Delegated Audit Program

This program allows agencies with approved internal controls to locally authorize all payments of less than $2000/$5000, with only an annual sample review by Accounts and Reports of these transactions.  Agencies must retain the original signed payment voucher (DA approved) in their files.   The only difference is that instead of sending the hard copy voucher to Audit Services for review and approval, the pre-audit and release functions occur at the agency level.  Also, agencies must be entering vouchers either using electronic datasets or STARS online.

After expressing interest to the Division of Accounts and Reports on joining the Delegated Audit Authority Program, an agreement is sent to the agency identifying both the responsibilities of the agency and the responsibilities of Accounts and Reports.  A letter will also be sent at the same time requesting that the following information be provided when the signed agreement is returned to Accounts and Reports:

• Organizational Chart of employees involved in agency payment process.
• Flow chart of agency payment process.
• Which position(s) prepare vouchers?
• Which position(s) approve vouchers?
• Which position(s) will pre-audit vouchers?
• Which position(s) will receive warrants back from A&R
• Who will have the authority to overrule a voucher rejection?

When this info has been returned to A&R, the agency will be contacted to schedule a short training session to discuss the process and answer any questions the agency staff involved in the process may have.

1. The agency shall designate a pre-auditor(s) to be responsible for the pre-audit function in accordance with the delegation agreement.
2. The pre-auditors shall have the authority to determine that all disbursement data entering the accounting system is legal, accurate, authorized, properly coded, adequately documented, that goods are received or services performed, and that data is processed correctly.
3. The pre-auditors shall have complete access to all necessary documentation to support the data entering or leaving the system.
4. The pre-auditors shall have the authority, experience and training to enforce compliance with statutes, rules and regulations and to require that adequate documentation is provided to support the payments.
5. The agency may implement policies on processing smaller transactions without pre-audit review (pre-audit sampling). These sampling policies must be approved by the DOA Division of Accounts and Reports. (DAR)
6. The agency will continue to update the agency audit programs and procedure manuals, as rules and regulations change. Audit programs and procedure manuals shall be available to all pre-auditors.
7. The agency shall review proposed changes relating to pre-audit systems, procedures and methodologies with DAR.
8. The agency shall maintain a file of the original vouchers which have been pre-audited by the agency for the length of time specified by the State Records Board.
9. The DOA DAR auditors shall have access to all necessary documentation to be able to perform their review of the pre-audit delegation. The agency will provide this documentation upon request.
10. The agency shall implement agreed upon internal control and processing recommendations from DOA Audit Reports and other independent audits of the accounting system.
11. The agency shall comply with all applicable statutes, Kansas Administrative Codes, and DOA policies in the processing and pre-audit of expenditure transactions.

1. Central accounting records will continue to be maintained to provide summary information and budgetary control over agency appropriations.
2. Training and information on pre-audit procedures will be provided to the agency pre-audit unit upon request.
3. The DAR will provide agency with assistance in developing procedures for pre-audit duties delegated to the agency.
4. Reasonable advance notice will be given by the DAR auditors before conducting an audit of the agency disbursement process for compliance with statutes, rules and regulations and the terms of this agreement.
5. The DAR will report on the findings of their audit of the agency pre-audit process.

Voucher Processing Procedures

1. All payment transactions shall be processed on voucher forms, which have been approved by the Director of Accounts and Reports (DA forms).
2. All transactions shall be supported by an original and legible invoice provided by the vendor. Any other appropriate supporting documentation/authorization shall also be attached to the voucher.
   
   When an invoice can not be obtained from a vendor, a note summarizing the transaction shall be prepared, approved by an authorized individual, and kept as part of the voucher documentation.
3. If an item is purchased on statewide open-end contract, the amount paid for the item shall be consistent with the contract price. Statewide open-end contract numbers shall be included on the voucher, when appropriate.
4. Vendor name, state coding and an explanation/description of voucher transactions shall always be included on the voucher.
5. An initial or some other identifying mark (e.g. a stamp) shall always be placed on vouchers by the agency's designated pre-auditor.
6. Vouchers shall always be approved by a person included on the agency's signature verification cards, which are on file with Accounts and Reports' Audit Services Team. An approved signature must be attached to the document (either an original signature or a facsimile of an original signature).
7. Vouchers and all supporting documents shall be retained in accordance with the Public Records Preservation Act (K.S.A. 45-401 et seq.). Missing documents are not indicative of a strong internal control environment.
8. Transactions, which require prior written approval from Department of Administration (for example, radio frequency networks and equipment requiring FCC license), shall not be processed unless such written prior approval has been obtained and is attached to the voucher.
9. Prior fiscal year claims and personal injury or property damage claims shall not be processed via the Delegated Audit Authority function (PPM Filings 11,966 and 11,967). All such claims documents shall be forwarded to the Central Services Team, for processing.
10. Refer to the Voucher Audit Instructions for additional detailed information regarding voucher preparation.

Compliance With State Accounting and Purchasing Guidelines

1. Participation in the Delegated Audit Authority Program does not exempt a state agency or its officers from complying with statutory requirements and the State's purchasing and accounting guidelines. Guidance regarding specific issues can be obtained from the following sources:
    
   • The Audit Reference Information provides guidance regarding questions, which arise on a recurring basis.
   • Refer to the Division of Accounts and Reports Policy and Procedure Manual (PPM) and State statutes for guidance on specific issues.
2. Agency reviews have noted several areas of recurring non-compliance with PPM requirements, including those listed below:
    
   • Travel reimbursement guidelines as detailed in PPM Filing 3,903.
   • Assignment of appropriate expenditure sub-object codes as detailed in PPM Filing 7,002.
   • Processing of late charge fees as discussed in PPM Filing 3,102.
   • Processing of under five dollar payments as detailed per K.S.A. 75-3732.
     
     Under five dollar payments are appropriate in special circumstances (for example, to process a single transaction before the end of the month's business to avoid late payment penalties, etc.) When such under five dollar payments are processed, a notation describing the circumstances shall be attached to the vouchers.
   • Charging payments to the correct fiscal year per the requirements of PPM Filing 14,002.

Internal Control Environment

Each agency is responsible for establishing an appropriate internal control environment for delegated audit authority responsibilities, including approvals, auditability, adjustments, recordkeeping, reporting, reconciliation, segregation of duties and supervision.

STARS On-Line Voucher Processing

Agencies can release on-line delegated audit authority voucher batches for payment with a release flag of "1". (Refer to the STARS Security Sign-on Request form, TM-96.) An approval level of "5" is required to release on-line batches.

The Audit Services Team is responsible for performing on-site reviews of agency delegated audit authority, business procurement card and fixed asset inventory functions. Audits of agency delegated audit authority and business procurement card functions will be conducted on an annual basis. Audits of agency fixed asset inventory items will be conducted on a three-year cycle. 

• The Audit Procedures document formalizes audit procedures and emphasizes communications and the reporting of audit findings. Individual sections of the document address audit planning and agency notification, audit opening conference and audit fieldwork procedures (including documentation of audit findings), audit closing conference and preparation of a letter of audit findings. (This document is not yet available.)

The following documents are provided in .pdf format as samples of documents used by Accounts and Reports personnel when conducting an annual audit.  In order to view or print these documents, you will need to download and install the free Adobe Acrobat Reader.

• Audit procedures are summarized in the Audit Checklist (.pdf) (updated 12/02)
• The Audit Findings Rating Criteria Sheet (.pdf) provides a basis for consistently rating the significance of specific audit findings.
• Audit findings will be documented on the Audit Findings Worksheet  (.pdf) (updated 12/02)
• Agencies will be responsible for completing Verification of Inventory Sample Item on Observed (.pdf) worksheets, if inventory items selected for audit are not physically verified by the auditor during audit fieldwork.

1. Agency Number - Required three-digit state agency code must correspond with agency name on voucher.
2. Current Document Number - Required. Will allow up to eight characters to identify the document; first character must be "V" for a payment voucher.
3. Document Date - Required field. Six digits in MMDDYY format.
4. Effective date - Determines which month to post transaction. Six digits in MMDDYY format. If left blank, will default to today's date for online and data key documents. This field must be completed on documents submitted to STARS on magnetic tape.
5. Due date - Optional field. Six digits in MMDDYY format. Identifies a future date upon which the warrant will be written. Then expenditure will charge when the voucher is processed.
6. Vendor number / suffix - Nine digit number / two digit suffix identifies the vendor to which a warrant is to be written.

7. Payment Indicator (PI) - Method of payment is selected by use of one of the following values:

   A - Return warrant to agency
   X - Pay via electronic deposit (ACH)
   Blank - Warrant mailed to vendor by Accounts and Reports

8. Name / Address - Identifies the vendor. If payment is encumbered, the name must agree with the encumbrance document if the encumbrance is specific to a particular vendor.
9. Paying Agency Name and Address - Must be complete.
10. Current Document Suffix - Two digits to identify the line number.
11. Transaction Code - Required three-digit number determines the accounting impact and edit rules for the transaction.
12. Reference Document Number - Eight digits. Used only if payment is encumbered. This number identifies an encumbered document previously entered into STARS.
13. Reference Document Suffix - Two digits. Required when reference document number is entered. Identifies each line of the reference document.

14. Modifier - Identifies liquidation of pre-encumbrances and encumbrances as Partial or Final. Valid values are:

    P  -  Partial liquidation
    F  -  Final liquidation
    A  -  Activate a closed document

15. Fund - Required. Four digits identify the fund impacted by the transaction. The fund is reviewed for validity and appropriateness for items being purchased or services being rendered.
16. Fiscal Year - Required. Reviewed to ensure expenditure is being charged to the proper year. If a prior year is being charged, the reference document number, reference document suffix, and modifier should be completed.
17. Index - Required. Four digits reference the budget unit to which the transaction should be charged.
18. Program Cost Account (PCA) - Required. Five digits identify the program to which the expenditure is charged. The significance is at the agency level. Audited on an exception basis.
19. Expenditure Subobject - Four-digit number identifies the type of expenditure. The subobject code should reflect the description given in the " description of material or service" section of the voucher. In cases where multiple subobjects are reflected, each subobject must correspond to an area of the description.
    
    or
    
    Revenue Subobject - Four-digit number identifies the type of revenue. This code is appropriate in conjunction with certain transaction codes including but not limited to 717 and 723.
20. Detail - Not used.
21. Amount - Required. Reflects the amount to be charged to fund/subobject listed and should correspond to the description portion of the voucher.
22. Invoice Number - Optional, but recommended. Fourteen digits provide for entry of vendor's invoice number to be included on the remittance advice.
23. Description - Optional but recommended. Thirty digits provide for entry or a brief description to be included on the remittance advice.
24. Agency Use - Sixteen digits. Available to agencies for agency determined applications.
25. Contract Number - Open-end contract number established by the Division of Purchases.
26. Document Total - Total of all the funding lines.
27. Date and Invoice Number - Must be complete.
28. Quantity / Unit - Must be complete.
29. Description of Material and Service - This section is reviewed to determine the type of expenditure for which payment is being made. Then expenditure should be in accordance with all statutes, regulations and policies.
30. Unit Price - Must be complete.
31. Amount - Must equal quantity times unit price.
32. Agency Payment Certification - Must be signed by an agency-authorized official.