As of May 31, 2016, the District had a total of $477,783 available for operational and capital expenditures and a potential liability from a legal
judgment that could total $2,499,6832. The District had not made any financial arrangements to address that potential liability. In addition, the
District’s expenditures exceeded total revenue for fiscal years 2014 through 2016.
The District also did not comply with certain requirements of Texas Water Code, Chapters 49 and 58; Title 30, Texas Administrative Code, Chapter 293;
the Commission on Environmental Quality’s Water District Financial Management Guide; and the District’s policies. For example, it did not (1) determine
what percentage of the District’s maintenance and operating expenses should be covered by its various rates, (2) develop written policies and procedures
in most key business areas, (3) approve budgets in a timely manner, and (4) sufficiently bond its board members. Auditors communicated other, less significant
issues separately in writing to District management.
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