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Tips for a Successful Procurement Audit

This article provides helpful tips for conducting a successful procurement audit, including knowing the law, understanding written determinations, and being familiar with procurement regulations.

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Tips for a Successful Procurement Audit

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  1. SCAGPO November 17, 2011 Tips for a Successful Procurement Audit South Carolina Budget and Control Board Division of Procurement Services Jimmy Aycock, Manager Audit and Certification

  2. Know the Law • I can not impress upon you enough to read the Code and Regulations. If you process a RFP, read it.

  3. Know the Law • Written Determinations • Required for a variety of processes • Any formal bid solicitation other than low bid – RFP, Best Value, Fixed Price, Reverse Auctions • Different information required

  4. Know the Law Written Determinations SECTION 11-35-1525. Competitive fixed price bidding. When a purchasing agency determines in writing that the use of competitive sealed bidding is either not practicable or not advantageous to the State SECTION 11-35-1529. Competitive online bidding. Conditions for Use. When a purchasing agency determines that on-line bidding is more advantageous than other procurement methods provided by this code

  5. Know the Law Written Determinations Sole Sources Emergencies Multi-term contracts

  6. Obligation of Good Faith • SECTION 11-35-30. Obligation of good faith. Every contract or duty within this code imposes an obligation of good faith in its negotiation, performance or enforcement. "Good faith" means honesty in fact in the conduct or transaction concerned and the observance of reasonable commercial standards of fair dealing.

  7. Know your Definitions 11-35-310 (13) Days - The day of the event from which the designated period of time begins to run is not included (35) Term Contract – 10% rule - The solicitation used to establish the term contract must specify contract terms applicable to a purchase from the vendor offering the lower price. (19) Grant - means the furnishing by the State or the United States government of assistance, whether financial or otherwise, to a person to support a program authorized by law.

  8. Know your Definitions 19-445.2000. State Procurement Regulations. C. Definitions (1) "Head of purchasing agency" means the agency head, that is, the individual charged with ultimate responsibility…., the head of the purchasing agency is authorized to act only within the limits of the governmental body's authority under Section 11-35-1550(1) or its certification as granted by Board under Section 11-35-1210(1), except with regard to acts taken pursuant to Section 11-35-1560 and 11-35-1570.

  9. General Procurement Competition Thresholds • $0 - $2,500 - Fair and Reasonable (Up to $10,000 for Higher Ed.) • $2,500.01 - $10,000 - Solicitation of 3 Written quotes (May not apply to Higher Ed.)

  10. General Procurement Competition Thresholds $10,000.01 - $50,000 - Written solicitation of written quotes, bids or proposals & advertised in SCBO Greater than $50,000 - Formal sealed bidding: IFB, RFP, BVB, FPB, Reverse Auction – Must be advertised in SCBO

  11. General Procurement Competition Thresholds Document!, Document!, Document! Let me tell you a Story.

  12. Procurement Cards • Visa Card • Most single transactions limited (STL) to $2,500.00 • Higher Ed can have STLs up to $10,000 • STLs over $2,500 or 10,000 for Higher Ed, must obtain approval from Voight Shealy

  13. Procurement Cards Findings: Artificially divided procurements Collusive procurements Violating internal policies and procedures Make sure everyone’s card purchases are reviewed

  14. Procurement Cards – Audit Program 3 Procurement Card Review a. Review the Agency's Procurement Card Manual to confirm the establishment of internal controls and cardholder spending limits. Ensure that adequate separation of duties exist between cardholder purchases and the review/approval of these purchases prior to payment. b. Determine that the agency has a training program for new card holders and liaisons.

  15. Procurement Cards – Audit Program c. Using the WORKS Program: i. Identify all cardholders with single transaction limits exceeding $2,500. Confirm CPO approval. ii. Identify any employees who have been issued more than one card. Obtain an explanation of why and determine reasonableness. iii. Determine that the agency has no unassigned cards and that all cards are issued in an employee's name.

  16. Procurement Cards – Audit Program c. Using the WORKS Program: iv. Obtain a listing of the agency's blocked MCCs. Compare to the CG's list of blocked MCCs. Document differences and obtain explanations. v. Judgmentally select at least two sequential monthly billing statements within the audit period for review. Select a sample of transactions within billing statements and request copies of receipts for testing in accordance with our P Card Matrix that purchases are being managed in compliance with the Code and internal procedures.

  17. Audit Program • AUDIT_PROGRAM_3-10-11.xls • http://procurement.sc.gov/webfiles/MMO_audit/Audit%20Program/AUDIT_PROGRAM_3-10-11.xls

  18. WE ARE ALWAYS WILLING TO HELP • Call us @ 737-0600 • Internet web site: procurement.sc.gov Jimmy Aycock Allen Townsend Lane Warren Mac Stiles Beth Adkins Gail Skinner

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