KILLEEN, Texas (July 28, 2023) - City Auditor Matthew Grady conducted an independent review of the Finance Department’s accounts payable process with three objectives-- assess the adequacy of internal controls over the accounts payable process, review the process for managing vendor files and review a sample of payments for support and authorization. The scope of the audit focused primarily on accounts payable activity for Fiscal Year 2022 and the findings have been published for public review.
The City Auditor’s review of the Finance Department’s accounts payable process found that management had established a robust system of internal controls to ensure the integrity of the process.
The department issued about 10,000 payments in Fiscal Year 2022, totaling nearly $100 million. Best practices noted included the proper separation of duties, limited access to the vendor database, and both internal and external error checks.
The City Auditor’s report identified several steps that could be taken to further strengthen the internal control system. This included fully documenting policies and procedures. Staff has made some efforts to document separate operations with the accounts payable process, however, a more comprehensive approach is needed to fully document the process to ensure both consistency and continuity of operations.
In addition, the use of foreign vendors, while not prohibited, has sometimes been problematic for staff in getting the information necessary to complete vendor files and process payments. Therefore, the Finance Department should consider implementing a policy requiring justification for the use of foreign vendors.
Finally, there were about 5,000 long-dormant vendor files still active in the vendor database that needed to be deactivated. This was a legacy issue caused by lack of database upkeep in prior decades. Management and staff were aware of the issue and had begun work to resolve it prior to issuance of this report. The City Auditor recommended implementing procedures going forward to review the vendor database every 12 to 18 months to identify and deactivate any inactive vendor files.
The full report can be viewed on our website at www.KilleenTexas.gov/Auditor.