2012 Maverick County Audit Workshop raises financial discrepancies
By: Jose G. Landa, Copyright 2014, Eagle Pass Business Journal, Inc.
The Maverick County Commissioners Court workshop on the 2012 Maverick County Financial Statements and Audit Report held on Monday, March 24, 2014, raised many financial discrepancies with the extremely poor and inadequate accounting practices and records maintained by Maverick County.
Certified Public Accountant Milo Martinez of Martinez, Rosario Company L.L.P. of San Antonio, Texas presented Commissioners Court with a draft of the 2012 Maverick County Financial Statements and Audit report showing a $2.3 Million budget deficit for the fiscal year ending on September 30, 2012. Martinez advised Commissioners Court of the very poor and inadequate accounting practices and records that were maintained by the County during 2011-2012 to the extent that Martinez’s company can not issue an opinion on the truth and accuracy of the financial statements of Maverick County, except those of the Maverick County Public Facility Corporation, which operates the Maverick County Detention Center.
One of the issues discussed during the 2012 Audit Workshop was the responsibility for the poor accounting practices and records regarding 5,000 journal entries during 2012. Martinez postulated that part of the responsibility is that of Maverick County Auditor Fidencio Oritz, appointed by 365th Judicial District Judge Amado J. Abascal, III, while Ortiz replied that he was not the County Auditor during 2012 and could not take responsibility for the 5,000 journal accounting entries. Martinez advised Commissioners Court that the county records are the responsibility of the County management and ultimately Commissioners Court. “There are over 5,000 journal entries that had no reviews, are they correct, too many to test to make any sense of it all,” said Martinez.
County Auditor Ortiz noted that the County Treasurer’s Office also generates many of these journal entries and enters them into the County’s computer system.
Commissioner Roberto Ruiz asked who takes the responsibility for the journal entries, which Martinez replied that at present time no one is taking the responsibility.
Martinez then stated that County Auditor Fidencio Ortiz said that he didn’t get to them, the journal entries, and was not going to be able to get to them.
“How can I do anything with them, I’m only here to audit your books and records,” added Martinez.
“ We can try and get a letter from him stating that everything is correct but we all know that is not true. Why go through that exercise, if we know he can’t take responsibility for this set of transactions. Then why are we even trying to go through that effort,” said Martinez.
Commissioner Ruiz questioned if anything is being done to correct the problem.
Martinez replied that was a matter that needed to be addressed with the current auditor (Ortiz) if the problem was being rectified. Martinez also stated that no test had been done to the 2013 journal entries and would not know if the proper controls are being taken at present time.
“ I think some of the issues that occurred in 2012 were still occurring in 2013. I don’t know if Ortiz went back and fixed them,” added Martinez.
Ortiz replied that they were looking into it and had fixed the problem Martinez was alluding to.
Martinez went on to state that it was later explained that the software used by the auditor’s office produces the entries and that they are not reviewed only after they go into the system. Martinez also stated that they had addressed certain issues in regards to journal entries and when they are put into the operating system, stating that they had notified the auditor of the discrepancies recently. Ortiz rebutted stating that certain test are done on a monthly basis on printouts.
Commissioner Ruiz questioned why Ortiz would not take responsibility for the 5,000 journal entries in question from 2012.
“ I wasn’t here in 2012. Why should I take responsibility for 2012 when I wasn’t even here,” said Ortiz.
Ortiz assured Commissioners Court that the proper procedures are being taken now for 2013 since he took over.
Another issue raised at the workshop was the lack of financial reports audited from the Maverick County Solid Waste Authority Authority, which operates the Maverick County Landfill. Martinez explained the situation and expressed that the numbers he was presented by the County at one point were not good. “The numbers that we were given did not even balance,” said Martinez.
Ortiz intervened and stated that the information Martinez was talking about was old and that the updated information was ready for review, but that was not being reviewed or sent to Martinez because of a current contract dispute between Martinez, Rosario Company LLP. and the Maverick County Solid Waste Authority regarding the auditing fees for 2011.
Commissioner Ruiz asked Martinez if he had ever experienced anything as like what’s happening in Maverick County in his professional career, which Martinez answered, “No.”
Ruiz then stated to the Court that he felt something needed to be done about the problem.
“It‘s embarrassing, it is to me,” said Ruiz.
Commissioner Asalia Casares also stated that it was embarrassing and “ I feel like I’m in a Second Grade class room,” said Casares.
Maverick County Judge David R. Saucedo then addressed the situation and asked if it was the correct thing for County Auditor Oritz not take the responsibility for the 2012 audit because he (Ortiz) was not working for the County in 2012.
Judge Saucedo then asked what legal ramification procedures are there if there is refusal to not look into certain records within the auditor’s office perimeter by the current auditor.
“ That is a legal matter. He should be taking responsibility but I think that’s his personal choice,” said Martinez.
Maverick County Legal Counsel Poncho Nevarez stated that there are certain removal procedures for county-appointed officials for not performing their duties. “Obviously there are going to be fact issues of whether or not the official is performing their duties. It becomes a question of fact,” said Nevarez.
“Elected and appointed officials have statutory duties. It is similar to the proceedings that the County Attorney set in the removal of an ex- commissioner and he should then follow up to see if it needs to be taken to that level,” added Nevarez.
Legal Counsel and Commissioners Court went on to discuss what constituted abandonment of duties if any and if so, what would be the proper steps to take in order alleviate the situation through the proper legal course if possible due to certain circumstances.
Martinez noted that the proposed draft of the County’s 2012 Audit does not include any financial statements and audit of the Maverick County Solid Waste Authority, which operates the Maverick County Landfill.
Another issue raised by Martinez at the workshop was that the only County entity that he was giving an unqualified opinion for 2012 was the Maverick County Public Facility Corporation, which operates the Maverick County Detention Center.
However, Martinez raised concerns regarding the Maverick County Public Facility Corporation having its Texas corporate charter forfeited for failing to comply with state requirements with the filing of annual corporate officers and directors reports and registered agent report. Martinez advised the Court that this issue had been addressed by him in the past with both the past and present County Auditors and that the past auditor had stated that it would be taken care of, but that it never was and remains outstanding.
“Basically you have to file an annual report, generally in your case you wouldn’t need a franchise tax and you would update them with your officers. If you look at the registered agent there is a prior County Judge that still is registered. This is outdated information,” said Martinez. “This is basically corporate protection. To function as a corporation you have to be in good standing,” added Martinez.
Legal Counsel Poncho Nevarez advised Commissioners Court that there were other issues pertaining to this item that needed to be addressed, such as re-placement of officers and re-instatement of corporate charter.
Ortiz notified the Court that he had spoken to County Attorney Ricardo Ramos on the matter and that the County Attorney had stated that he would be looking into the situation. “ I turned over the papers that I had . In fact, we couldn’t find the incorporation papers and the county attorney said he was going to try to see if he could get them,” added Ortiz.
“ If you don’t file it on time then you go into a certain status , where you run the risk that they forfeit your charter. They give you certain windows of grace periods, once those are exhausted and run out you are in this condition,” said Martinez.
Martinez stated that it had been organized in 2007 and nothing had been filed since then.
After a brief discussion on budgeted to actual finances and material weaknesses and material non-compliances, Martinez was asked to present the schedule of findings and recommendations.
“We are issuing qualified opinions on two different federal awards audit reports, the Stone Garden and the Congressional recommended award programs,” said Martinez.
Martinez then advised the court that their findings are evaluated through testing 50% of the county’s grant programs.
Martinez recommended that the County Auditor should prepare and present monthly auditors reports to Commissioners Court and the state District Judges containing the information required by state law. Martinez added that the gravity of these findings combined with the findings of 2010 results in Maverick County lacking adequate fiscal management and financial reports. The magnitude of poor internal controls and inadequate records results in Maverick County’s financial statements to be misstated as of September 30th 2009 ,2010, , and 2011, and to disclaim an opinion for the years ending 2010, 2011 and 2012. The County must significantly improve its fiscal operations and make revisions to fiscal management and work with the district judges to change its county auditor.
The independent auditor’s report further stated that the county must assure that the new county auditor have the necessary education, training and skills to meet its fiscal management and fiscal reporting needs also the county must monitor that the new county auditor adheres to the requisite state laws applicable to county auditor’s .
Maverick County must prepare the proper corrective actions to address the many financial issues within the county government that are impeding the county to move forward in rectifying and alleviating the significant financial discrepancies and inadequate accounting practices.
Commissioners Court will hold a special meeting on Thursday, March 27th, at 5 P.M. at Commissioners Courtroom to discuss and take possible action regarding the 2012 Maverick County Financial Statements and Audit.
