Phase II:

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1 Slide 1 The office of County Auditor Phase II: A system of checks and balances exists between the county auditor and the Commissioners Court just like a system of checks and balances exists between the State Legislature and Comptroller. The county auditor has independent authority to review financial matters much like the Comptroller. The Commissioners Court adopts the County Budget much like the Legislature, but it is the county auditor that audits the expenditures. Because of this responsibility, the county auditor has one of the more unique roles in the county offices. State Objectives: Slide 2 What is a County Auditor? History and Background Independence Relationship to District Judge(s) Qualifications, Appointment and Salary Staff History and Background Office of County Auditor was statutorily created in County Auditor required in counties with a population of more than. County Auditor may be appointed in a county with a population of less than through joint action of Commissioners Court and district judge(s). Independence Part of the system of checks and balances of county government. Not bound to or by the Commissioners Court or any other elected official. Appointed by Judge(s); salary set by District Judge(s). Page 1 of 8

2 Relationship to District Judge(s) District Judge(s) have limited authority over County Auditor. District Judge(s) appoint the County Auditor to a year term. (LGC ) District Judge(s) set the salary of the County Auditor and assistants, within statutory limits. Qualifications, Appointment and Salary Qualifications (LGC ) Competent accountant with at least two years experience in auditing and accounting. Thoroughly competent in public business details. Unquestionably good moral character and intelligence. Must complete hours of continuing education accredited by the Texas State Board of Public Accountancy. Appointment (LGC ) Affirmative vote by (majority of) judge(s) at a special called public meeting. (LGC ) Two year term. (LGC ) Oath and bond required. (LGC ) Can be removed from office for official misconduct or incompetence. (LGC ) Salary Set annually by district judges in a special called public meeting. May not exceed the salary from all sources of the highest paid employee. Staff (LGC ) District judge(s) approve the list of assistants and set the annual salaries of the auditor s staff in a special called public meeting. An overall increase of more than % for an assistant s office expenses or salary requires Commissioners Court approval. Clerical positions are determined by the county budget. Auditor is responsible for maintaining and developing adequately trained staff. Auditor may discharge staff. Slide 3 Authority Statutory Oversight Access Prescriptive Verification Case Law Oversight Authority Maintains a general set of county records (LGC ). Oversight of the books and records of the County is given to the County Auditor (LGC (a)). Page 2 of 8

3 County Auditor shall see to the strict enforcement of the law governing County finances (Local Government Code (b)). The county auditor shall annually examine the records of each precinct, county and district officer (LGC (a)). Access Authority Continual access to and ability to examine and investigate the books, accounts and records of any office receiving County funds is given to the County Auditor (LGC ). The same access is given concerning the records of specialized governmental entities, such as the District Attorney, Juvenile Probation and Adult Probation (LGC ). The County Auditor has the authority to examine records in cases with regards to the proper collection of fines and court costs (Code of Criminal Procedure ). Prescriptive Authority The County Auditor shall prescribe the system of accounting for the (LGC , and (c)). The County Auditor has the authority to prescribe the manner and form for other officials to make monthly and annual reports of collections to the County Auditor (LGC ). The County Auditor may adopt and enforce regulations that the Auditor considers necessary for the speedy and proper collecting, checking and accounting of the and other fees and funds of the County (LGC (b) and (c)). Verification Authority The County Auditor shall examine each claim, bill or account against the County and approve each before it may be allowed to be (LGC ). The County Auditor may require an affidavit from a County officer indicating that a claim or bill is correct and valid (LGC ). In counties under 225,000 in population, the county auditor may assist the county judge in the budgeting process (LGC ). Case Law Authority Court decisions pertaining to the role of the County Auditor, include: 1.Agan v. Titus County (Supreme Court of Texas ) ; 2.Guerrero v. County (946 S.W. 2d 558); 3.Fullerton v. Harris County (596 S.W. 2d 17520); 4.Crider v. Cox (960 S.W. 2d 703). Page 3 of 8

4 Slide 4 Responsibilities of the County Auditor Auditing Accounting and Financial Reporting Accounts Payable Budgeting Payroll Purchasing and Approval of Claims Other Auditing The goals of internal audit are: to insure the accuracy of accounting and budgeting information. to safeguard the of the county. to insure the efficiency of county operations. to insure a compliance with legal requirements regarding the use of resources. Statutes regarding the audit function: The County Auditor shall have continual access to the books and records of any county officer and orders of the commissioners court. (LGC ) The County Auditor is to examine all reports about the collection of money for the County (LGC ). The County Auditor is to examine the books of County officials for correctness (LGC ). The County Auditor is to examine the County Treasurer s books and reports (LGC ). The County Auditor is to examine the accounts of any precinct, county or district official (LGC ). The County Auditor is authorized to the funds of any specialized local entity (such as the criminal district attorney). (LGC (g)) An independent audit is often required by statute (LGC Chapter 115), bond covenant, grant requirement, etc. An outside auditor is selected by Commissioners Court and generally works closely with the County Auditor. Key internal controls: Authorization Execution Safeguarding Page 4 of 8

5 Separation of Duties Supervision Accounting and Financial Reporting 1. The County Auditor specifies the system of accounting for the County as a whole and for individual fee offices in conformance with generally accepted accounting principles as established by the Governmental Accounting Standards Board (GASB). 2. The County Auditor specifies the system for the collection and reporting of fines and fees. 3. The County Auditor prescribes the time and manner for financial reports from other elected officials and fee officers. (LGC ) 4. Responsibility for the of the accounting system rests with the County Auditor. 5. The County Auditor must maintain the general ledger of the County throughout the year. 6. Monthly financial reports are prepared by the County Auditor. 7. Preparation of the annual financial report is the responsibility of the County Auditor. 8. The County Auditor often coordinates the annual outside audit. 9. The County Auditor is responsible for the accounting and reporting of grants. 10. Most checks written by the County require a countersignature from the County Auditor. Accounts Payable These duties are performed by the County Auditor both to process normal accounting functions as well as to meet the County Auditor s duty for verification of financial transactions. Processing of accounts payable directly relates to the responsibility of the County Auditor require strict compliance with the county budget and to verify the correctness and legality of claims against the County before payments are disbursed. (LGC and ) Statutory requirements and good internal control through separation of duties necessitates the involvement of the county auditor, commissioners court and county treasurer. (LGC (a), , (a) The County Auditor must disbursement checks to validate them as proper and budgeted expenditures. (LGC ) Processing of accounts payable are optional duties by law (Agan v Titus County, AG Opinion DM-440). These are usually processed by the County Auditor to meet the County Auditor s duty for verification of financial transactions and prescribed high standards of internal control. Page 5 of 8

6 Budgeting 1. The County Auditor is the budget officer or assists the County Judge in preparing the budget in most counties. a. In counties with populations in excess of, the County Auditor prepares the budget unless the Commissioners Court has formally appointed a budget officer. b. In counties with populations less than, the County Judge generally prepares the budget with the assistance of the County Auditor. c. In counties with populations greater than and less than 225,000, the County Judge prepares the budget unless the Commissioners Court has formally appointed a budget officer. 2. The County Auditor has the authority to estimate revenues from all sources in most large counties. The County Auditor certifies the receipt of new money that was not included in the original budget. 3. The Commissioners Court must approve any increase in the County Auditor s budget (without regard to the salary of the County Auditor) greater than 5%. 4. The County Auditor must exercise oversight authority to see that only properly budgeted expenditures are approved for payment by the County. Payroll Commissioners court has the authority to assign the payroll function to a responsible county official. Benefit Changes. Purchasing and Approval of Claims 1. The County Auditor may not pay for supplies or materials that have not been properly requisitioned and approved (LGC ). 2. The County Auditor must co-sign disbursement checks to validate them as proper and budgeted expenditures. (LGC ) 3. Purchase Requisitions (LGC ) The County Auditor may not approve the purchase of supplies or materials unless a signed by the requesting officer and approved by the county judge is presented. In a county with a county auditor, the Commissioners Court may waive the requirement for approval of purchase requisitions by the County Judge with all claims being approved in open court. Page 6 of 8

7 Other Duties Subject to Assignment by Commissioners Court Information Technology and Data Processing Services Risk Management Human Resources and Personnel Indigent Health Care Program Administration Investments Slide 5 Challenges to the County Auditor Maintaining Independence Mastering Diverse Functions Co-Existance Staff Recruitment Inherent Conflicts Maintaining Independence Maintaining the independence of the County Auditor from the Commissioners Court and other elected officials. Mastering Diverse Functions Mastering diverse functions such as governmental accounting and financial reporting, internal, grants management, debt issuance and management, budgeting and budgetary control, compliance with purchasing laws, personnel matters, and risk management. Co-Existence The personalities and politics of working with elected officials, co-existing while exercising oversight and prescriptive authority. Staff Recruitment Staff recruitment, retention and development in the County government environment. Inherent Conflicts Inherent conflicts due to the unique nature of the job. Slide 6 Page 7 of 8

8 Review Authority Responsibilities Challenges Summary The county auditor has authority over many functions of the county. Statutory authority includes oversight, access, prescriptive and verification authority. The county auditor faces several challenges, including: Maintaining Independence Mastering Diverse Functions Co-Existence Staff Recruitment Inherent Conflicts Slide 7 Resources uditor.asp articles/cc/muc10.html Resources: Page 8 of 8