An IT auditor is tasked with reviewing the adequacy of a service level agreement (SLA) between the company and an outsourced supplier. The IT auditor has identified multiple concerns mostly around what is missing from the SLA. From what has been identified as missing from the SLA, which finding should be a major concern to the IT auditor?

Contractual language detailing commitment for service improvement.

Transition clause from the old supplier to a new supplier in the case of expiration or termination.

Allowance for late payments through a clause between the customer and the supplier.

Approved dispute resolution procedures between the contracting parties.

Explanation

The delivery of IT services for a specific customer always implies a close linkage between the client and the supplier of the service. If there are no contract terms to specify how the transition to a new supplier may be performed, there is the risk that the old supplier may simply âpull the plugâ if the contract expires or is terminated. This would be the greatest risk to the organization. Contractual issues regarding payment, service improvement and dispute resolution are important, but not as critical as ensuring that service disruption, data loss or other significant events occur in the event that the organization switches to a new firm providing outsourced services.