Originally Published: 12 March 2024

This analysis is based on Nimble Global's proprietary research and 30+ years of practical experience across over 90 countries.

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When considering a Managed Service Provider (MSP) for your enterprise, one essential yet often overlooked factor is whether the MSP undergoes independent third-party audits. Failure to follow audit and compliance Standard Operating Procedures (SOPs) is not just a minor oversight—it is a significant risk that can compromise Program Governance, Risk Mitigation, and Market Credibility. In this Insight, we'll delve into the implications of ignoring this critical aspect.

Why Are Audits Crucial?

For Clients: Validation and Assurance

A third-party audit is an unambiguous confirmation that your MSP operates to the highest industry standards. Audits come in three flavors: certification audits to confirm compliance, surveillance audits to ensure ongoing compliance, and re-certification audits to revalidate compliance. Ensuring that your master service agreement mandates these audits aligns with a robust quality management methodology and affirms that your chosen MSP is genuinely best-in-class.

For MSP Providers: Market Credibility and Client Trust

From an MSP's perspective, willingly undergoing rigorous third-party audits significantly enhances market credibility. It sends a clear message to existing and potential clients that your processes are transparent, robust, and in line with industry best practices. Essentially, independent third-party audits serve as a market differentiator, solidifying your standing in a competitive marketplace.

The Perils of Ignoring Audit SOPs

• Legal Implications.

  Firstly, the absence of third-party audits can result in non-compliance with government regulations, exposing your organization to legal liabilities and penalties.

• Erosion of Trust.

  Without audits, the integrity of the service is in question, eroding trust with both clients, suppliers, and vendors. This erosion can be swift and, once lost, difficult to regain.

• Operational Risks.

  Lack of adherence to compliance SOPs can lead to inconsistent quality of service, disrupting the supply chain and creating inefficiencies in workflow.

• Financial Consequences.

  Lastly, non-compliance and operational inconsistencies can have financial repercussions, affecting both top-line revenues and bottom-line profits. This situation not only impacts the client but also trickles down the supply chain, affecting the overall business ecosystem.

What's Required for a Successful Audit?

• Data Access.

  Auditors should have unrestricted access to relevant data to make an unbiased assessment.

• Commercial Visibility.

  Full disclosure of commercial terms and agreements is crucial for an accurate evaluation.

• Cooperation.

  From the C-suite down to the operational staff, everyone must engage in the process with a cooperative mindset.

Specific requirements can be refined during the project discovery phase, contingent on the program's size and scope. It's crucial to involve auditors with domain expertise and a deep understanding of audit methodology to ensure a thorough and meaningful evaluation.

What’s Next?

It's time for action. Request audit results from your current or prospective MSP. Are they certified by an independent third party? If not, ask why. Don’t settle for vague answers; seek factual information. Once you have this data in hand, consider scheduling a complimentary discovery session with a Nimble Global expert to explore how we can assist you in ensuring that your MSP’s compliance posture aligns with your organizational needs.

Conclusion

Disregarding the importance of independent third-party audits in your MSP engagement strategy is a gamble that could jeopardize both compliance and credibility. Always make these audits a cornerstone of your MSP management framework. Ensuring your MSP undergoes regular, rigorous audits will help maintain high standards, build trust with stakeholders, and protect your organization from legal, operational, and financial risks.

By prioritizing third-party audits, you can confidently navigate the complexities of managed service provider governance and create a foundation for long-term success and credibility in the market.

Stay Nimble. Stay Compliant.

About the Author: With extensive experience in workforce compliance and global workforce solutions, David Ballew has consistently driven innovation and operational excellence. As the Founder and CEO of Nimble Global, David combines deep industry expertise with a unique perspective shaped by his neurodiverse AuDHD profile, enabling creative problem-solving and multidimensional insight. A pioneer in MSP models and workforce technologies, he is dedicated to bridging global compliance gaps and helping organisations build resilient, future-ready workforces.

Real People. Real Action. Real Innovation.

Disclaimer: This content is intended for informational purposes only and does not constitute legal, tax, or employment advice. Readers should consult qualified professionals in relevant jurisdictions before acting on the guidance provided. Nimble Global disclaims any liability for actions taken based on this publication.