Improve accountability and transparency with custodial service contract audits

Contracted custodial services can represent a large portion of your organization’s budget, with costs running from thousands to millions of dollars. Yet managing contracted custodial service programs and the related controls isn’t typically a core function for organizations, which can lead to costly errors and oversights.

These contracts outline the scope of work, responsibilities, and terms of payment for services such as cleaning, maintenance, and repair of buildings and facilities. Unmonitored, they are subject to common pitfalls including cost overruns, staffing shortages, and a decrease in the quality of service received. Establishing clear expectations and accountability through these contracts is vital to keeping your properties and jobsites well-maintained and meeting health and safety standards.

Contract audits can help you improve accountability and key controls for effective custodial service contracts. By engaging with an experienced custodial services contract auditor and establishing clear audit requirements, you can reduce costs, improve performance, and mitigate risk.

Common types of custodial service contracts

Fixed Price Contracts. Costs are billed for a specified period (monthly, quarterly, etc.) at a fixed price. These rates are generally broken down by service type, facility location, and unit of measurement (square footage, estimated hours, job title).

Cost-Plus Contracts. Allowable costs are reimbursed by you for the actual cost incurred as evidenced by time sheets, receipts, and invoices, plus a fixed fee or percentage of the costs as profit.

Hybrid Contracts. Combine elements of both fixed price contracts and cost-plus contracts. For example, equipment and supply costs may be billed at a fixed rate while labor costs are based on the actual number of hours worked by the custodian’s staff.

What are the basics of a custodial services contract audit?

Custodial service contract audits are generally conducted to improve operational performance, reduce noncompliant costs, facilitate decision-making, and provide transparency and accountability to key stakeholders. Custodial service contract audit objectives should be clear and concise and address various performance aspects of the program.

Before entering a custodial services contract, you should engage with service providers and auditors early on to establish audit requirements and that a right-to-audit clause is included within the service contract. This can help all parties understand and maintain compliance with the agreed-upon requirements and prevent non-compliant contract audit findings.