Criteria Management is responsible for the preparation and fair presentation of the District?s financial statements in accordance with accounting principles generally accepted (?GAAP?) in the United States of America. In addition, the Uniform Guidance requires that the auditee prepare the SEFA. Condition As a non-attest service to the District, the District?s external auditors prepare the financial statements, and the SEFA. Cause It is not unusual for small governments not to have the expertise needed to prepare GAAP based financial statements and the SEFA and to rely on outside consultants for assistance. Effect Without auditor?s assistance, the District?s financial statements and SEFA would be materially misstated. In addition, the condition has the potential to impair the independence of the auditor, if the appropriate procedures are not completed by the District. Recommendations The District should perform detail review of the financial statements and SEFA, including proposed journal entries. The District should also oversee all nonattest services and to seek consultation from other professionals as warranted. Management Response The District agrees with the finding. The District engages consultants who possess industry knowledge and expertise. In addition, the District agrees to oversee all nonattest services.
Criteria The District should have a system of internal controls, which are sufficiently designed to allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements of the financial statements on a timely basis. Condition Significant audit adjustments were required to correct errors and improper financial statement presentations. Cause Financial statement accounts were not reconciled with underlying records. Expenditures were not recorded in the proper period. Effect Without proper internal control over financial reporting material misstatements could occur. Recommendations The District should establish and adhere to policies and procedures relating to the reconciliation of financial statement accounts. In addition, invoices should be processed timely and recorded in the proper period. Management Response The District Agrees with the finding. The District will reevaluate internal controls regarding over financial reporting, including the preparation, review and approval of financial statements. The District will improved processes to ensure reconciliations with underlying accounting records are done timely.
Criteria Section 5.6 of the District?s bond covenant with the Texas Water Development Board (?TWDB?) requires the District to maintain rates and charges to produce sufficient gross revenues sufficient to pay all maintenance, operating and administrative expenses. Condition Current year expenditures exceeded revenue. Cause Repairs and maintenance expenditures exceeded what the District had budgeted. Effect The District is not in compliance with its covenants. Questioned Costs There are no questioned costs as a result of this finding. Recommendations The District should review its? budgeting process and internal controls over cash management and financial reporting. Management Response In August 2022, The District increased water and sewer rates to generate additional revenue. The District will work with TWDB and submit a corrective action plan.
Criteria Uniform Guidance 2 CFR Part 200 Uniform Administrative Requirements, Cost Principle, and Audit requirements for Federal Awards requires that the grantee establish written policies and procedures for administration of applicable federal compliance requirements. Condition The District does not have established written polices and procedures for the administration of federal awards including the determination of the allowability of costs and procedures for procurement transactions surrounding federal awards. Cause The District was not aware of the Uniform Guidance requirements related to written policies and procedures. Effect Without written policies instances of noncompliance with direct and material requirements may occur. Questioned Costs There are no questioned costs as a result of this finding. Recommendations It is recommended that management develop a written policy and procedures manual related to all aspects of grant funding including cost principles and procurement, suspension and debarment. In addition, management and staff who are involved with federal programs should become familiar with requirements stated in 2 CFR 200 of the Uniform Guidance. Management Response The District agrees with the finding and will work towards written policy and procedure manuals.
Criteria Management is responsible for the preparation and fair presentation of the District?s financial statements in accordance with accounting principles generally accepted (?GAAP?) in the United States of America. In addition, the Uniform Guidance requires that the auditee prepare the SEFA. Condition As a non-attest service to the District, the District?s external auditors prepare the financial statements, and the SEFA. Cause It is not unusual for small governments not to have the expertise needed to prepare GAAP based financial statements and the SEFA and to rely on outside consultants for assistance. Effect Without auditor?s assistance, the District?s financial statements and SEFA would be materially misstated. In addition, the condition has the potential to impair the independence of the auditor, if the appropriate procedures are not completed by the District. Recommendations The District should perform detail review of the financial statements and SEFA, including proposed journal entries. The District should also oversee all nonattest services and to seek consultation from other professionals as warranted. Management Response The District agrees with the finding. The District engages consultants who possess industry knowledge and expertise. In addition, the District agrees to oversee all nonattest services.
Criteria The District should have a system of internal controls, which are sufficiently designed to allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements of the financial statements on a timely basis. Condition Significant audit adjustments were required to correct errors and improper financial statement presentations. Cause Financial statement accounts were not reconciled with underlying records. Expenditures were not recorded in the proper period. Effect Without proper internal control over financial reporting material misstatements could occur. Recommendations The District should establish and adhere to policies and procedures relating to the reconciliation of financial statement accounts. In addition, invoices should be processed timely and recorded in the proper period. Management Response The District Agrees with the finding. The District will reevaluate internal controls regarding over financial reporting, including the preparation, review and approval of financial statements. The District will improved processes to ensure reconciliations with underlying accounting records are done timely.
Criteria Section 5.6 of the District?s bond covenant with the Texas Water Development Board (?TWDB?) requires the District to maintain rates and charges to produce sufficient gross revenues sufficient to pay all maintenance, operating and administrative expenses. Condition Current year expenditures exceeded revenue. Cause Repairs and maintenance expenditures exceeded what the District had budgeted. Effect The District is not in compliance with its covenants. Questioned Costs There are no questioned costs as a result of this finding. Recommendations The District should review its? budgeting process and internal controls over cash management and financial reporting. Management Response In August 2022, The District increased water and sewer rates to generate additional revenue. The District will work with TWDB and submit a corrective action plan.
Criteria Uniform Guidance 2 CFR Part 200 Uniform Administrative Requirements, Cost Principle, and Audit requirements for Federal Awards requires that the grantee establish written policies and procedures for administration of applicable federal compliance requirements. Condition The District does not have established written polices and procedures for the administration of federal awards including the determination of the allowability of costs and procedures for procurement transactions surrounding federal awards. Cause The District was not aware of the Uniform Guidance requirements related to written policies and procedures. Effect Without written policies instances of noncompliance with direct and material requirements may occur. Questioned Costs There are no questioned costs as a result of this finding. Recommendations It is recommended that management develop a written policy and procedures manual related to all aspects of grant funding including cost principles and procurement, suspension and debarment. In addition, management and staff who are involved with federal programs should become familiar with requirements stated in 2 CFR 200 of the Uniform Guidance. Management Response The District agrees with the finding and will work towards written policy and procedure manuals.