Importance of Vendor Compliance in a Joint Venture
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Russ: This is the PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I’m here once again with Brian Baumler, a Senior Vice President with Joint Venture Strategic Advisors and an Audit Director with PKF Texas. Brian, welcome back to the Playbook.
Brian: Thank you very much, Russ. How are you doing today?
Russ: Doing great. So, when it comes to strategic advisor services, we talked about audit services, management services, what else is there?
Brian: Well, another facet of the business, which kind of makes sense when you have joint ventures, often time you’re bringing a number of vendors together and help to provide that service and to manage that joint venture. Another subset of the service we provide is actually vendor compliance. Vendor compliance is very important because a lot of the components that cannot be done by the operator of those joint ventures have to be farmed out to vendors.
Russ: These are vendors that were brought in by both parties to the joint venture, right?
Brian: They can be.
Russ: And sometimes Party A brought theirs in but Party B doesn’t know about their vendor relationships and might need to know about them?
Brian: Well, a lot of times when the joint ventures come together everybody kind of jointly agrees on the moving components of those arrangements, and in some cases, that may be true but for the most part I think everybody agrees to those vendors and of course the terms of the arrangements that are actually coming together into those projects.
Russ: Do you all have an easy way to review all of that information and then come back and tell everyone what you have?
Brian: That’s a great question. We actually have a software that we use that has, it’s a database and it actually provides a lot of analytics and it looks for anomalies within the core terms of arrangements, looking for errors. It could be errors in billing. It’s also intended to be used to measure overbillings when things become outside the boundaries of AFE, which is the Authorization For Expenditure.
Russ: Really interesting. Ok, once again, I appreciate you kind of filling out the picture for joint ventures.
Brian: Thank you very much.
Russ: For more about the joint ventures services visit jvsa.com. This has been another Thought Leader Production, brought to you by PKF Texas Entrepreneur’s Playbook.