An internal audit at FGH, Inc.

In a situation where there is a discrepancy in labor rates charged by a trusted long-term supplier, the first step should be to perform a validation process. This involves verifying the accuracy of the charges and comparing them with the contractual agreement. Conducting a validation process ensures that any errors are identified and corrected systematically, maintaining trust and transparency between FGH and the supplier. This step is essential before moving to other actions like cost/benefit analysis or establishing a time frame for recovery, as it confirms whether there is indeed a discrepancy that needs to be addressed.

References:

Baily, P., Farmer, D., Crocker, B., Jessop, D., & Jones, D. (2015). Procurement Principles and Management. Pearson Education.

Lysons, K., & Farrington, B. (2012). Purchasing and Supply Chain Management. Pearson Education.