7/4/23, 2:04 PM Top 10 Audit Findings in Post-Payment Audits (2022)

Fiscal Management
Glenn Hegar
Texas Comptroller of Public Accounts

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:

Updating preventive controls in USAS on the Agency Profile (D02) for all transactions.
Requesting the USAS Risky Document Report (DAFR9840) that lists activities for all users,
including any documents that were entered or altered and then released by the same user.

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:

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

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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:

Verify calculations of lump sum payments, including all factors such as the base salary,
number of vacation hours, termination date, hourly rates, holidays, and partial months.
Enhance their internal controls to ensure correct vacation lump sum calculated payments.

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:

Research state of Texas procurement methods in the State of Texas Procurement and Contract
Management Guide.
Determine and follow the correct procurement method.
Ensure that all steps of the procurement method are documented.

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.

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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:

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

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.
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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) and the LBB contract
reporting guide .

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.

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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).

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