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Susan Combs  •  Texas Comptroller of Public Accounts

Post-Payment Audit Process

To ensure that agencies’ payroll, purchase, procurement and travel expenditures comply with state law, the Comptroller’s Fiscal Management Division performs post-payment audits of all state agencies.

Each year, the Expenditure Audit section selects agencies based on a risk assessment. Here is how the agency audit process works:

Audit Process

Phase 1

Collecting information

  • We send you a notification letter along with a questionnaire that asks about your processing procedures. Once you have filled out the questionnaire, we schedule an entrance meeting with you to discuss the scope and nature of the audit.
  • We select a stratified random sample of your transactions from each group—payroll, purchase, travel, and special expenditures—and ask you to pull all related documentation.
  • We may ask you about other transactions or information related to your agency.

Phase 2

Fieldwork

  • We spend time at your agency reviewing your documentation. As we identify issues, we give you time to research them and provide additional supporting documentation.
  • We then schedule an exit conference to finalize the fieldwork. This is your last opportunity to submit documentation before we draft a preliminary audit report.

    If you submit documentation after the exit conference, we include it as part of your formal comments in the final report.

Phase 3

Reporting

  • We prepare the preliminary audit report. It includes report issues only (not management issues).
    • Report issues have a monetary impact. They include:
      • Payment issues, such as paying more than the contracted rate. We report the dollar value projected across all transactions for the audit period (for example, purchase error rate of 0.32 percent).
      • Documentation issues, such as missing invoices. We report the number of issues against the number of transactions in the sample (for example, nine out of 180 purchase vouchers).
    • Management issues do not have a monetary impact. They are processing or procedural errors, such as incorrect Comptroller object codes and interagency payments made with warrants. We inform your management about these issues separately from the audit report.
  • You receive the preliminary report. You then have two weeks to submit comments to be included in the final report.
  • You also receive a Corrective Action Schedule to complete, for which you have four weeks to detail any corrective policy and procedural changes.
  • We review your plan and either follow up with you or close the audit.

Your audit is included in our Quarterly Audit Summary that goes to the Governor's Office, Legislative Budget Board, Senate Finance Committee, House Appropriations Committee, Sunset Commission, and State Auditor's Office.

Post-Payment Audit Sequence

  1. Entrance conference
    • Agency pulls documentation
  2. Auditor begins fieldwork
  3. Update meeting
    • Agency can submit additional documentation to support its expenditures
  4. Exit conference
  5. Auditor issues preliminary report
  6. Agency responds to preliminary report
    • Auditor incorporates agency's response, as appropriate
  7. Final report is issued

Documentation needed to support expenditures

The following list gives examples of documentation required to support an expenditure. Additional documentation may be necessary for specific situations. Each agency is given a detailed listing of the documents they must provide to the auditor.

Purchase documents

  • Purchase agreement with vendor
  • Invoice
  • Documentation showing the items purchased were received

Travel documents

  • Travel vouchers with employee signatures
  • Receipts for travel expenses incurred (where required)

Payroll documents

  • An employee's entire personnel file; or
  • Individual documents to support each type of payroll expense (for example, personnel action forms, documentation showing prior state service, etc.)

Procurement documents

  • Purchase agreement or contract files
  • Justifications of procurement method
  • Statutory exemptions from standard procurement methods or delegation of authority
  • PCC reference from Purchase Manual

Special audit groups (grants, payment card charges, etc.)

  • Grants — grant contract or award documentation that shows the payment amount
  • Payment card charges — original charge receipts, invoices, purchase agreements, individual cardholder logs, etc.

Recovery Audit Techniques

In conjunction with the post-payment audit, we have incorporated additional audit procedures to identify recoverable monies for state agencies. These procedures are conducted during the planning and fieldwork phases of the audit and may require you to provide additional supporting documentation for the audit.

Statement reviews

  • Aids Expenditure Audit by managing a process that reviews accounts payable confirmations that are mailed directly to the agency vendor.

Duplicate payment report

  • Assist Expenditure Audit by generating and reviewing data to test agency payments of goods and services to identify potential duplicate payments.

If your agency is being audited, the auditor can answer any specific questions you may have about documentation to provide.

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Susan Combs
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.state.tx.us
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