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The Bloodhound Has Arrived: Court-Ordered Third Party Audits and What To Expect

The opposing party is not satisfied with your discovery efforts and methodologies.  Somewhere along the line, trust has been broken and they are now making a case to the court, demanding audit of your processes.  The judge sides with opposing and approves their audit request.  The auditor has now arrived at your doorstep.  What happens next?

A few ground rules:

  1. Cooperation is key.  Do not resist and remember the auditor is only the middle man.  If you are uncooperative, this could be reported to the court and will only make matters worse.
  2. Be proactive and forthcoming with information.  Gather names, dates and facts to the best of your ability and keep any opinions to a minimum (unless asked).
  3. Try to get a clear understanding of the auditor’s objectives.  This will help with point two above.
  4. Obtain a copy of the court order and carefully read through it.

Once the audit is in full swing, things will go quickly.  More than likely, the turnaround for getting the audit complete will be lightning fast.  The auditor will have to prepare a thorough report for the court with as much detail as possible under a strict timeline, so an overwhelmingly amount of information may be requested.  

A lot of in-depth questions will be asked and no stone will be unturned (at some points in the process, it may feel like you are being deposed).  Having an auditor retrace your footsteps and question your reasoning is a very intrusive process, so be prepared to reach to the deepest parts of your memory, supply countless reports, provide summaries of your actions and have the auditor dig with a fine toothed comb and microscope in an attempt to find loop holes and test your processes.  The auditor will have to make an unbiased determination about what took place and whether or not the processes are satisfactory.  The auditor will then make recommendations to the court based on their findings and the court will decide how to proceed.

Although third-party court ordered audits are rare, they are requested from time to time.  The best way to prepare for such proceeding (should it arise) is to take-charge and (i) appropriately document important project information while the project is active, (ii) create detailed audit trails with as much relevant information as possible and (iii) always act in good faith.  Auditors will take as much information as they can get their hands, so keeping records and reports together for each project and summaries of each process will make the auditing process more efficient and less time consuming.  If a roadmap referencing processes, decisions, workflow and all documents exists, this also can help the auditor understand the lay of the land.