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Top 10 Audit Findings in Post-Payment Audits (2019-2020)

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, 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. Failure To Request Security Access Removal and Failure To Notify Comptroller To Remove Employee From Signature Card

The issue

State agencies fail to notify the Comptroller’s office of an employee’s termination so the employee’s security access can be revoked in a timely manner. Any payments authorized electronically in USAS or paper vouchers approved after the employee’s termination would constitute an unapproved expenditure.

Proper procedure

Agencies must:

Find out more

Establishing and Removing Authority and Security to Approve Expenditures (FPP B.007)

4. Lack of Conservation of State Funds (Travel)

The issue

Agencies do not consider cost savings to the state when making travel arrangements. Employees fail to compare costs to determine the most cost-effective method to travel. This results in additional travel expenses.

Proper procedure

Agencies must:

Find out more

Textravel – Conservation of state funds

Textravel – Agency, Employee Responsibilities

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. Prompt Payment and Payment Scheduling Errors

The issue

Payments are improperly scheduled for payment in USAS, which may result in either a late payment or an early payment. If it is a late payment, the Comptroller’s office must pay interest due under the prompt payment law on behalf of the agency. If a payment is early, the state’s treasury incurs a loss in interest.

Proper procedure

State agencies should review their procedures to ensure they submit payment information for processing in a timely manner and release payments on time to avoid incurring interest.

In addition, state agencies must verify that proper due dates are entered to ensure that, if interest is due, it is paid correctly to the vendors.

To minimize the loss of earned interest to the state’s treasury, state agencies must schedule all payments greater than $5,000 for the latest possible distribution allowed by their purchasing agreements.

Find out more

eXpendit – Prompt Payment

eXpendit – Payment Scheduling

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 CMBL Solicitation

The issue

State agencies do not notify all entities on the Centralized Master Bidders List (CMBL) that match the commodity code for the purchase, or do not document the notification. This can decrease potential competition on procurements.

Proper procedure

An agency must solicit from a minimum of three active vendors on the CMBL including two current Texas-certified historically underutilized businesses for purchases between $5,000 and $25,000. For procurements exceeding $25,000, an agency must use the CMBL to solicit from each eligible vendor on the list that serves the agency’s geographic region. A copy of the bid list must be placed in the procurement file.

Find out more

See State of Texas Procurement and Contract Management Guide – Centralized Master Bidders List.

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.