A Follow-up Audit Report on the Kinney County Groundwater Conservation District
February 2010
Report Number 10-023
Overall Conclusion
Significant financial and operational deficiencies continue to exist at the Kinney County Groundwater Conservation District (District). Many of these deficiencies were identified in the State Auditor's Office's 2006 audit of the District. These deficiencies prevent the District from ensuring that it (1) has timely, complete, and accurate financial information; (2) is able to meet its financial obligations; or (3) can protect its assets against violations, abuse, and fraud. In addition, the District's board of directors has not consistently demonstrated proper financial oversight as required by Texas Water Code, Section 36.057 (a). The lack of adequate financial oversight, combined with the District's difficulty in hiring and retaining qualified staff, contributed to the identified weaknesses in the District's accounting procedures and controls. The State Auditor's Office can provide limited-to-no assurance that amounts in this report are accurate and complete because the District was not able to provide complete and reliable information. Because the District did not provide assurances that the information provided to auditors was complete and accurate, the findings, conclusions, and supplemental information in this report are subject to that limitation.
The District is not operational because it has not achieved 80 percent of its management plan objectives. Texas Water Code, Section 36.302, directs the State Auditor to determine whether a water district is operational based on whether a district is actively engaged in achieving the objectives of its management plan. The District's management plan, which was certified by the Water Development Board in June 2008, had 10 objectives that primarily address the following broad goals: performing public outreach through publishing informative articles in local newspapers; seeking funds and intergovernmental assistance to map water flows in the three aquifers within the District; and maintaining intergovernmental and regional planning efforts with regional stakeholders.
In addition, the District did not consistently meet its own rules and business objectives or comply with Texas Water Code requirements. Specifically, the District did not (1) issue new permits in a timely manner, (2) ensure that statutorily required annual audits were conducted, (3) monitor water usage for all permitted wells, (4) ensure that all board members disclosed potential conflicts of interest, or (5) consistently retain minutes of the board's public meetings.
The District also has not fully implemented 31 (96.8 percent) of 32 audit recommendations in An Audit Report on the Kinney County Groundwater Conservation District (State Auditor's Office Report No. 06-021, January 2006). Fifteen (47.0 percent) of the 32 recommendations were not implemented, while implementation of 16 (50.0 percent) of 32 recommendations was incomplete/ongoing. Implementing these recommendations may have helped the District address its significant financial and operational weaknesses.
Auditors also identified other less significant issues that were communicated separately in writing to the District.
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