A Follow-up Audit Report on the Kinney County Groundwater Conservation District Page: 42 of 51
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Appendix 4
Management Letter from External Auditors Regarding the District's
Fiscal Year 2006 Financial Statements
SCHULEP (25 6CHUUtP
Cedified Public Accounimik
601 CANTU RD
P.O. BOX 42009
DEL RIO, TEXAS 780420098
WV A SCHIJLER, JR.CPA TF FH M
CYNTHA K SCHULER, CPA ITS ! 39
To the Board of Directors of Kinney
County Groundwater Conservation Dist ict
In planning and performing our audit of the Iinanul [LUlnl of the ."'nmEnt:
activities of Kinney County Groundwater Conservation District (the I )ist Ict) as of-and
for the year ended September 30, 2006, in accordance with auditing standards generally
accepted in the United States of America, we considered the District's internal control
over financial reporting (internal control) as a basis for designing our auditing procedures
for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the District's internal control.
Our Independent Auditor's Report was Qualified due to scope limitations, being we wetr
not able to perform procedures necessary due to lack of adequate internal controls.
Accordingly, we no not express an opinion on the effectivenLN of the l)is ct intern:!
control.
Our consideration of internal control was for the limited pipo i dSCrihed i ilw
preceding paragraph and would not necessarily ideni if aJl dc ic]il]CS m mItWinl tr
that might be significant deficiencies or material weaknesses.
A control deficiency exists when the design or operation of a control does not allow,
management or employees, in the normal course of performing the assigned function, o
prevent or detect misstatements on a timely basis. A significant deficiency is a contwl
deficiency , or a combination of control defciencies, that adversely affects the entity'>
ability to initiate, authorize, record, process, or report financial data reliably in
accordance with generally accepted accounting principles such that there is more than
remote likelihood that a misstatement of the entity's financial statements that is more
than inconsequential will not be prevented or detected by the entity's internal control
We consider the following deficiencies to be significant deficiencies in internal contiL
Not all of the minutes of the Board of Directors were maintained or available, therelire
there is no assurance regarding the discussion that may have taken place at a meeting of
the Board and likewise, no ai ranl:CL re [ding olicial :cifos !' the Ha1d a 1111
Iiavc had a financial impact
[he general ledger was not unmtInHcd. Conintid neg[ect cI the iencral 1cd4cr u d]i nt
only continue to cause delays in the financial statements, but will allow for possible
in-cgularities, including fraud, to exist and continue without timely detection
Currently, employees who are responsible for cash fumctions also prepare the bank
reconciliations. This provides an ineffective system of cash control, because it permits
the possibility of fraudulent activities due to the lack of an adequate segregation of duties.
Also, bank reconciliations were not always reconciled to the general ledger in a timely
manner, with several months being reconciled at one time.
MEMBERS TEXAS SOCIETY AND AMERICAN INSTfrUTE OF CERTIFIED PUBLIC ACCOUNTANTS
A Follow-up Audit Report on the Kinney County Groundwater Conservation District
SAO Report No. 10-023
February 2010
Page 37
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Texas. Office of the State Auditor. A Follow-up Audit Report on the Kinney County Groundwater Conservation District, report, February 2010; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth517437/m1/42/?rotate=90: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.