Maverick County Commissioners Court approve reading of resolution to hire Independent Auditor to audit County Auditor books & records
By: Jose G. Landa, Copyright 2014, Eagle Pass Business Journal, Inc.
Maverick County Commissioners Court unanimously approved the reading of a resolution authorizing the employment of an expert accountant or auditor to audit all books, records, and accounts of Maverick County Auditor Fidencio Ortiz and to waive the County’s professional services employment policies “due to time constraints on issues dealing with the County Auditor” during their special meeting held on Monday December 29, 2014.
During discussion, special Legal Counsel Luis R. Vera, Jr. of San Antonio, Texas presented Commissioners Court with a summary of the procedural process needed to be followed under the Texas Local Government Code for hiring an independent expert accountant or auditor to audit the books, records, and documents of the County Auditor.
“Under your request, we have looked into the proper steps that you would have to follow in order to under the Government Code to be able to hire an outside independent auditor to audit the county auditor, based on, I guess, a large part of the audit that was just completed by your independent auditor. There are various steps that you need to take. Today is simply to read the resolution. Once you read that, then you would take the next step, which would be to place on the next regular court meeting your motion to adopt your resolution. Once your resolution is adopted, then it must be published in the general circulation paper in Maverick County, Eagle Pass. Once that is done, then you take the steps in actually hiring your auditor,” said Vera.
Vera also explained the process for the discussion and possible action for the employment of a disinterested, competent, and expert public accountant or firm to audit all books, records or documents of the County Auditor pursuant to the Resolution approved and adopted by Maverick County Commissioners Court pursuant to Section 115.031 of the Texas Local Government Code.
Vera advised Commissioners Court that they could begin the process of searching for an independent, expert accountant or auditor to consider hiring. “There is nothing to prevent you from doing that now. Of course, the contingency would be that Commissioners Court would adopt the resolution, put it in the newspaper as required by statute. and then you would hire the auditor.”
Special Legal Counsel Luis R. Vera, Jr. and Albert Wesley further explained to Commissioners Court the process needed to adhere to the proposal being sought through the resolution that Commissioners Court was considering its approval of hiring an independent, expert accountant or auditor to audit all books, records, and accounts of the Maverick County Auditor.
Maverick County Judge David R. Saucedo read the proposed resolution pursuant to Section 115.031 of the Texas Local Government Code for auditing the Maverick County Auditor to Commissioners Court.
“ Whereas, the Maverick County Auditor Fidencio Ortiz was appointed by District Judge Abascal and District Judge Muniz for a term of two years, Whereas, the County Auditor has supervision over all books and the records of all the offices in Maverick County and to see the strict enforcement of the law governing Maverick County finances. Whereas, the County Auditor term has expired and the District Judges for Maverick County have failed to appoint a successor county auditor. Whereas, the County Judge and County Commissioners are concerned with the expenditure of funds and accountability of the county auditor. Whereas , Martinez Rosario & Company LLP, an auditor, was engaged by County Commissioners Court to audit the financial statements of the governmental activities, the business type activities of each major governmental fund, the aggregate remaining governmental funds information, the majority proprietary fund for the water utility operations, aggregate remaining proprietary funds information and the agency fund for Maverick County Texas. Whereas, the Auditor found the following material weakness and material non-compliance within the county’s financial statements due to the omissions and negligence of the County Auditor,” read Judge Saucedo.
“The County Auditor was not presenting monthly financial reports to Commissioners Court in accordance to Texas Local Government Code Section 114.024 & 114.025. The County Auditor was not in compliance with the legal requirements because of weak oversight and ineffective performances of the duties of the county auditor, lack of overall adherence to the county’s policies, inadequate supervision and review of staff as well as the lack of staff training, errors in cash certain governmental receivables , inter-fund receivables and payables, accounts receivables, accounts payables, inventory and journal entries that cost financial statements to be misstated, no period and end closing procedures existed to assure that transactions were recorded in the appropriate accounting period, no review and approval process existed as part of the financial statement process to assure accuracy of journal entries, account reconciliations and financial statements and related disclosure, accurate and timely budget reporting is not occurring that budget to actual results do not appear to be monitored by anyone and that amended budgets are not prepared and approved when it is determined actual expenditures will exceed budgeted amounts, no evidence indicating whether bank reconciliations were prepared on a timely basis and there was no evidence of supervisory review or approval of bank reconciliations, formal bank reconciliations were not prepared for any agency cash accounts held by an elected official, the payroll department is printing blank payroll checks that have been pre-signed, the county has no control or process for opening and closing bank accounts, clerical personnel were opening and closing bank accounts with no supervision, no process existed to track or record the liability associated with the County’s self-insurance programs. The County was unable to provide sufficient information to disclose the County’s risk financing in accordance with accounting principles generally accepted in the United States of America. Assets were not properly placed into service and depreciated accordingly. No detail was provided for fixed assets nor any records available at the time audit occurred. Deteriorating operating results are restricting the ability of funds to pay interfund borrowings. Errors in certain accounts receivable, accounts payable and failure to prepare reconciliations are results of inadequate supervision and review of finance staff by the County Auditor as well as lack of finance staff training. Inadequate supervision and review of finance staff by the County Auditor as well as the lack of finance staff training. Failure of the County Auditor to comply with monthly financial reporting requirements of the County. Also, a lack of compliance by the County Auditor and with the County’s approval annual budget. The County Treasurer is not performing this function as is required. The County Auditor’s office is performing this function; however, there is a lack of finance staff training and related supervisory review in the County Auditor’s office. No policies in place. No internal controls. Failure of the County Auditor to design and implement a process for tracking and recording the self –insurance liabilities in accordance with business practices and the County has a GAAP departure. Inadequate review of financial statements by the County Auditor, prior County Auditor lost the detailed capital assets records for inventory control and depreciation expense,” read Judge Saucedo.
“Whereas, the County Auditor continues to serve in the role over all the books and records of Maverick County and financial records even though the term is expired and the findings and opinion of the Auditor is that the County Auditor should be changed, and whereas, based on the findings of the Auditor it is an imperative public necessity that the Commissioners Court employ an disinterested, competent, and expert public accountant or firm to audit all books, records or accounts of the County Auditor to determine any damages, if any, as a result of the findings and opinions of the Auditor. Now, therefore, being resolved that the Maverick County Commissioners Court of Maverick County, Texas have determined the following, resolved, based upon the findings and opinions of the Auditor, the County Auditor due to intentional omissions and negligence has potentially caused damage and harm to the county. Further resolved, the County Auditor has failed to keep accounts, make reports or account for public funds as required by law, and further resolved, the audit of the County Auditor is justified by an imperative public necessity and would best serve the public interest based on all the above enumerated factors,” read Judge Saucedo.
“So, as we can see here, Commissioners there wasn’t one, two or three or four or five or six or seven, there were sixteen. I’m sure that there were probably more that could have been listed there. At this juncture, these are items that will allow Commissioners Court to go ahead and request this if that is the desire of the court,” said Judge Saucedo to Commissioners Court.
Interestingly, the majority of the reasons stated in the resolution read by Judge Saucedo are noted in Martinez Rosario & Company. LLP audit for Maverick County for 2012, which County Auditor Fidencio Ortiz was not yet appointed nor responsible for. County Auditor was appointed on September 24, 2012 by District Judges Abascal and Muniz to serve a two-year term. Thus, the majority of reasons stated in the resolution read by Judge Saucedo are for deficiencies prior to County Auditor Ortiz’s tenure. According to state law, the County Judge is the chief budget administrator of each County’s budget and Commissioners Court approves the budget. The 2013 Maverick County Audit remains outstanding and has not been completed by Martinez Rosario & Company, LLP, has not been approved by Commissioners Court, and filed with the State of Texas.
Judge Saucedo asked special Legal Counsel Luis R. Vera, Jr. what recourse did Commissioners Court have if it is determined that there are any damages caused due to the County Auditor’s failure to keep the accounts, make reports, or account for public funds and the county auditor’s omissions and negligence .”What recourse does the court have in that situation?” asked Judge Saucedo.
Vera answered that Commissioners Court would determine once the audit is complete and. if any, damage is determined, then Commissioners Court would decide what if anything the Court would want to follow up with.
Vera then stated that the auditor does have a bond but the the amount of the bond is unknown. “According to an Attorney General opinion and case law that exists, the county auditor could be held personally liable as far as the authority going after the bond. That would be determined once the audit is completed,” said Vera.
Special Legal Counsel Vera noted that “Realistically, can this come down to a political fight, maybe? We hope not. We are just going to follow the law and what the law says. If it comes to that, then will take it one step at a time” Vera summed it best noting that this whole situation is a political fight.
Vera advised Commissioners Court that state law authorizes the District Judges of Maverick County to appoint, replace, or terminate a County Auditor, not Commissioners Court.
Currently, District Judges Abascal and Muniz split on the re-appointment of County Auditor Ortiz with Abascal in favor and Muniz against, prompting they write to Governor Rick Perry requesting the appointment of a third District Judge to join the two local judges in determining whom to appoint as County Auditor. This request has been made, but the Governor’s Office has not yet appointed the third District Judge. This procedure under state law is pending and should decide who is going to be appointed as Maverick County Auditor.
After discussion, Commissioners Court unanimously approved the reading of the resolution. County Commissioner Jose Luis Rosales was not present at the meeting.
Commissioners Court also unanimously approved Agenda Item No. 12 regarding the waiver of County policy for Professional Services due to time constraints on issues dealing with the County Auditor.
Agenda Item No.13 regarding the employment of a disinterested, competent, and expert public accountant or firm to audit all books, records or accounts of the County Auditor pursuant to the Resolution approved and adopted by Maverick County Commissioners Court and as per Section 115.031 of the Texas Local Government Code was also approved unanimously contingent on the adoption of the resolution covered on agenda item No.11 at the next Commissioners Court monthly regular meeting to be held in January 2015.
Following the December 29th special meeting, the stage is set for Commissioners Court to approve the hiring of a disinterested, independent expert accountant or auditor to audit the records, books, and accounts of County Auditor Ortiz at their next meeting in January 2015.
Maverick County taxpayers are having to pay for Special Legal Counsel Luis R. Vera, Jr.’s professional services at $150 per hour plus expenses and would have to pay for any disinterested, independent expert accountant or auditor which may be hired in January 2015 to audit the books, records, and accounts of County Auditor Ortiz.
