A Financial Review of the Texas Department of Economic Development
May 2004
Report Number 04-031
Overall Conclusion
The Texas Department of Economic Development (TxED) misclassified $2.8 million of unreserved undesignated fund balance as encumbrances on its balance sheet for the fiscal year ending August 31, 2003. This resulted in a material understatement of its unreserved undesignated fund balance. This means that TxED had $2.8 million more in unspent and unreserved funds than it reported.
We found that fiscal year 2003 expenditure data in TxED's accounting system (MIP) corresponds to the Uniform Statewide Accounting System (USAS); however, we also found accounting deficiencies in MIP that negatively affected MIP's accuracy and reliability. For example, TxED has not yet closed out MIP for fiscal year 2003. We have made recommendations to improve controls over MIP because the Office of the Governor reports that it may use TxED's accounting system as one of the data sources for TxED's fiscal year 2004 and 2005 financial statements. After fiscal year 2005, the Office of the Governor will discontinue using this accounting system.
The Department of Economic Development was abolished effective September 2003, and its functions were transferred to the newly created Office of Economic Development and Tourism within the Office of the Governor. We performed this audit at the request of the Office of the Governor.
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