Office of the Legislative Auditor - Financial Audit Division

The professional/technical contracting processes at the Department of Administration and the agencies included in our audit scope were generally adequate to ensure financial transactions were properly controlled and recorded and that agencies complied with applicable legal requirements. However, we found several weaknesses in control processes and instances of noncompliance with certain legal provisions governing contracts.

Findings:

• Many state agencies included in our scope granted their employees excessive or incompatible access to the state’s accounting system, and the Department of Finance did not adequately monitor state agencies’ compliance with its accounting system security access policy.
• The Department of Administration did not analyze financial transactions recorded in the accounting system to ensure state agencies complied with contracting requirements. 
• Some agencies did not encumber funds or fully execute contracts prior to receiving services from vendors in some cases, and many state agencies failed to comply with statutory requirements to prepare performance evaluation reports on completed contracts exceeding $50,000.  
• The Department of Administration had not promptly updated its state contracting manual for certain statutory changes. 

• Except for the Department of Administration, state agencies were generally unaware of legal provisions that prohibit contracting with suspended or debarred vendors.

• July 1, 2005, through June 30, 2006

• Professional/technical contracting oversight responsibilities of the Department of Administration
• Internal control and legal compliance over 86 professional/technical services contracts administered by 17 state agencies
• Security access to accounting applications

In fiscal year 2006, the state spent $367 million on professional/technical contractual services.  The departments of Administration, Finance, and the Office of Enterprise Technology have significant oversight responsibilities related to the state’s professional/technical contracting process.  The Department of Administration establishes contracting policies and procedures, and the Department of Finance administers security over the state’s accounting system.  The Office of Enterprise Technology evaluates state agency information and telecommunications projects.