Fleet Audit: How to Ensure Your Fleet’s Efficiency

February 20, 2020

Let’s face it: Everybody hates to be the subject of an audit! However, audits are necessary for improving a company’s efficiency. You can do it yourself, as the fleet manager, or you can rely on an external auditing service.

How do audits apply to fleet operations? Any fleet audit will evaluate:

• Whether the company stores fleet records adequately.
• Whether the company is following its fleet operation processes, procedures, and policies.

This post will advise you on ways to audit your fleet’s operations, whether it’s an internal or an external audit. But first, let’s understand a bit more about what a fleet audit is.

What’s a Fleet Audit?

Most likely, your company has already been through some kind of auditing procedure. Usually, internal or external audits focus on the company’s financial health, and fleet operations are part of that financial health. But the efficiency of fleet operations isn’t limited to financial aspects. For instance, a fleet audit may look for automation opportunities in fleet operations, such as automated billing integrated with an existing transportation management system (TMS). Thus, an efficient fleet isn’t focused solely on dollars. A fleet auditor may recommend other changes that improve efficiency, such as automating some fleet operations.

A fleet audit measures the compliance of fleet operations against a company’s or standard’s processes, procedures, and policies. The audit involves collecting information from actual operations and comparing it with those processes, procedures, and policies. It doesn’t have to do with service-level agreements (SLAs), comparing operational costs, or evaluating a business forecast.

Here are some examples of items in a fleet audit checklist:

• Invoices contain certain information that the company or the law requires. For instance, an invoice that your company sends out for payment must contain the word “invoice,” a unique invoice number, and your company’s name and address.
• Expense reports, accounts payable and receivable, and driver assessments are within certain limits.
• Fleet records—such as title records, contracts, and driver records—exist and are up to date.

Now you’re aware of what a fleet audit entails. Let’s find out more about its goals and advantages.

What’s a Fleet Audit Good for, Anyway?

The outcome of a fleet audit may help you with defining processes, procedures, and policies for fleet operations. For example, it may help you define a policy of checking the accuracy of driver records every six months. It may also help with determining, for instance, how you generate and analyze expense reports each month.

A fleet audit is obviously useful when it helps you determine the overall efficiency of the fleet’s operation. But it’s also useful when you’re selling a truck or when a driver is involved in an accident. For example, to sell a truck, you’ll need to locate the vehicle’s title record. Similarly, the absence of the driver’s motor vehicle record (MVR) in case of an accident is a serious issue. So, a fleet audit not only contributes to the company’s efficiency but also helps you limit risk in fleet operations. Above all, that protects your company.

At this point, let’s dive into some specific fleet audit actions. The first one is a fleet costs audit.

How Are Your Fleet Costs Doing?

This is the most common audit type you can find. Think about a trucking company. Every day, the operation, maintenance, and repair of trucks all generate a lot of information that’s vital for expense management. Based on that information, you can figure out a lot of costs for the business, such as the cost per mile, day, week, month, year, or load unit. And those costs may refer to specific trucks, the entire fleet, a certain customer, or a certain route.

A truck’s record is a series of transactions. And all the information in those transactions must be complete and accurate. Why? Because you need a way to calculate fleet costs. For instance, a maintenance record must contain odometer readings. And a repair record must contain parts lists, with prices and applicable taxes as well as labor costs. Both records must contain the truck number; the date of each transaction; the truck’s year, make, and model; and the total cost.

Now you know a bit about fleet costs auditing. Let’s talk about the second fleet audit action: fleet accounts payable auditing.

Are Your Fleet Accounts Payable Accurate?

Your company has rules for requiring and authorizing payments. That means your company must have an accounts payable process, procedure, or policy. And it must audit its accounts payable.

It’s most likely that your company has defined distinct expense authorization levels depending on a person’s role. It’s also likely that the applicant must fill out forms to request payments. For example:

• A director is allowed to spend more than a manager is.
• Every driver has authorization to change a flat tire.
• A fleet maintenance provider must request authorization for repairs of at least a certain amount.

After payments auditing comes the third and final fleet audit action, which is legal fleet documentation auditing. Let’s have a look at it.

Is Your Legal Fleet Documentation Healthy?

You either own or lease every truck in your fleet, right? That means someone ordered the truck, either through a purchase requisition or a lease requisition. That means more documents to audit—and a lot of people involved in a multi-authorization scenario as well.

It sounds like the fleet manager must define, implement, and audit a workflow, doesn’t it? Indeed it does.

Some documents allow a trucking company to operate with its vehicles:

• To sell a truck, a trucking company must present the vehicle’s title record and the federal odometer statement.
• A trucking company must have the manufacturer’s certificate of origin (CO) to legally buy a truck.
• A truck can’t operate without the vehicle’s registration.
• Every driver in a trucking company must have an MVR, preferably without violations.

When it comes to workflows—such as driver workflows—not only must documents exist, but also people need to present them at certain times. For example:

• Lessors must provide COs and vehicle titles.
• Drivers must provide their registrations.
• Sales records must have federal odometer statements.

If You Want to Get Ahead of a Fleet Audit…

The fleet manager is responsible for defining which information must be in transactions. And the manager must do so for different types of records, such as maintenance, repair, accident, or driver records.

The manager must also define who will deliver specific kinds of information to store in records. For instance, drivers should deliver accident reports containing information that the fleet manager specifies, and the corresponding repair and replacement truck rentals must trace back to the accident report.

Conduct a self-audit regularly. A quarterly self-audit is more effective and quicker to perform than a yearly one is. Therefore, do the following every three months:

• Pull a random sample of records. They can be maintenance, repair, accident, driver, or any other kind of record your company must keep for its fleet.
• Check each record against the required information. And measure the level of compliance between that information and the information you found in records. Remember the information you defined as required for transactions in that type of record.
• When applicable, check transactions for required authorization and documentation. This applies to the case of fleet accounts payable auditing actions.
• When applicable, check whether legal documentation exists. It applies to fleet legal documentation auditing actions.
• Look for automation opportunities in fleet operations. Reducing the use of paper and labor costs makes your trucking company more efficient.

If you perform this quarterly audit, you’ll be able to pinpoint where information is lacking. You’ll know when a process, procedure, or policy failed. And you’ll be able to define and implement actions to remedy the impact of missing information or failures. Taking these actions will help you prevent relatively small problems from escalating into crises.

This post was written by Sofia Azevedo. Sofia has most recently taught college-level courses in IT, ICT, information systems, and computer engineering. She is fond of software development methods and processes. She started her career at Philips Research Europe and Nokia Siemens Networks as a software engineer. Sofia has also been a product owner, working in the development of software for domains such as telecom, marketing, and logistics.

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