2013 Maverick County Audit Shows $1.4 Million Deficit
By: Jose G. Landa, Copyright 2015, Eagle Pass Business Journal, Inc.
Maverick County Independent Auditor Milo Martinez of Martinez Rosario & Company LLP presented the 2013 Maverick County Audit results to Maverick County Commissioners Court during their April , 2015 meeting, showing that Maverick County had sustained another deficit of $1.4 Million during its 2012-2013 fiscal year.
Martinez advised Maverick County Commissioners Court that Maverick County’s expenditures exceeded its actual revenues received by a whopping $1.4 Million during 2013. This is at least the third consecutive year that Maverick County has sustained budget deficits with losses of $2.3 Million for 2011 and 2012 each year, totaling $4.6 Million. When you add the $1.4 Million deficit for 2013, Maverick County has lost $6.0 Million during the past three fiscal years (2011-2013). Maverick County Commissioners Court continue to overspend more money than the revenues received by Maverick County.
The 2013 Maverick County Audit was presented to Maverick County Commissioners Court with a majority of the County activities and funds not qualified for an opinion from independent auditor Milo Martinez of Rosario, Martinez & Company LLP.
Martinez’s auditing firm set a disclaimer of opinion on the governmental and business activities, each major governmental fund, the aggregate remaining governmental funds information, and the major proprietary fund for the water utility. ”The reason we have a disclaimer is similar to what happened in previous years and the reason we have a disclaimer the records were just not adequate,” said Martinez.
Martinez advised Maverick County Commissioners Court that the county had an over expenditure of funds for fiscal year 2013 of $1,400,000 (Million).
Martinez noted that on new cash accounts that were added they had not received all the documents that had been requested in that area so they were not able to finish looking at all the cash and bank activity.
“There are some account receivables and payables that again we didn’t have all the data there. The big problem area is in the due to and due from which is from the borrowing between has occurred and that number was built up over the years up to last year it was at $29,000,000. The county auditor made large multiple adjustments totaling about $18,000,000 that was just written off,” said Martinez.
Martinez stated that the concern on that issue is that it was never brought to Commissioners Court for approval or consideration.
Martinez emphasized that Maverick County does not have the adequate capital asset records. “Records for the equipment, and other things that you own, buildings, etc., you don’t have a good record of what you got,” added Martinez.
“You continue having a problem with the debt transactions as you continue borrowing money in 2011 and 2012 and that money was to pay bills and things for certain years and we are not able to get adequate records that we can audit to say the money was borrowed and used for the purposes that it was borrowed for,” noted Martinez. “That has been an ongoing problem there,” said Martinez.
Under Self-Insurance Liabilities, Martinez stated that it was one of the big issues last time where the account had not even been reconciled. ”It was off by $1,200,000 dollars. Some of those entries have been posted and adjusted, however, there is another analysis that needs to happen with your claims,” said Martinez.
“There are some disclosures that need to be done with the financial transactions that relate to your capital assets but since you don’t have adequate records that can’t be done and also the disclosures that relates to the Self–Insurance funds as well,” added Martinez.
“The liabilities that exist you have to record them in the right years,” said Martinez.
“We requested all this information in 2014 and we just didn’t get that information,” alleged Martinez. “That’s what has led us to where we are we just can’t get enough evidence to get our opinion of whether the numbers are good or not,” said Martinez.
Martinez also stated that there are issues with the prior period restatements that continue to be misstated and not adhered to accordingly.
It was then noted that no one from the Maverick County Auditor’s Office was present during the meeting.
“There is other financial information when it relates to other funds that you have and again because we were not able to audit the big numbers we are not able to issue an opinion on that and again we’re disclaiming on that,” noted Martinez.
Under the Maverick County Public Facility Detention Center and the operations of the jail, Martinez stated that they had looked at most of the documentation but that on the questions that they had under receivables and payables they could not get comfortable with what was there. “They proposed and adjustment that we could not agree with. It just didn’t make any sense.” said Martinez.
Martinez also stated that there were some subsequent events at the Maverick County Detention Center that he could not get comfortable with. “There may be some liabilities regarding the prior operator and there may be some contingencies regarding the bondholders and some of the debt. We just couldn’t get enough information to settle that,” added Martinez.
Martinez then stated that was the reason why there had been a qualified opinion rendered.
“Under the payables, the staff was proposing an even larger amount and I just said you have to prove to me that the money is even owed,” said Martinez.
Martinez and Commissioners Court proceeded to have a discussion over certain responsibilities of the County Auditor’s office including an inventory of county assets, properties and other amenities that was not being handled and can be seen as troublesome due to situations that may arise in the future. “They do have records. I’m not going to say they don’t have any. It’s just they’re not complete. You have to go through a process of auditing those records to establish that those are good records since you are going from scratch and building them,” said Martinez.
Martinez also stated that a record and audit of equipment bought with federal monies needs to take place every year or two to account for it. “So you don’t have shrinkage, theft and other things because all of this stuff will walk,” said Martinez. “We have seen it in other agencies where they were much more diligent in it and still had theft problems,” added Martinez.
“The last opinion is on the Maverick County Solid Waste Authority and it is an unmodified opinion,” said Martinez.
On the budget to actual general fund the county was short under a variance with final budget ($185,718) on revenues comparing proposed budget of $11,495,322 and the actual amount came in at $11,309,604.
On the expenditures the county came in short on revenues but went over on its expenses by ($170,290).
“If you look at your actual revenues to expenditures your deficit for that fund is the excess of expenditures over revenues which is $(1,400,000),” said Martinez.
“There is other sources of money and money going out but theirs where you see the $3,000,000 that were borrowed for the landfill and then properly transferred out to do Cell No.2. If you see the transfers in and out that’s why those numbers are so big because he wrote of this $18,000,000. So you wound up with a negative in other financing sources of $6,500,000 a total of almost $8,000,000 your change in fund balance,” said Martinez.
“Your fund balance and general fund went from a positive of $3,900,000 to a negative of $3,800,000 and that is almost an $8,000,000 swing,” said Martinez.
“That is what would be very concerning that you are having these kinds of swings and variances with your general fund,” said Martinez.
Under the Road and Bridge Fund, its revenues were $3,300,000 and its expenditures were $2,400,000 for a positive of $700,000.
Commissioners Court and Martinez then discussed the proper procedures to be taken when dealing with actions such as re-classifications/write offs and if they have to be brought to Commissioners Court to establish such action or deny the proposed action.
“There are checks and balances and an approval process because you have to live with the consequences of this decisions,” said Martinez.
“The way this was built up was with time one fund needed money because it was short and the one that had money loaned it to them and will pay it back in a short period of time, it should be a short period of time. Well it just kept on. The other thing is you have to be careful that people aren’t doing it to plug holes because you can make it to the entry balance and it works but you just plug it and forget about it and then down the road then you see the effect of oh, oh! We really took more money of the general fund than what it showed that particular year. If you differ it and say I did it in year one and you write it off in year 4 you were able to let 2 to 3 years go by and nobody questioned it. They’re just supposed to be short term items,” said Martinez noting Maverick County Commissioners Court and past County Auditors practice and custom.
Martinez started that the write off of almost $18,000,000 should not be at that amount and should have been decreasing not growing.
“We just didn’t see that the prior auditor did a good job auditing and it just kept growing and mushrooming and it just has to stop,” said Martinez.
“Basically it was a gift from one fund to the other and basically it was a permanent transfer and that is not the purpose. Each fund should live within its own needs,” added Martinez.
Martinez then explained that some of the issues occur due to those types of transfers and borrowings.
“Sometimes this are where they occur either there is overspending or money gets misdirected and it never pays back. That is what occurred when you guys borrowed a couple of million dollars and said well we are going to get this grant money and we’ll have it and pay it back and the money came in for the grant and it was used for something else and so you got into you having to do some emergency borrowing and it was short term and you had to pay it within 10 months and it really put a lot of stress on you guys. You finally got over some of those obstacles but it shouldn’t be happening now,” said Martinez.
Martinez stated that an area of concern is the Self-Insurance Fund.
The audit report also shows that the proprietary major funds of the Maverick County Public Facility Corporation (MCPFC) and the Maverick County Detention Center (MCPFC) received a qualified opinion.
The proprietary major fund of the Maverick County Solid Waste Authority received an unmodified (clean) opinion.
Under the Federal awards reports, Martinez determined that the schedule of expenditures of federal awards also warranted an unmodified (clean) opinion. The county had $891,000 worth of grants in 2013.
Martinez clearly presented the continuing financial problems of Maverick County include the overspending by Maverick County Commissioners Court of more money than the revenues it receives, the notorious past practice of borrowing monies from one fund to pay for another during the past 10 or more years, and the lack of adequate accounting procedures of county funds for over 10 years.
Maverick County Commissioners Court approved the 2013 Audit Report of Maverick County by Martinez Rosario & Company LLP.
