Post Audits

An audit is an examination of a consultant's financial records, bookkeeping procedures, and accounting system. For government entities, an audit also includes reviews of the consultant's compliance with laws, policies, regulations, and procedures.

Post audits can be performed on request or at the discretion of the Audits and Investigations Division ("Audits") after project completion, contract termination, or contract expiration. Contracts that are audited based on a specific request cannot be closed out until the post- audit is complete and all outstanding audit issues have been resolved.

Factors that may indicate a need for post audit include size of the contract, type of services delivered, and the number of contracts with the consultant. All contracts involving more than $10,000 can be audited for up to three years after the final payment. Per State contract provisions, consultants must allow auditors access to their premises to interview employees and inspect books, records, and accounts. The auditor may also test the consultant's accounting system.

The goal of post audit is to determine whether the costs claimed are:

1. Allowable
2. Allocable (traceable to the proper cost account)
3. Reasonable
4. In compliance with State and federal laws and regulations
5. In accordance with contract language

After a post audit, the contract manager may need to seek reimbursement from the consultant for any funds that were deemed unallowable. Unsupported or unallowable costs often are the result of weaknesses in the accounting system and must be reimbursed to the State.

If the contract involves federal funds, it also is subject to audit by agencies such as the General Accounting Office (GAO) or Federal Highway Administration (FHWA).