Top 10 Audit Findings in Post-Payment Audits (2024)

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.

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.
• Firearm and Ammunition Industries Discrimination Check: Texas Government Code, Section 2274.002(b).
• Energy Company Boycott Check: Texas Government Code, Section 2276.002(b).

2. Incorrect Human Resource Information System Reporting

The Issue

Institutions of higher education misreport or fail to report personnel and payroll transactions in the Human Resource Information System (HRIS). These errors result in incomplete or inaccurate data in HRIS, affecting state-level reporting.

Proper Procedure

Institutions must ensure that all personnel actions, pay rate changes, and payroll transactions are accurately reported in HRIS using the correct reason codes, effective dates, and comptroller objects. Additionally, terminations should be reported with the correct reason code corresponding to the reason for the employee’s departure.

Find Out More

• 34 Texas Administrative Code Section 5.41(h)–(i)
• HRIS Compliance Reports (FPP F.003)
• HRIS Reporting Requirements – Higher Education (FPP M.005)
• Reason Code Resources and Classification Salary Schedules (FPP R.022)

3. 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 30^th day after the latest of:

• The date the agency receives the goods under the contract.
• The date the performance of the contracted service is completed.
• The date the agency receives an invoice for the goods or services.

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:

• As prescribed by the contracts or specific arrangements covering the payments.
• On the last day a payment can be made without accruing interest under the prompt payment law.

Find Out More

• Texas Government Code, Section 2251.021(a)
• Texas Government Code, Section 2251.026
• eXpendit – Prompt Payment
• eXpendit – Payment Scheduling
• eXpendit (FPP I.005)

4. 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:

• Invoice.
• Purchase order (PO).
• Contract (including supporting procurement documentation).
• Receiving report (for PO).
• Travel voucher.
• Receipts.
• Other supporting documents for travel expenses.

5. Incorrect Format on Charge Card Invoice Number and Description

The Issue

State agencies enter incorrect data in the invoice number field when processing payments to the payment card vendor. As a result, the payment card vendor may be unable to accurately post the payments to the agency’s accounts, potentially leading to account reconciliation issues or delays.

Proper Procedure

Agencies must ensure that charge card invoice numbers and descriptions are formatted correctly. The last 10 digits of the billing account number must be included in the invoice number field to ensure accurate and timely posting of payments.

Find Out More

• Processing Third-Party Transactions in USAS for Payment/Travel Cards, Direct Bill Payments and Reimbursements (FPP A.043) (login required)
• USAS and CAPPS Financials Invoice Number Field Requirements (FPP E.023)

6. 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.

Find Out More

• See General Appropriations Act, Article IX Section 6.04 PDF
• See General Appropriations Act, Article III PDF
• eXpendit (FPP I.005)

7. 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:

• Research state of Texas employment history.
• Determine eligibility for longevity pay by verifying prior state service.
• Ensure the longevity payment is calculated correctly.

Find Out More

• Texas Payroll/Personnel Resource – State of Texas Employment History Application
• Texas Payroll/Personnel Resource – Longevity Pay

8. 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.

Find Out More

• 34 Texas Administrative Code Section 20.115
• Texas Government Code, Section 2155.089
• Vendor Performance Tracking System

9. 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.

10. Incorrect Processing of Third-Party Transactions

The Issue

State agencies frequently process third-party transactions with incorrect transaction codes (T-codes) and Texas Identification Numbers (TINs). Common mistakes include using a 225 T-code instead of using the appropriate T-code pair or using the generic TIN or payment card vendor TIN instead of the specific TIN assigned to a vendor with the 247 T-code. Additionally, agencies often combine multiple charges into one transaction, which results in inaccurate reporting of the vendor details, expenditure categories, and transaction dates. These errors hinder transparency and affect public information requests, HUB reporting, and overall expenditure accuracy.

Proper Procedure

State agencies must process each transaction individually, ensuring that the correct T-code is applied, and the actual vendor or employee TIN is used. This ensures the accurate recording of transactions.

Find Out More

Processing Third-Party Transactions in USAS for Payment/Travel Cards, Direct Bill Payments and Reimbursements (FPP A.043) (login required)