Internal Audit Follow-Up Report

Transcription

1 Internal Audit Follow-Up Report Contract Administration TxDOT Internal Audit Division

2 Objective To assess the status of corrective actions for high risk Management Action Plans (MAPs) previously communicated in the Contract Administration audit report issued December Summary Results Testing consisted of an evaluation of 4 MAPs to determine if corrective actions were implemented as agreed. MAP Status Comments 2 Open Corrective actions that require completion to address identified risks from the original audit report. 2 Closed Corrective actions have been completed. Scope The engagement was performed by Margarita Vasquez and Letta Hinton (Engagement Lead). The engagement was conducted during the period from September 20, 2016 to October 24, The scope of the engagement consisted of a review of updated policy and procedure manuals, updated contract templates, training materials, and quality control activities. Methodology The methodology used to complete the objectives of this engagement included: Interviewed the Contract Services Division Director, the Procurement Division Director, and the Procurement Division Business Analyst. Reviewed the Negotiated Contracts Policy Manual, the Negotiated Contracts Procedure Manual, and contract templates for updated content. Reviewed training material and quality control activities related to purchase orders. Background This report was prepared for the Texas Transportation Commission and for the Administration and Management of TxDOT. The report presents the results of the Contract Administration Follow-Up engagement which was conducted as part of the Fiscal Year (FY) 2017 Audit Plan. TxDOT is required to procure and manage contracts in accordance with various federal and state laws and regulations. State law requires contracting activities to be tied to a specific statute that authorizes procurement and establishes the process of provider selection. Under the delegation of authority granted by the State of Texas, TxDOT designated the Contract Services Division (CSD) to set the contracting policy for the agency and the Procurement Division (PRO) to oversee purchase order procurement activities. Districts and divisions are generally responsible for contract administration, vendor oversight/monitoring, and project closeout activities. CSD and PRO update contracting policy and procedures, as well as, they also provide needed training to ensure compliance. We conducted this follow-up engagement in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform November

3 the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our conclusions based on our engagement objective. Recommendations to mitigate risks identified were previously provided to management during the original engagement to assist in the formulation of the management action plans referenced in this report. The Internal Audit Division uses the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework version November

4 MAP Status: Open Corrective actions that require completion to address identified risks from the original audit report. Original Audit Finding Number 1: Control Environment and Contract Governance MAP Owners: Kenneth Stewart, Director, Contract Services Division Cassie Jordan, Section Director, Information Management Division MAP 1.1: The department is implementing the Enterprise Information Management Program, an agency-wide effort to ensure all of the agency s information is stored and managed in a way to ensure accuracy and efficiency. An integral part of this effort is implementing an Enterprise Content Management system which will be used to store all agency documents or content, including contracts. This system will replace an electronic data management system and integrate with other applicable systems including Modern Portfolio Project Management, enterprise resource planning, and others. Original Completion Date: August 15, 2017 Revised Completion Date: August 15, 2019 MAP Owners: Kenneth Stewart, Director, Contract Services Division Erika Kemp, Director, Modern Portfolio & Project Management (MPPM) Project, Transportation Program Office MAP 1.2: The Modernize Portfolio Project Management II initiative (MPPM II) includes requirements for agency-wide project management and contract management capabilities. MPPM II replaces up to 40 legacy systems including FILENET based PSCAMS system. As part of the initial MPPM project, the department expanded use of a grant management program being used by Traffic Safety, Aviation, and Public Transportation. Contract Services will provide support during development and deployment of the MPPM II solution. Contract Services will develop policy guidance and technical materials to aid districts and divisions in their use of the MPPM II solutions with regards to contracting activities. In response to legislation passed in 2015, the department created an online library of agency contracts. As required by Senate Bill 20, all agency contracts are posted on the internet. The department exceeded the minimum requirements of the law and posts agreements in a searchable format, by contract type, execution date, operating division and counter party. An IT solution to add these agreements automatically to the internet is planned. Original Completion Date: August 15, 2017 Revised Completion Date: September 15, 2019 November

5 MAP Status: Closed Corrective actions have been completed. Original Audit Finding Number 1: Control Environment and Contract Governance MAP Owner: Kenneth Stewart, Director, Contract Services Division MAP 1.3: Concerning specific recommendations addressed to the Contract Services Division (CSD), the division is in the process of revising and publishing its Policy and Procedures Manuals to comply with recent legislative changes. Specifically, CSD is publishing revised versions of its Policy Manual and Procedures Manual within 45 days. The revised Policy Manual will specifically address: the Selection File, File of Record, Documentation File, and Record Retention and Open Records Requests obligations applicability of the Texas Comptroller s Contract Management Guide Additionally, CSD will review each of the contract types addressed by the audit to confirm that the identified provisions are required and are not covered by an exemption, and that the relevant templates are updated. Original Completion Date: March 15, 2016 Actual Completion Date: September 2016 MAP Owner: Glenn Hagler, Director, Procurement Division MAP 1.4: The Procurement Division (PRO) will provide ongoing training for PRO purchasers to reinforce the requirement for completing vendor background checks prior to award of each procurement, and include training on retaining the appropriate documentation in the purchase order file. The training will be included as a recurring presentation in the professional development training calendar. The purchase order file assembly checklist will also be updated to include the requirement. PRO will provide ongoing training for PRO purchasers to reinforce the requirement for completing federal debarred vendor checks prior to award of each procurement, and include training on retaining the appropriate documentation in the purchase order file. The training will be included as a recurring presentation in the professional development training calendar. The purchase order file assembly checklist will also be updated to include the requirement. PRO will perform periodic quality control reviews based on a statistical sampling of department purchase orders at least quarterly to ensure all required documents, including vendor background checks, are retained in the purchase order file by adding this responsibility to the purchasing lead s duties. A recap of the findings will be posted on the PRO SharePoint site. Original Completion Date: March 15, 2016 Actual Completion Date: July 2016 November

6 Closing Comments The results of this Contract Administration MAP Follow-Up engagement were discussed with the Contract Services Division Director and the Procurement Division Director on November 4, The Internal Audit team appreciates the cooperation and assistance received from the Contract Services and Procurement Divisions during this engagement. November