Finding 1206157 (2025-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2025

Accepted

2026-04-08

Audit: 398155

Organization: City of Bruceville-Eddy (TX)

Auditor: BROCKWAY GERSBACH FRANKLIN & NIEMEIER PC

AI Summary

Core Issue: The sewer fund interest and sinking account was underfunded by about $442,736 at the fiscal year-end, violating section 7(d) of Ordinance No. O 6-17-2024-1.
Impacted Requirements: This situation results in material non-compliance with debt covenants related to the Texas combination tax and revenue certificate of obligation.
Recommended Follow-Up: Ensure funds are deposited or transferred from system revenues or ad valorem taxes to meet the required balance in the interest and sinking account.

Finding Text

Condition: At the end of the fiscal year under audit the funds held in the sewer fund interest and sinking account did not meet the balance requirements under section 7(d) of Ordinance No. O 6-17-2024-1, and the account was under funded by approximately $442,736. Criteria: Requirements under section 7(d) of Ordinance No. O 6-17-2024-1 authorizing the issuance of a Texas combination tax and revenue certificate of obligation with the United States Department of Agriculture. Cause of Condition: Funds were not deposited or transferred into the Revenue bond 2024 interest and sinking account to meet the balance requirements. Effect of Condition: Effect is a state of material non-compliance with the established debt covenants. Recommendation: Deposit or transfer funds from system revenues or ad valorem taxes into the designated interest and sinking account in order to bring the balance of the account into compliance with the debt covenant.

Corrective Action Plan

Per the recommendation for brining the sewer fund interest and sinking account balance to the required approximate amount of $442,736 in relation to section 7(d) of Ordinance No. 0 6-17-2024-1, the City has already implemented a plan of action by making quarterly deposits of $75,000 into the l&S account until its balance equals the required amount. The first payment was deposited in December 2025, and the next payment will take place in March of this year. We anticipate the final payment to the l&S account to take place in March 2027 and bring us into compliance with the cited regulation.

Other Findings in this Audit

1206155 2025-002

Material Weakness Repeat
1206156 2025-003

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
10.760	Water and Waste Disposal Systems for Rural Communities	$12.37M
14.228	COMMUNITY DEVELOPMENT BLOCK GRANTS/STATE'S PROGRAM AND NON-ENTITLEMENT GRANTS IN HAWAII	$27,500