Maverick County’s 2012 Financial Statements and Audit Draft shows $2.3 Million Deficit
By: Jose G. Landa, Copyright 2014, Eagle Pass Business Journal, Inc.
Maverick County Commissioners Court held a special meeting on Monday, March 17, 2014, at 5 P.M. at the Maverick County Courthouse Annex, 500 Quarry Street, in Eagle Pass, Texas, to hear the two long awaited 2012 fiscal year Maverick County Financial Statements and Audit draft report by Martinez, Rosario & Company LLP of San Antonio, Texas, independent auditors hired to perform the state mandated 2012 audit for the County of Maverick, showing a financial deficit of $2.3 Million and poor and inadequate accounting records.
During the presentation of the first draft of the 2012 audit, Milo Martinez of Martinez, Rosario & Company LLC presented the findings to the Commissioners Court in a detailed report, clarifying key issues of concern with the latest audit performed for the County of Maverick.
“ The first report we are going to present is the financial statements. Our opinions and the objective of the audit are on pages 1 through 5. On Page 1 of the independent auditors report, we are disclaiming an opinion because we could not get enough comfort as to the numbers because of inadequate records and a variety of other things that are disclosed within this report. Anything else that we could audit has been audited. There are certain disclosures that are not in the financials that need to be in the financials but aren’t in regards to capital assets, debt transactions and some other liabilities that are needed for a complete set of full disclosure, need to be in there, we don’t have all that information available to audit that information,” said Martinez.
Martinez stated that because of that reason they have included a paragraph that cites all those items as the reason that Martinez, Rosario & Company LLP cannot formulate an independent auditor’s opinion on Maverick County’s 2012 Financial Statements.
“The other paragraphs just relate to other notes that are in the financial statements in regards to contingencies, corrections and errors from the previous year. The report this year is pretty much reflects the prior year,” said Martinez. Martinez implied that the 2012 Maverick County Financial Statements are similar to the previous 2011 Financial Statements reflecting a $2.3 Million deficit and deficient record keeping and accounting procedures to be able to form an auditor’s opinion overall.
Martinez, however, did report that only the Maverick County Detention Center and the Maverick County Public Facility Corporation had provided the appropriate information available to form an auditor’s opinion and was given a clean auditor’s opinion. “In our opinion this fund financial statements present fairly, that means that they are correct in all material respects, the financial position for the Maverick County Public Facility Corporation and the Maverick County Detention Center in regards to the year of this audit,” said Martinez. Martinez stated that those facilities were able to be audited in its entirety except one transaction that was pending.
“There are a few financials that I would like to point out,” said Martinez to Commissioners Court. The budget to actual statements on the general fund budget, actual being the funds spent and what was made and what was actually budgeted for that year in accordance to Martinez’s report has a deficiency of close to $2,314,000 million.
“The biggest item we are seeing is the excess or deficiencies over your revenues and expenditures. Your revenues were $11,168,000 and your expenditures were $13,492,000, a deficit of about $2.3 million dollars which is comparable to the prior year as you also had a deficit of about $2.3 million that year as well,” said Martinez to Commissioners Court.
Martinez then pointed out that in regards to revenues from property taxes and license and permits and other miscellaneous items the actual revenues was $2.7 million dollars but that there were expenditures of $2.9 million dollars, which amounted to an over-budget or deficit of close to $240,000 dollars. “You had done a lot of cutbacks in this area as your expenditures the previous year of 2011 had been $4.7 million and you cut back almost $1.8 million dollars from that fund,” said Martinez.
Maverick County Commissioner of Precinct 4 Roberto Ruiz intervened and expressed his concerns.
“Your independent audit report seems to be pretty bleak to say the least,” said Commissioner Ruiz to Martinez. “Yes, it’s not good. It’s certainly not a positive report on the overall operations of the County. The Maverick County Public Facility Corporation and the Maverick County Detention Center do have good reports,” replied Martinez.
Commissioner Ruiz then questioned the auditor’s report in regards to not implementing other auditing procedures as stated in the initial auditor’s report of statements. Martinez answered Commissioner Ruiz by stating that part of it was due to the volume of transactions. “When we do an audit of an E and E organization we look at the controls that you have to process transactions on a daily basis. The controls for the last three years have been very weak. Things are not reviewed tightly or are not reviewed at all. The bank reconciliations are not done on time. We have a lot of adjustments when we come in. When we test transactions we find that they are not recorded properly or are in the wrong years. So what you look is to sample a portion of it but in some cases the controls are so weak we have to look at a lot of records,” added Martinez.
Martinez then presented an example of such a problem and also pointed to certain procedures that were lacking by the administration in charge of accounting for those entries into the books. He then noted that if those controls were followed then a lot of those transactions would then be able to be explained and be properly accounted for before even putting them into the system.
“That weakens your controls because they haven’t been reviewed. There is a process to close the books every month but you have not had that process in place and it just keeps going and going. When the cash wasn’t reconciled in 2012 until August 2013, almost a year later, the bank accounts says that you have over 100 accounts. It’s the same thing between funds you have over 380 accounts where they are borrowing money from one fund to another due to deferrals and they have just been building up over the years,” added Martinez to Commissioners Court.
Maverick County Judge David R. Saucedo then asked Martinez which department was in charge of having those reconciliations done. Martinez then answered that it was generally the responsibility of the County Auditor’s Office.
“Do we have those controls set in place now?,” asked County Judge Saucedo.
“We haven’t audited into the next period but we have been told that those controls are better now. My understanding is that they have been reconciling funds for the end of 2013. They just finished it 3 to 4 weeks ago that about 4 to 5 months after the fact. These reconciliations ought to be happening every 30 to 45 days,” said Martinez.
County Judge Saucedo also questioned Martinez in regards to the auditor’s statement of insufficient information in regards to assets. This question was brought to light in regards to the recent questioning of funding available from the sale of the old airport and which was set into the existing account that has been used and continues to be used for the Maverick County International Airport and its expenses in general.
“This past week I read an article where a source claimed that at one point there were $10 million dollars at one point in the airport fund,” said County Judge Saucedo.
“Didn’t that occur over 15 years ago or longer than that?,” asked Martinez.
“It’s been longer than that,” answered Commissioner Ruiz and Judge Saucedo simultaneously.
“ I think over the years it’s been chipped away at and its done. I don’t know if it was ever $10 million dollars,” said Martinez.
” I think it’s important for the public to know because there has been some numbers that have been thrown out that have nothing to do with what we are actually dealing with here. When you have it here in black and white $ 2.4 million dollars and there were some improvements that were done and there have been salaries that have been paid to the people who have worked in that facility in the past 15 years. It’s important for me to say this is what’s there and this was what has been used,” said County Judge Saucedo.
Commissioners Court then addressed the lack of a report presented on behalf of the Maverick County Solid Waste Authority in the draft of the 2012 Maverick County Financial Statements and Audit.
Martinez stated that “as of today nothing had been done to audit the numbers for the Maverick County Solid Waste Authority in their 2012 audit.” “The financial activities of the Maverick County Landfill are not represented here at all?” questioned Commissioner Ruiz. “Not at all,” replied Martinez.
Commissioner Ruiz then asked why not?
Martinez stated that what was being presented by the Maverick County Solid Waste Authority, in regards to their numbers, were really bad and wrong and that it would raise a lot of questions which would lead to another disclaimer on behalf of the independent auditor ( Martinez , Rosario & Company LLP) . “It would raise more questions if I put it in there than if I had not put it in there. There were not materially correct,” said Martinez.
Martinez sated that he had not received a revised version of the reports that had been presented to him by the Maverick County Solid Waste Authority back in January of this year. “Those numbers presented didn’t balance and there were a lot of other questions raised. They do need to get audited and put in this report at some point in time. At this point they are not available,” said Martinez.
“What we see here is bottom line, that the County’s accounting records are inadequate and that the Martinez, Rosario & Company LLP does not express any opinions on the financial statements of the county?,” questioned Commissioner Ruiz. “Right, there are too many transactions that we did not get comfortable with. We could find good records on your revenues, but in your expenditures we had a lot of problems,” added Martinez.
“Judge, if the Independent Auditor has no opinion on our financial matters, how are we going to present this to State and Federal offices?,” questioned Commissioner Ruiz.
Martinez then stated that there is a separate opinion on the County’s Grant schedule which was able to be audited down to all the transactions and had a clean opinion on their behalf (Martinez , Rosario Company LLP) .
Commissioner Ruiz then asked if that would help the County clarify issues with grant funding at the state and federal levels? Martinez replied that it would help.
“Their( federal and state entities) focus is on, if the audit is turned in on time. They normally want it within 9 months after the end of the year. We are at about 18 months. The Federal Government wants it within that nine months window,” added Martinez.
After further discussion of when the final draft of the 2012 Maverick County Financial Statements and Audit would be ready to be presented for Commissioners Court approval, it was agreed that they would attempt to have it detailed and ready by the coming week where they will be conducting a Commissioners Court work session to iron out the last details of the 2012 County audit.
“I need this Audit done as of now . We have the Texas Department of Agriculture stating that they need us to present this audit so they won’t cut off our funding. We need it, there are a couple of programs including our self-help center waiting on this audit to continue moving forward,” said County Judge Saucedo.
Martinez, Rosario Company LLP is set to present the final draft of the 2012 Maverick County Financial Statements and Audit next week. Absent at this special County Commissioners Court meeting were Commissioners Asalia Casares and Jose Luis Rosales.
