School for County Commissioners Courts The office of County Auditor Presented by: Lisa Smith, Bastrop County Auditor Katie Conner, Brazos County Auditor V.G. Young Institute School for County Commissioners Courts February 20, 2019 Insert Gain Attention: Use opener here that creates an analogy between the unique characteristics of a county auditor and the Texas Comptroller of Public Accounts. For example, 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: Upon completion of this lesson, you should be able to: 1.Outline the authorities of the county auditor 2.Describe the roles and responsibilities of the county auditor 3.Explain the challenges faced by county auditors Insert Make It Personal: Ask the participants to discuss the importance of a “checks and balances” system. Have participants relate this system to their own lives. Ask participants if they have served in a more independent role or in more of a “check” role. Continue to use this analogy and relate material to participants throughout lesson.

What is a County Auditor? History and Background 1905 – created by statute Pop. >= 10,200 – Required Pop. < 10,200 – Optional Qualifications Competent, experienced, moral character Present Content: Stimulate participants by presenting the information in short segments (10 minutes each). Refer back to personal example provided during introduction when appropriate. Use visual or other aides to demonstrate ideas. History and Background Office of County Auditor was statutorily created in 1905 (appointed by CJ & DJs). 1891-District Courts given judicial review over Cct. 1917-Auditor appointed by DJs only. County Auditor required in counties with a population of more than 10,200. County Auditor may be appointed in a county with a population of less than 10,200 through joint action of Commissioners Court and district judge(s). (LGC 84.002) Joint employment allowed in counties < 25,000 if both Commissioners Courts approve subject to the District Judges approval. (LGC 84.008) 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 District Judge(s); salary set by District Judge(s).

What is a County Auditor? Cont’d Appointment Appointed by District Judge(s) Majority vote Two year term Oath & Bond requirements Relationship to District Judge(s) District Judge(s) have limited authority over County Auditor. District Judge(s) appoint the County Auditor to a two year term. (LGC 84.002) District Judge(s) set the salary of the County Auditor and assistants, within statutory limits. (LGC 111) Assistants approved by District Judge(s) and certified to Commissioners Court including “temporary” provisions. (LGC 84.021) Qualifications, Appointment and Salary Qualifications (LGC 84.006) 1). Competent accountant with at least two years experience in auditing and accounting. 2). Thoroughly competent in public business details. 3). Unquestionably good moral character and intelligence. Continuing Education: Must complete 40 hours of continuing education accredited by the Texas State Board of Public Accountancy. (LGC 84.0085) Appointment (LGC 84.002) Affirmative vote by (majority of) district judge(s) at a special called public meeting. (LGC 84.003) Two year term. (LGC 84.004) Oath and bond required. (LGC 84.007) Can be removed from office for official misconduct or incompetence. (LGC 84.009)

What is a County Auditor? Cont’d Independence Nature of the relationship with District Judges Ensures a system of checks & balances Not just the Auditor Cooperative effort

What is a County Auditor? Cont’d Auditor Salary Set by District Judges at Hearing Max. = highest paid elected county official with a few exceptions Staff District Judges approve list and salaries 5% increase limitation Salary Set annually by district judges in a special called public meeting. (LGC 152.031) May not exceed the salary from all sources of the highest paid elected county officer other than a statutory county court judge. (LGC 152.032) Prior to 80th Legislative session, salary exceptions limited to counties >500,000. Now several different brackets exist with Commissioners Court Approval. Staff (LGC 84.021) 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 5% for an assistant’s office expenses or salary requires Commissioners Court approval. (LGC 111) Auditor is responsible for maintaining and developing adequately trained staff. Auditor may discharge staff.

AUTHORITY OF THE COUNTY AUDITOR

Statutory Oversight General oversight of books and records See to strict enforcement of laws – county finances Access Continual access to records Content, cont. Oversight Authority Maintains a general set of county financial records (LGC 112.007). Oversight of the books and records of the County is given to the County Auditor (LGC 112.006 (a)). County Auditor shall see to the strict enforcement of the law governing County finances (Local Government Code 112.006(b)). The county auditor shall annually examine the records of each precinct, county and district officer (LGC 114.041(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 115.001). The same access is given concerning the records of specialized governmental entities, such as the District Attorney, Juvenile Probation and Adult Probation (LGC 140.003). The County Auditor has the authority to examine records in criminal cases with regards to the proper collection of fines and court costs (Code of Criminal Procedure 103.11).

Statutory cont’d Prescriptive Verification Regulations for collecting & accounting System of accounting (>190,000) Time, manner, form of reports to Auditor Verification Claims approval Claim incurred as provided by law Prescriptive Authority The County Auditor shall prescribe the system of accounting for the County (LGC 112.001, 112.002 and 113.023 (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 114.002). 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 112.002 (b) and 113.023 (c)). Change funds established by Cct once approved by auditor. 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 paid (LGC 113.065). The County Auditor may require an affidavit from a County officer indicating that a claim or bill is correct and valid (LGC 113.064). In counties under 225,000 in population, the county auditor may assist the county judge in the budgeting process (LGC 111.003).

Duties and Responsibilities of the County Auditor

Duties and Responsibilities Auditing All funds due/collected/disposed All funds/assets safeguarded Examine books of all officials/departments Review internal controls Accounting and Financial Reporting Maintain general ledger & chart of accts Periodic reports – internal/external Coordinate outside audits Content, cont. Auditing The goals of internal audit are: to insure the accuracy of accounting and budgeting information. to safeguard the assets 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 115.001) The County Auditor is to examine all reports about the collection of money for the County (LGC 115.002). The County Auditor is to examine the books of County officials for correctness (LGC 115.003). The County Auditor is to examine the County Treasurer’s books and reports (LGC 115.003). The County Auditor is to examine the accounts of any precinct, county or district official (LGC 115.0035). The County Auditor is authorized to audit the funds of any specialized local entity (such as the criminal district attorney). (LGC 140.003 (g)) An “outside” 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 Recording Safeguarding 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 114.002) 4.Responsibility for the design 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.

Duties and Responsibilities (cont’d) Budgeting Subchapter A – assist with budget Subchapter B – budget officer Subchapter C – Commissioners Court appoints budget officer Purchasing and Approval of Claims Verify compliance with contracts Legally acquired and budgeted expenditures Content, cont. Budgeting The County Auditor is the budget officer or assists the County Judge in preparing the budget in most counties. In counties with populations in excess of 225,000, the County Auditor prepares the budget unless the Commissioners Court has formally appointed a budget officer. In counties with populations less than 225,000, the County Judge generally prepares the budget with the assistance of the County Auditor. In counties with populations greater than 125.000 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. 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 113.901). 2.The County Auditor must co-sign disbursement checks to validate them as proper and budgeted expenditures. (LGC 113.043) 3.Purchase Requisitions (LGC 113.901) The County Auditor may not approve the purchase of supplies or materials unless a requisition 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.

Duties and Responsibilities (cont’d) Accounts Payable Budgetary compliance Co-sign checks with Treasurer Payroll Routine audits for compliance Content, cont. 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 113.064 and 113.065) Statutory requirements and good internal control through separation of duties necessitates the involvement of the county auditor, commissioners court and county treasurer. (LGC 113.041 (a), 113.043, 113.064 (a) The County Auditor must co-sign disbursement checks to validate them as proper and budgeted expenditures. (LGC 113.043) 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. Payroll Commissioners court has the authority to assign the payroll function to a responsible county official. Benefit Changes. 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

Challenges to the County Auditor Maintaining Independence Mastering Diverse Functions – management of cash, debt, grants, & risks, personnel & employment law, budgetary control, internal auditing & financial reporting, etc Establishing effective working relationships Content, cont. Once appointed the County Auditor must be qualified to be an accountant, an auditor, an attorney, an economist, a public relations manager, a financial forecaster, a budget expert, a personnel director, a purchasing agent, a politician, and possibly a resident expert on cleaning compounds and toilet tissue. 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 auditing, 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.

Review Four statutory authorities Responsibilities – Various; the County Auditor is primarily responsible for insuring that county finances comply with the law. Challenges of the job Insert Guided Learning: Conduct a guided review of the information and encourage participants to summarize the information for the group List best-case scenario questions and answers, debate topics or other activities here. 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

Resources Texas Association of Counties www.county.org Texas Association of County Auditors www.texascountyauditors.org Texas Attorney General – Opinion Subjects www.oag.state.tx.us Insert Resources to Encourage Retention: Provide participants with an outside assignment, additional reading materials, Web sites and contact information for subject experts Texas Association of Counties Article by Tommy Tompkins, Bexar County Auditor Texas Association of County Auditors Texas AG Opinions – Cumulative

Contact Info Lisa Smith, Bastrop County Auditor 804 Pecan Street Bastrop, TX 78602 512-332-7222 lisa.smith@co.bastrop.tx.us Katie Conner, Brazos County Auditor 200 S. Texas Ave., Ste 218 Bryan, TX 77803 979-361-4359 kconner@brazoscountytx.gov