Recovery auditing offers organisations the opportunity to generate significant income, writes McIntosh Taylor Ltd's Anthony Taylor

Recovery auditing has been established in the UK private sector for over three decades and is therefore hardly a new or half-baked concept. Many corporate organisations generate such large amounts of recovery audit income that they make provisions for it in the budget and forecasting process. As an ex-public service internal auditor, I know that the recovery audit model will work just as well within public service organisations.

Recovery auditing is not an issue of poor governance or inadequate financial control. It is a straightforward financial reality. Every organisation processing millions of financial transactions will overpay, undercharge and under-recover significant amounts of money and that is why recovery auditors can work on a commission of the income they generate – because they are guaranteed results. There are also many aspects of recovery auditing that are easily absorbed into an organisation, enabling it in future years to generate the income itself.

A recovery audit agreement sits within the public sector, £50,000 contact limit and is serviced entirely by external consultants. You do not have to incur the costs of a formal tendering process because recovery auditors simply retain a percentage commission of recovered income and so the service costs organisations nothing at all. Organisations simply have to set up a couple of brief meetings with potential consultancies, agree commission rates and the scope of the audit, sign an agreement and soon after that, they will begin to generate very substantial amounts of extra income.

It is also possible to employ a staff incentive or gain sharing scheme within the recovery audit model. This will further empower the finance staff involved in the AP processes, help remove any potential blame issues associated with accounting errors and encourage the AP department to proactively adopt the recovery process as an internal function for the future.

To be successful and generate the maximum possible income from recovery auditing, organisations need to ensure that they implement a comprehensive audit programme and get the process up and running as soon as possible; for every month an organisation delays, thousands of pounds of potential income will be lost forever.