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Top 10 Audit Findings in Post-Payment Audits (2022)

1. Lack of Controls Over Expenditure Processing

The issue

State employees have the security access to perform multiple tasks in the statewide financial systems such as both entering and releasing payments through the Uniform Statewide Accounting System (USAS) without oversight, adjusting payment instructions in the Texas Identification Number System (TINS), approving vouchers and picking up warrants from the Comptroller’s office.

Proper procedure

State agencies should implement controls over expenditure processing and segregate each task as much as possible.

Agencies can strengthen internal controls and reduce risks to state funds by:

Find out more

USAS Accounting and Payment Control (FPP B.005)

2. Missing Prior State Service Forms/Incorrect Amount of 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:

Find out more

Texas Payroll/Personnel Resource – State of Texas Employment History Application

Texas Payroll/Personnel Resource – Longevity Pay

3. Incorrect Amount of Lump Sum Payments

The issue

State agencies fail to calculate the lump sum payment for accrued vacation time correctly, resulting in an incorrect payment amount to the employee.

Proper procedure

When making lump sum payments, agencies must:

Find out more

Texas Government Code, Sections 661.061-068

Texas Payroll/Personnel Resource – Lump Sum Payment of Accrued Vacation Time

Texas Payroll/Personnel Resource – Lump Sum Payment of Accrued Vacation and Sick Time for Deceased Employees

4. Incorrect Procurement Method Used

The issue

State agencies fail to research procurement methods resulting in an incorrect procurement method being used.

Proper procedure

When choosing a procurement method, agencies must:

Find out more

State of Texas Procurement and Contract Management Guide

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 Uniform Statewide Accounting System (USAS) cannot be validated.

Proper procedure

Agencies must maintain supporting documentation in their files to support the legality and fiscal responsibility of each payment that results from either a purchase or a travel expense.

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 universities 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 or universities 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 or university 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.

Find out more

34 Texas Administrative Code, Section 20.115

Texas Government Code, Section 2155.089

Vendor Performance Tracking System

7. Missing/Incorrect SAO Nepotism Disclosure Statement

The issue

State agencies fail to complete a nepotism disclosure statement when procuring a contract valued at $1 million or more, or have the form signed by the wrong individual. This can lead to an agency being unaware of a potential conflict of interest in a procurement decision.

Proper procedure

For contracts valued at $1 million or more, all purchasing personnel working on a contract must disclose any relationship with the selected vendor to the administrative head of the agency on a form prescribed by the State Auditor’s Office.

Find out more

Texas Government Code, Section 2262.004 requires state agency purchasers to disclose relationships that might pose a conflict of interest in awarding a major contract. See State of Texas Procurement and Contract Management Guide – Agency Review of Required Disclosures.

8. 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.

Find out more

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

9. Missing or Late Acknowledgement of Texas Ethics Commission Certificate Form 1295

The issue

State agencies or universities failed to obtain the Texas Ethics Commission (TEC) Certificate of Interested Parties (Form 1295) for contracts over $1 million. In other instances, state agencies failed to acknowledge the form on the TEC website no later than the 30th day after the date the agency receives the vendor’s disclosure.

Proper procedure

Before awarding a contract, state agencies or universities must obtain a signed TEC Certificate of Interested Parties (Form 1295) from the vendor, which includes the certificate of filing number and date. The contract developer must acknowledge Form 1295 on the TEC website. A reference to Form 1295 should be included in the solicitation to allow the vendor to gather the pertinent information early in the process. A certificate will stay in pending status until it is acknowledged by the agency. Only acknowledged certificates are posted to the TEC website.

Find out more

Texas Government Code, Section 2252.908

Texas Ethics Commission

Texas Ethics Commission Electronic Filing Application

10. Missing/Incomplete Vendor Compliance Verifications

The issue

Verifications of vendor compliance that an agency must check before entering into a contract are not performed. 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 organization lists, the boycott Israel 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.

Find out more

Debarment check: Texas Government Code, Section 2155.077.

System for Award Management check: presidential Executive Order 13244.

Iran, Sudan and foreign terrorist list organization check: Texas Government Code, Sections 2252.001(2) and 2252.152.

Boycott Israel check: Texas Government Code, Sections 2270.0001(3) and 2271.002.

Warrant/payment hold check: eXpendit – Restricted Expenditures – Persons Indebted to the State and Texas Government Code, Section 2252.903.

Energy Company Boycott Check: Texas Government Code, Section 2274.002(b).