2010 Maverick County Financial Statement questions County’s ability to continue as a going concern
By: Jose G. Landa
An Exclusive Eagle Pass Business Journal News Story/Copyright 2013
The last financial statement and audit performed on the County of Maverick, Texas was that of its 2010 financial records by Martinez, Rosario & Company, L.L.P. of San Antonio, Texas on November 7, 2011, questioning Maverick County’s “ability to continue as a going concern.”
Note 18 on Page 86 of the 2010 Maverick County Financial Statement report states “A number of relevant conditions exist and events that have occurred are organizationally and financially important that raise substantial doubts about the County’s ability to continue as a going concern. These conditions and events include recurring operating losses experienced by the County.”
The specific conditions and events listed as having operating losses by Maverick County include the following:
1. An excess Deficiency of Revenues Over Expenditures of $7.7 million in its Governmental Funds and Working Capital Deficiencies and negative cash flow from operations resulting in:
A. A $1 million fund deficit balance in the Governmental Funds in the current year;
B. A $3.9 million increase in Government-Wide Accounts Payable in the current year; and
C. A $852,401 Budget shortfall in the current year.
In addition, the 2010 Financial Statement report notes that “adverse key financial ratios, material noncompliance with debt covenants, denial of usual key trade credit from suppliers, restructured and refinanced debt, excessive interfund borrowing, and fund deficits including:
1. A negative fund balance of ($1.2) million in General Fund;
2. A negative fund balance of ($2.8) million in the Road and Bridge Fund;
3. Negative total net assets of ($490,457) in the Maverick County Public Facility Corporation
Fund; and
4. Negative total assets of ($1.8) million in the Maverick County Public Facility Corporation-
Detention Center Fund.
The 2010 Maverick County Financial Statement report also states that “the County is seeking additional debt financing to resolve payment of its accounts payable, capital leases and interfund borrowings, and as discussed in Note 5, the County’s debt rating was withdrawn changing it from a “BB” to “Unrated.” In addition, the County lacks adequate fiscal management and financial reporting and needs to significantly revise its fiscal operations.”
The 2010 Maverick County Financial Statement report also states that “the County Auditor has an instance of material noncompliance with the State of Texas Laws and regulations which is failure to present monthly financial reports to the Commissioners Court in accordance with Texas Local Government Code sections 114.024 and 114.025.” The report also notes that “the County is not in material compliance with certain of its debt covenants.”
The 2010 Maverick County Financial Statement report adds that “the County plans to continue to seek additional financing as well as restructuring its debt, to increase its governmental and business activities revenues ant to institute cost cutting and cost control measures throughout all County operations to address and improve its deteriorating financial results and position. The ability of the County to continue as a going concern is dependent upon its ability to improve financial results and/or reduce operating expenses and expenditures to ensure continued operations.”
The report goes on to state that “the County intends to revise all of its fiscal management, financial reporting and fiscal operations. The County believes that these revisions will allow it to correct the material noncompliance issues noted above in the contingencies section.”
The 2010 Maverick County Financial Statement report notes that “however, there can be no assurance that the County’s efforts to improve its financial results, position and operations will be successful. The financial statements do not include any adjustments that might be necessary if the County is unable to continue as a going concern or from the outcome of these uncertainties.”
The 2010 Maverick County Financial Statement report highlights that the total outstanding indebtedness of Maverick County ending in 2010 is $67,593,140 million. The 2010 report raises questions among Maverick County taxpayers and citizens as to where did all this millions of monies go to and to whom? Local taxpayers are asking how did Maverick County dig itself such a deep, deep hole of financial debt to the tune of $67,593,140 million.
The 2010 Maverick County Financial Statement report is the last financial report presented by Maverick County Commissioners Court as the 2011 and 2012 annual County financial statement reports are outstanding, pending, and uncompleted and have not been filed timely as required by State of Texas law. Martinez, Rosario & Company, L.L.P. is currently working on the 2011 Maverick County Financial Statement report and is believed to be very close to completing it this month. However, Maverick County Commissioners Court is required to file its annual County financial statement reports by no later than March of the following year. Thus, the 2011 Maverick County financial statement report was due by March 1, 2012 and is overdue. Similarly, the 2012 Maverick County financial statement report was due by March 1, 2013 and is overdue, too.
Maverick County taxpayers and citizens are anxiously awaiting to see the County’s 2011 Financial Statement report to determine the critical financial state of the County and whether it will be able to continue and survive as a County government going concern.
