Contract Compliance Review

Introduction

As one of the largest fast-food chains in Saudi Arabia, our client engages in multiple large food provider contracts.   Our client explained that their spend with Coca-Cola was under dispute and was seeking our assistance in determining the correct XX owed to Coke.  The contract had been in effect for almost six years, all of which was eligible for review.

Process

The client provided a copy of the contract and its budget.  Broniec auditors contacted the vendor and requested its monthly billing files in the format prescribed by the client.

Deltas between the billing file and the budget were identified.  The vendor provided details of the GLs that drove those deltas.  Subsequently, the vendor provided many pages of receipt and invoice copies.

The invoices were then categorized by their business use.  These findings were then presented to the client

Resolution

Upon audit completion we determined a review of the Coca-Cola agreement that may identify the best opportunity for missed revenue is with Partnership Cash Incentives defined by various clauses.  Understanding that product values equate net sales as described in the agreement, our work showed a comparison of estimated fund earnings to receipts.  Missing from a final determination are receipts received in 2020 or invoiced and still owing pertaining to 2019 and prior incentives earned.

Per our research, there was as much as 5,844,344 SAR ($1,557,977 USD) in pending receipts to be invoiced or if invoiced, due to our client as of December 31, 2019.  For reference, raised invoices for these clauses in 2019 total 4,003,949 SAR ($1,067,367 USD) compared to estimated fund earnings of 7,244,420 ($1,931,207 USD).

We also noted some purchases for three products (Coke, Sprite, and Fanta) reported for 2017 and 2018 show zero values even though there are recorded quantities.  The values for these products may have been excluded from our client’s raised invoicing.  The detail of these was identified and presented in full detail to our client.