Avoiding Audit Findings

Public agencies are regularly subject to the scrutiny of federal, state, and local auditors, whose role is to report on whether the agency has complied with laws, regulations, policies, and grant provisions.

What do auditors review?  Most auditors do not audit all  procurement and contracting actions for compliance with all requirements.  Instead, auditors typically have a checklist of key items they review on selected contracts. 

Federal requirements:  Auditors regularly review to ensure that state and local agencies are in compliance with the provisions of federal grants.  While receiving federal funds enables an agency to accomplish work it might not otherwise be able to do, federal grants do come with many and often complex requirements.  It is important that each agency receiving federal funds carefully review the grant requirements and comply with them.  Who is responsible in your agency for reviewing and complying with federal grant provisions?

Common audit finding:  One of the most common audit findings on federally funded projects relates to agencies that fail to verify that all vendors, contractors, and consultants who receive $25,000 or more have not been suspended or debarred from doing business on federally funded projects.  Educational Service District No. 112 (a public agency supporting school districts in southwest Washington state) recently received an audit finding from the State Auditor's Office for failure to produce documentation that they had verified that two vendors were not on the federal suspension or debarment list.

How to check for federal debarment:  It's easy to check for whether a business your agency is contracting with has been suspended or debarred from doing business with the federal government.  Go to www.sam.gov, and enter the name of the business.  If the search does not reveal a record, click on the "save PDF" link that will include the name you searched for as well as a note indicating there were no search results.  Print this PDF and maintain it in your contract/project file for when you are audited.

Documentation matters:  Auditors are not mind readers.  You may have made appropriate decisions about a procurement or contract, but if your files do not include documentation demonstrating that you complied with the law and your policies, you may receive an audit finding.  Remember to maintain documentation in your files about your actions.

Mike Purdy's Public Contracting Blog 
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