Pre-audit guidelines
Pre-audit is a three-step
process – three different people need to review each document that is required
to be pre-audited (See Statute
81-1111). This three-step process
usually consists of a person collecting the necessary support and entering the
document into NIS, a second person who reviews and approves the document
on-line and a third person (usually called the pre-auditor) who ensures the document
meets Statutory requirements, State Accounting Policies,
Agency policies, and who then posts the document on NIS.
Statute requires that
documents equal to or greater than $1,500 be pre-audited in addition to those
documents with “sensitive” coding. Click
on this link for a list of transactions
which need to be pre-audited. Click
on this link for a listing of “sensitive”
object codes.
Always conduct an on-line review of your documents. The A/P Voucher pre-audit report is a
valuable tool to use in your review, but unless you are also reviewing the
on-line document, there is a risk that changes could have been made after
running this report and before posting the document.
We recommend that the person
posting the document also be the pre-audit person, i.e., the last person to
verify the on-line document and original supporting documentation is
correct. If the person posting the
document is not the pre-audit person, the poster should verify the payee and
the total dollar amount from the invoice agrees to what is shown on
We recommend using the
Pre-audit report as part of your review as this report contains information
that you may not see if you are reviewing
documents on-line under Review/Approve/Post Batches. For example, the pre-audit report will tell
how the payment is to be made – warrant or electronic transfer, information
which is not available if you are reviewing the document under
Review/Approve/Post Batches. In
addition, pre-audit staff can use this report to see if there are any
exceptions, error and warnings messages which may need to be corrected. Suggestions for reviewing the Pre-audit
report are documented below.
We recommend that warrants
be returned to an agency only when absolutely
necessary. If a warrant is returned
to an agency, it should be returned to someone other than the person who posted
the document for handling.
A checklist at the bottom of
this page has been developed to assist agencies in conducting a pre-audit
review. If your agency has specific
items which need to be reviewed, please add them to this checklist. Please continue to monitor this web page, as
we will be making updates which will further assist you.
Segregation of Duties
Segregation of duties is an internal control
intended to prevent or decrease the occurrence of innocent errors or
intentional fraud. This is done by ensuring that no single individual has
control over all phases of a transaction.
There are four general categories of duties:
authorization, custody, record keeping and reconciliation. In an ideal system,
different employees perform each of these four major functions. In other words,
no one person has control of two or more of these responsibilities. The more
negotiable the asset, the greater the need for proper segregation of duties -
especially when dealing with cash, negotiable checks and inventories.
Some examples of incompatible duties are:
· Authorizing a transaction, receiving and maintaining custody of the asset
that resulted from the transaction.
· Receiving checks (payment on account) and approving write-offs.
· Depositing cash and reconciling bank statements.
· Approving time cards and having custody of pay checks.
Also, in a small operation, it is not always
possible to have enough staff to properly segregate duties. In those cases,
management may need to take a more active role to achieve separation of duties,
by checking the work done by others. Sometimes, the knowledge that records will
be checked by others is enough to prevent misappropriation of assets.
Review A/P Voucher pre-audit report:
If this is an item that was
purchased with a purchase order, the purchase order number will be printed in
the P.O. Number field. If this field is
blank, STOP now and return document
to the appropriate person so that a three-way match can be processed.
Review Payment Handling Code
on pre-audit report to make sure any warrants returned to the agency are
necessary
Review report for error
messages; determine if actions needs to be taken (when paying IBT’s, you will
receive an error message to verify payee is correct. On IBT’s only, this message can be
ignored.)
Review Payee Number area to
ensure payment is being made to the correct entity and their correct payment
address which should be shown on the invoice
Review on-line Batch:
NOTE: When reviewing documents on-line, be sure to
click Cancel /Close when you have completed your review. Do NOT
click OK. If you do click okay, it will
change anything set up through special handling and it will reset the document
back to pending.
Batch Status must be A
(Approved) for posting
G/L date must be in current
month or you cannot post document
You should have support for
each document listed in the batch
Verify the vendor name on
the invoice agrees to the vendor name entered on document
Verify Invoice Number is
correct
Verify Payment Terms are
correct (take all available discounts!)
Data entered in Remark field
is information recipient will see on a warrant
Verify Due Date is the
correct date
Review supporting
documentation and verify the correct Business Unit/Object Code has been entered
correctly in the on-line document
Verify the dollar amount of
the invoice agrees to the dollar amount in the document
Review Explanation column
(this column shows on reports) to ensure it has correct information
If document is coded to
object 581800 - 586999, there should be a fixed asset tag number in the Asset
ID column
Ensure that adequate
supporting documentation is attached.
Review State Accounting Manual if you are unsure about policies.
If you are reviewing an
Expense Reimbursement Document, click on this link for
additional guidelines