An Audit Report on The Board of Public Accountancy: A Self-Directed, Semi-Independent Agency
September 2003
Report Number 04-001
Overall Conclusion
The Board of Public Accountancy's (Board) Combined Balance Sheet/Statement of Net Assets – Governmental Funds for fiscal year 2002 was substantially accurate with one exception: the Board did not report a liability it owed the State's General Revenue Fund. The unreported liability totaled $1,489,498, which is large enough to cause the Board's liabilities to be materially understated. Supporting documentation showed that the Board had raised questions as to the proper accounting treatment of this item during the year. The Board initially recorded the amount as an interagency liability in its monthly internal reports. At year end, the Board sought guidance from the Office of the Comptroller of Public Accounts (Comptroller's Office) as to the correct treatment of this amount and was advised, because of timing concerns involving the production of the State's Comprehensive Annual Financial Report, to report the amount as a fund balance rather than a liability. In an attempt to reconcile these alternative reporting positions and to provide full disclosure, the Board disclosed the need to repay the $1,489,498 in the notes to its financial statements.
The State loaned the $1,489,498 to the Board as start-up funds for the self-directed, semi-independent agency pilot project. According to Senate Bill 736, 77th Legislature, this loan is to be repaid as funds are available. As of August 31, 2002, the Board had $1,898,709 in cash that it could have used to repay the loan from the General Revenue Fund. By not correctly reporting these funds as a liability, the Board inaccurately showed these funds as unobligated. As a result, financial statement users could make incorrect decisions regarding the Board's finances if they rely on the Combined Balance Sheet/Statement of Net Assets – Governmental Funds.
In addition, we audited two of the Board's key performance measures. The Board
inaccurately reported the Percentage of Complaints Resulting in Disciplinary
Actions for fiscal year 2002. Although the Board accurately reported the other
key measure we audited (Number of Individuals Examined), it did not calculate
the results in accordance with the measure definition.
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