent third-party professionals who evaluate the procurement function against external benchmarks, regulatory standards, or industry best practices. External audits provide objectivity and credibility that internal audits may lack—their findings carry more weight with boards, regulators, and senior leadership. External audits are particularly valuable when an organization suspects significant compliance gaps, is preparing for a major transaction or regulatory review, or wants an unbiased assessment of purchasing performance relative to peer organizations. Aurora Training Advantage's purchasing audit webinar, presented by Michael Gozzo, covers both audit types and guides participants in selecting the right approach for their organization's needs.
Organizing a successful purchasing audit requires a structured approach that begins with clear objectives and ends with documented, actionable improvement commitments. The first step is defining the audit scope and objectives—determining whether the audit will cover the full procurement function or specific areas such as supplier qualification, contract compliance, or purchasing ethics. Establishing criteria for evaluation, including internal policies, regulatory requirements, and industry benchmarks, provides the framework against which findings will be assessed. Selecting appropriately qualified auditors—whether internal or external—who have both procurement expertise and audit methodology skills is critical to a credible review. During the audit, auditors gather evidence through document review, interviews, process observation, and sampling of transactions to assess actual practice against stated policy. Findings are analyzed, categorized by severity, and summarized in an audit report with specific corrective action recommendations. A key success factor is engaging key procurement stakeholders throughout the process to ensure findings are understood and actionable. Follow-up on corrective action completion closes the loop and confirms that identified issues have actually been resolved. Michael Gozzo's purchasing audit webinar at Aurora Training Advantage walks participants through each step with practical tools including survey samples, supplier checklists, and performance benchmarks.
Supplier qualification and evaluation is one of the most critical components of a comprehensive purchasing audit, as supplier performance directly impacts product quality, cost, delivery reliability, and organizational risk. A purchasing audit's supplier evaluation component typically reviews the criteria and process used to initially qualify suppliers—examining whether appropriate due diligence was performed on financial stability, quality management systems, capacity, ethical practices, and regulatory compliance. The audit also assesses whether ongoing supplier performance is being systematically measured using defined metrics (on-time delivery, quality defect rates, cost performance, and responsiveness) and whether that data is being used to drive improvement conversations and sourcing decisions. Supplier surveys are a key audit tool: structured questionnaires sent to suppliers capture their perspective on the relationship and identify issues that may not be visible from internal data alone. The audit should also examine how the organization handles supplier re-qualification—determining when suppliers are re-evaluated after issues arise or after significant time has passed. Developing and maintaining robust supplier selection criteria ensures the organization consistently works with qualified, compliant, and high-performing supply partners. Aurora Training Advantage's purchasing audit webinar, led by Michael Gozzo, provides supplier evaluation frameworks and checklists applicable to any procurement function.
Effective purchasing audits use a combination of quantitative metrics and qualitative benchmarks to assess procurement performance against both internal standards and external peer comparisons. Key quantitative purchasing performance metrics include purchase price variance (PPV)—measuring the difference between actual and standard purchase prices to evaluate cost management effectiveness; on-time delivery rate—tracking supplier delivery performance against committed dates; quality defect rate and cost of quality—measuring supplier quality consistency; procurement cycle time—the time from requisition to purchase order issuance; and invoice processing accuracy rate. Cost savings as a percentage of addressable spend and contract compliance rate (the percentage of purchases made through approved contracts and suppliers) measure strategic procurement effectiveness. For supplier management, supplier concentration risk—measuring what percentage of spend flows through the top 5-10 suppliers—signals dependency risk. Qualitative benchmarks include alignment with best practices such as strategic sourcing processes, formal supplier development programs, and robust purchasing ethics policies. Benchmarking against industry data provides context for whether the organization's performance is competitive or lagging. Aurora Training Advantage's Conducting a Successful Purchasing Audit webinar, presented by Michael Gozzo, provides a comprehensive set of purchasing performance benchmarks and guidance on how to apply them in an audit context.