Vendor Audit Findings Examples

Every TPRM manager has war stories about vendor audits gone sideways. That moment when you discover your critical payment processor has been storing unencrypted PAN data for three years. Or when your cloud infrastructure vendor fails 18 of 20 SOC 2 controls during a routine assessment.

These findings shape how we build vendor risk programs. They determine which controls become non-negotiable, which vendors require enhanced monitoring, and where to focus limited audit resources. Understanding common audit findings—and their root causes—transforms reactive firefighting into proactive risk management.

This guide dissects real vendor audit findings from financial services, healthcare, and technology sectors. You'll see the specific control failures, understand why they occurred, and learn how other organizations remediated them. More importantly, you'll discover patterns that predict future failures before they impact your attack surface.

Case Study 1: Financial Services Firm Discovers Critical Authentication Gaps

A regional bank's TPRM team audited their loan origination vendor following suspicious login patterns. The vendor processed 40,000 applications monthly and held PII for 2.3 million customers.

Initial Red Flags

The security operations center noticed authentication anomalies during routine log analysis:

• 3,400 successful logins from deprecated service accounts
• No MFA enforcement on administrative interfaces
• Password complexity requirements below NIST 800-63B standards
• Session tokens valid for 30 days without re-authentication

Audit Execution

The TPRM team deployed a risk-based audit approach:

1. Scoping Phase (Week 1)

   • Mapped data flows between systems
   • Identified 47 integration points
   • Classified data types (PII, PCI, proprietary)
   • Assigned Tier 1 criticality based on data volume

2. Technical Assessment (Weeks 2-3)

   • Penetration testing revealed 12 critical vulnerabilities
   • Configuration review found 234 baseline deviations
   • Access review identified 89 orphaned accounts
   • Network segmentation analysis showed flat architecture

3. Documentation Review (Week 4)

   • Security policies last updated in 2019
   • No evidence of quarterly access reviews
   • Incident response plan referenced defunct contacts
   • Missing encryption-at-rest attestations

Critical Findings

Finding Category	Severity	Details	Business Impact
Authentication	Critical	No MFA on admin portal	Complete system compromise possible
Access Control	High	89 terminated employee accounts active	Data exfiltration risk
Encryption	Critical	Database backups unencrypted	2.3M records exposed if breached
Logging	Medium	90-day retention (requires 12 months)	Compliance violation, $250K potential fine
Patching	High	47 systems running EOL software	Known exploits publicly available

Remediation Timeline

The vendor received 30 days for critical findings, 60 days for high-severity issues. Actual remediation:

• Day 7: MFA enabled on all administrative interfaces
• Day 14: Orphaned accounts disabled
• Day 21: Database encryption implemented
• Day 45: All high-severity findings closed
• Day 60: Achieved full compliance

Lessons Learned

Risk tiering saved this audit. Because the vendor held Tier 1 classification, the bank required:

• Quarterly technical assessments
• Real-time security monitoring integration
• Mandatory participation in tabletop exercises
• Executive-level remediation commitments

Without proper tiering, this vendor would have received annual questionnaire-based assessments only.

Case Study 2: Healthcare System Uncovers Supply Chain Vulnerabilities

A 14-hospital system audited their medical device management vendor after ransomware hit three peer organizations through similar third-party vectors.

Pre-Audit Indicators

Continuous monitoring platforms flagged concerning signals:

• Vendor's attack surface expanded 300% in six months
• 14 new subdomains without security headers
• SSL certificates expired on 3 production endpoints
• Public GitHub repository contained API keys

Structured Assessment Approach

Phase 1: Remote Assessment

• Automated scanning identified 1,847 potential issues
• Manual validation confirmed 234 actual vulnerabilities
• Supply chain mapping revealed 19 fourth-party dependencies
• None of the fourth parties had undergone security assessment

Phase 2: Onsite Deep Dive The three-day onsite revealed systematic control failures:

1. Physical Security Gaps

   • Server room access unmonitored
   • No visitor logs maintained
   • Backup tapes stored in unlocked cabinet
   • Cleaning crew had unrestricted access

2. Fourth-Party Risk Blindness

   • 19 critical subprocessors unvetted
   • No contractual flow-downs for security
   • Data residency requirements ignored
   • Breach notification gaps with sub-vendors

3. Development Security Failures

   • No secure SDLC documentation
   • Developers pushing directly to production
   • Hard-coded credentials in source code
   • No static or dynamic security testing

Quantified Business Impact

The audit findings translated to measurable risk exposure:

• Patient Records at Risk: 4.7 million
• Potential HIPAA Fines: $1.5M per incident
• Operational Downtime Risk: 72-hour RPO/RTO gap
• Reputational Impact: 3 similar breaches made headlines

Remediation and Monitoring Strategy

The healthcare system implemented a phased remediation approach:

Immediate Actions (0-30 days)

• Isolated vendor systems from production network
• Required cyber insurance increase to $50M
• Implemented compensating controls for critical gaps
• Daily status calls with vendor CISO

Medium-term Fixes (30-90 days)

• Vendor implemented SAST/DAST in CI/CD pipeline
• All fourth parties completed security questionnaires
• Physical security controls enhanced
• Penetration testing cadence increased to quarterly

Long-term Program Changes

• Continuous monitoring tools deployed
• Monthly attack surface reviews
• Automated vulnerability correlation
• Executive risk committee oversight

Common Patterns Across Industries

After analyzing 500+ vendor audits across sectors, clear patterns emerge:

Top 10 Most Frequent Findings

1. Inadequate Access Controls (a large share of audits)

   • Excessive privileges
   • No segregation of duties
   • Missing access reviews
   • Shared administrative accounts

2. Weak Authentication (61%)

   • No MFA enforcement
   • Password complexity below standards
   • Session management flaws
   • API keys in plaintext

3. Patch Management Failures (58%)

   • Critical patches months overdue
   • No patch testing process
   • End-of-life systems active
   • Missing vulnerability scanning

4. Encryption Gaps (54%)

   • Data at rest unencrypted
   • Weak encryption algorithms
   • Poor key management
   • Unencrypted backups

5. Logging Deficiencies (52%)

   • Insufficient retention periods
   • Missing security events
   • No log integrity controls
   • Lack of centralized logging

Risk Tiering Misalignment

Most critical finding: many vendors were incorrectly tiered, leading to:

• Under-assessment of critical vendors
• Over-investment in low-risk relationships
• Missed continuous monitoring opportunities
• Inadequate contractual protections

Framework Compliance Gaps

Vendors consistently fail similar controls across frameworks:

Framework	Common Failures	Remediation Complexity
SOC 2	Logical access, change management	Medium (3-6 months)
ISO 27001	Risk assessment, incident response	High (6-12 months)
NIST CSF	Identify, Detect functions	Medium (4-8 months)
HIPAA	Access controls, audit logging	Low (1-3 months)
PCI DSS	Network segmentation, encryption	High (6-9 months)

Building Your Audit Program

Successful audit programs share these characteristics:

1. Risk-Based Scheduling

• Tier 1 vendors: Quarterly technical assessments
• Tier 2 vendors: Annual onsite audits
• Tier 3 vendors: Biennial questionnaires
• All tiers: Continuous monitoring overlay

2. Clear Finding Classification

Critical: Remediate within 30 days or implement compensating controls
High: Remediate within 60 days with weekly progress reports  
Medium: Remediate within 90 days with monthly updates
Low: Track for next audit cycle

3. Executive Reporting Metrics

• Mean time to remediation by severity
• Repeat finding percentage
• Cost of findings (potential impact)
• Vendor improvement trends

4. Automation Integration Modern TPRM platforms automate finding workflows:

• Evidence collection and validation
• Remediation tracking and alerts
• Risk scoring adjustments
• Report generation and distribution

Frequently Asked Questions

How do you prioritize which vendors to audit when resources are limited?

Focus on vendors with access to sensitive data, critical business functions, or significant attack surface exposure. Use automated tools for continuous monitoring of all vendors, then conduct deep-dive audits on the top a notable share of based on risk scores.

What's the most effective way to ensure vendor remediation of critical findings?

Include specific SLA requirements in contracts with financial penalties for non-remediation. Require executive sign-off on remediation plans and implement automated tracking with escalation workflows.

How often should we update our vendor audit methodology?

Review methodology quarterly, but only make significant updates annually unless threat landscape changes demand it. Minor adjustments based on findings trends can happen continuously.

Should internal audit or the TPRM team lead vendor audits?

TPRM should lead operational vendor audits with internal audit providing oversight and conducting periodic reviews of the TPRM program itself. This maintains independence while leveraging TPRM's vendor expertise.

How do we handle vendors who refuse to remediate findings?

Document the business risk acceptance if continuing the relationship, implement compensating controls where possible, and develop exit strategies. Critical findings may require vendor replacement.

What's the ideal balance between automated and manual audit procedures?

Use automation for continuous control monitoring, vulnerability scanning, and questionnaire analysis. Reserve manual effort for high-risk areas like business logic, complex integrations, and fourth-party validations.