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Top 10 Audit Findings in Post-Payment Audits (2025)

1. Missing/Incomplete Vendor Compliance Verifications

The Issue

State agencies are not completing (or documenting) vendor compliance verifications before awarding a contract. If a vendor is listed on one of these lists, then the state may not do business with that vendor. These verifications include the System for Award Management, the debarred vendor list, the Iran, Sudan and foreign terrorist organizations lists, the boycott Israel check, the firearm and ammunition industry discrimination check, the energy company boycott check, and the vendor’s warrant hold status. Failure to conduct these checks can lead to the improper award of a contract.

Proper Procedure

The vendor compliance verifications must be performed before the agency contracts with a vendor. A dated copy of the verifications must be retained in the procurement file.

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2. Missing Statutory Authority

The Issue

State agencies process payments without verifying that they have statutory authority to use the funds for the expenses. Processing payments without proper statutory authority can result in financial discrepancies.

Proper Procedure

Agencies must verify their statutory authority and ensure that appropriate documentation is maintained before submitting any payment requests.

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3. Missing Dual or Multiple Employment Notification Forms

The Issue

Employees engaged in dual employment notified the agency, but the agency failed to verify their employment or could not produce documentation of verification. If a person is employed at multiple state agencies, coordination and communication are necessary so all agencies are aware of how the other agencies classify the employee, how many hours the employee works at each agency, and who will be responsible for what share of any resulting overtime pay. This is also important to prevent employees from receiving leave accruals and other benefits more than once.

Proper Procedure

When an employee seeks dual or multiple employment, the employee must inform the current and potential employing entities before accepting additional employment. The current employer must explain dual and/or multiple employment requirements to the employee and is also responsible for contacting the new employer to coordinate work schedules and ensure the employee is paid or credited for any time worked over 40 hours per week. The current employer must also ensure benefits such as insurance, leave and lifetime service credit provided to a person employed by more than one agency do not exceed the benefits provided for a single full-time employee.

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4. Failure to Report Contract to the Legislative Budget Board

The Issue

State agencies do not report contracts or contract amendments valued more than $50,000 to the Legislative Budget Board (LBB). This can hamper the ability of oversight agencies to monitor state contracting efforts.

Proper Procedure

State agencies receiving appropriations under the GAA must report all contracts over $50,000 to the LBB, including contracts for which only non-appropriated funds will be expended. The submission must include documentation such as the award, solicitation documents, renewals, amendments, addendums, extensions, attestation letters and other records.

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See General Appropriations Act (GAA), Article IX, Section 7.04(c) PDF and the LBB contract reporting guide PDF.

5. Missing/Insufficient Supporting Documentation (Purchase & Travel)

The Issue

Agency documentation for purchases and travel expenses is missing or insufficient. Without supporting documentation, a purchase or travel expense and the corresponding data entered into the statewide accounting systems cannot be validated.

Proper Procedure

Examples of required documentation include:

6. Failure to Report to the Vendor Performance Tracking System

The Issue

State agencies or universities fail to report vendor performance for contracts over $25,000 to the Vendor Performance Tracking System (VPTS).

Proper Procedure

After a contract is completed or otherwise terminated, each state agency must review the vendor’s performance under the contract. State agencies (and institutions of higher education for contracts that started before Sept. 1, 2021) must report purchases and contracts over $25,000 to VPTS to identify supplier performance, which helps aid purchasers in making a best value determination based on vendor past performance and protect the state from vendors with unethical business practices. State agencies submit their vendor performance electronically via the Statewide Procurement Division website.

If the value of the contract exceeds $5 million there are additional requirements. The state agency shall review the vendor’s performance:

  1. At least once each year during the term of the contract.
  2. At each key milestone identified for the contract.

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7. Improper Payment of Meals

The Issue

State agencies process employee reimbursements of meal expenses without verifying compliance with the Travel Regulations Act, Comptroller rules, and travel provisions of the General Appropriations Act (GAA). Reimbursing incorrect meal expenses can result in financial discrepancies.

Proper Procedure

When reimbursing meal expenses, agencies must verify:

  1. The appropriate comptroller object was used to record meal reimbursement.
  2. Meal expenses were incurred while conducting state business outside the employee’s designated headquarters for at least six consecutive hours.
  3. Meal expenses claimed are within the allowable meal reimbursement rate for that location.
  4. Only eligible expenses are reimbursed.
    – and –
  5. The correct dollar amount for meal expenses was submitted for payment.

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8. Incorrect State Effective Service Date/Longevity Pay

The Issue

State agencies fail to verify prior state service when hiring leading to incorrect longevity payments. When agencies fail to verify prior state service, longevity payments are calculated incorrectly, and eligible employees are underpaid.

Proper Procedure

When hiring a new employee, agencies must:

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9. Missing/Incorrect Direct Deposit Authorization Form

The Issue

There is a federal mandate to properly identify and handle payments involving moving funds internationally. One question on the direct deposit authorization form asks if the money will be forwarded to a financial institution outside of the United States. Agencies cannot provide the form to auditors, or they have the form, but this question is not completed or is marked “yes.” Without a properly completed form on file, the agency is unable to determine whether state funds were forwarded to a financial institution outside of the United States.

The Comptroller’s office does not participate in international automated clearing house (ACH) transactions (IATs). If a payee informs an agency a payment is destined for a financial institution outside the United States, the agency may not set up that payee for direct deposit.

Proper Procedure

IATs are payments destined for a financial institution outside the United States.  Due to federal requirements mandated by Office of Foreign Assets Control (OFAC), the National Automated Clearing House Association has adopted specific rules on the identification and processing of IATs.

To avoid potential federal penalties, each state agency must:

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10. Prompt Payment and Payment Scheduling Errors

The Issue

State agencies fail to make timely payments, which results in overdue payments and interest owed to vendors. Additionally, agencies schedule payments too early, leading to lost interest for the state treasury.

Proper Procedure

A state agency’s payment is due on the 30th day after the latest of:

A state agency is liable for any interest that accrues on an overdue payment under the prompt payment law. Interest starts accruing on the date the payment becomes overdue.

Payments over $5,000 must be scheduled for distribution 30 days from the last received, either the invoice or completion of services/receipt of goods, or:

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