When was the last time you checked the completeness of your procurement documentation?

With the 2024 Uniform Guidance updates going into effect on October 1, it’s the perfect time to ensure you're maintaining complete and accurate records of procurement transactions. Proper documentation isn’t just a box to check—it’s a key component in safeguarding your organization from compliance issues and potential unallowable costs.

In this post, I’ll walk you through what it means to have “audit-ready” procurement documentation, the most common pitfalls your organization may encounter, and practical steps to get your documentation in top shape as you begin making procurements under the new guidance.

What Does Audit-Ready Documentation Look Like?

Audit-ready procurement documentation means having complete and accurate records that clearly demonstrate compliance with federal regulations and any unique funder requirements. Compliance goes beyond simply having the right documents in place. It’s about ensuring every decision and action taken during the procurement process is adequately justified, recorded, and retained.

Under the 2024 guidance, you're required to 'maintain records sufficient to detail the history of each procurement transaction’. At a minimum, these records must include:

• Clear and Accurate Technical Requirements: Create a description of technical and other requirements that the offerors need to fulfill.
• Rationale for the Procurement Method: Document why a particular procurement method was chosen (e.g., micro-purchase, simplified acquisition, proposal, etc).
• Evaluation Factors: Identify all factors that will be used in evaluating bids or proposals.
• Contractor Selection or Rejection: Detail the criteria used to select or reject contractors, ensuring your decision aligns with your evaluation factors and other requirements.
• Basis for the Contract Price: Provide evidence that costs and prices were analyzed to demonstrate the agreed-upon price is fair and reasonable.
• Contract Type Selection: Identify the type of contract awarded, such as fixed-price or cost-reimbursement.

But those are just the basics.

You must also maintain audit-evidence of internal controls and other compliance-related activities that may be required, depending on the nature of the procurement. Examples include:

• Evidence of Contractor Due Diligence: Demonstrate that contractors were properly evaluated for capabilities and risks before awarding a contract.
• Public Posting of Requests for Proposals (RFPs): Provide proof that RFPs were publicly posted when they exceed your simplified acquisition threshold.
• Screenings for Suspension and Debarment: Ensure proof that contractors have been checked against the System for Award Management (SAM) database to confirm they are not suspended or debarred from receiving federal contracts.
• Procurement Approvals: Document all necessary internal approvals, demonstrating that procurement actions were reviewed and authorized in accordance with your policies.

The bottom line is that procurement transactions must be documented completely and accurately, and retained to provide a clear and auditable trail for each transaction.

Common Documentation Pitfalls

Keeping procurement documentation in top shape can be challenging. Even the most diligent organizations can fall into common documentation traps. Here are three I see most often:

• Lack of Consistency: Different departments using varying documentation standards can lead to inconsistencies that raise red flags for auditors.
• Incomplete Records: Failing to retain all required documents, such as cost or price analysis, justification for sole-source procurements, or documenting price reasonableness for micro-purchases (new for 2024).
• Missing Approvals: Not documenting approvals for procurement actions to show policies and controls were followed.

One of the best ways to avoid these pitfalls is by establishing a structured documentation system and leveraging technology to collect, store, and maintain your records. When your documentation is centralized and organized, you can easily track and access all the necessary information. This not only helps you stay compliant, but also provides peace of mind knowing that you have a complete and accurate audit trail for every procurement transaction.

Now, let’s look at some practical steps you can take to get your documentation in top shape and keep it that way.

5 Tips to Maintain Audit-Ready Procurement Documentation

If you have concerns about your documentation, don’t worry. Here are a few tips to help you get things organized.

• Update Policies and Procedures for 2024 Changes: Start by ensuring your policies and procedures incorporate all documentation requirements from the 2024 Uniform Guidance. This will provide your team with clear and comprehensive guidelines on what is expected.
• Conduct an Internal Documentation Audit: Evaluate your current recordkeeping against your updated policies and procedures. Identify gaps in required documentation, such as missing approvals or insufficient justification for procurement decisions.
• Train Staff on Documentation Standards: Make sure everyone involved in the procurement process understands what’s required. Ongoing training sessions can help reinforce best practices and reduce the risk of non-compliance.
• Implement Consistent Recordkeeping Practices: Establish a standardized method for organizing and storing procurement documentation. This should include a clear retention policy that specifies what needs to be kept, where it should be stored, and for how long.
• Engage in Regular Monitoring: Periodically spot-check procurement records to ensure ongoing compliance. A proactive approach can help you catch and address any issues before they turn into audit findings.

Final Thoughts

Being audit-ready is about more than just compliance. It’s about ensuring that everyone is following good procurement practices and reducing the risk that undocumented procurement costs will be disallowed.

If you’re unsure where to start, our experts can help you conduct a procurement review to identify gaps and close them before they become compliance problems.

Contact us to learn how we can help.