State Auditor and Inspector Cindy Byrd said last week her office has finished the field work on an investigative audit of the City of Pauls Valley and is in the process of writing the report, with the goal of releasing it by the end of the year.
Byrd was in Pauls Valley Friday as the guest speaker at the Pauls Valley Rotary Club meeting. She spoke about the role of the State Auditor and Inspector’s office and provided a detailed walkthrough of the recent Epic Charter School audit conducted by her office.
During her presentation, Byrd spoke about investigative audits and specifically, the Pauls Valley audit, which was requested by citizen petition in the fall of 2020.
Byrd said the number one reason municipalities undergo an investigative audit is for violating the state’s open meetings and open records act. Even the perception that a city or town is hiding information from the citizenry can prompt an investigation.
“Now, I think it’s important for you to know that an individual outside of your town, whose job it has been made to go across the state and find reasons to start citizens petitions is the individual who started the citizens petition audit process for the city of Pauls Valley, because the city was slow or lacking in providing his open records request.”
Byrd said the field work for the audit is completed and her office is in the process of writing the audit report, which should be completed and released soon. She said the intent is to have it done before the end of the year.
“As you know, the hospital was rescued from closure by the city at cost of millions of dollars, which does have a potential impact on you, the taxpayers. It’s important to note the audit request was for the city and how that money was being exchanged between the city and hospital,” Byrd said. “It’s common practice for cities and hospitals to enter into deals to try to work together to keep the hospitals open. The audit will provide a historical account of exactly what happened. That’s about all I can speak about right now on that audit, but it will be out very soon.”
Byrd is the state’s 13th auditor, and the first woman to be elected to the office, which was established by the state constitution in 1907.
The state auditor is elected by the people as their choice to audit government entities and has the authority to conduct audits at state and local government levels.
Byrd said the SAI’s office averages 350 audits per year across five divisions, which employ a total of 100 auditors. Each division performs a different type of audit.
Byrd said $5 billion in revenue flows through county governments each year. The state constitution requires the SAI’s office to audit all 77 county treasurers, 65 EMS districts and by statute, the 27 district attorneys.
“I can tell you, the issues with county governments of the past are much better today,” said Byrd, who served as a county auditor for many years before being elected to the state auditor’s office. “Today, it is the most transparent form of government. Part of that is because of the structure. There are eight elected county officials, and their roles are clearly defined in statute. County commissioners are the management of the county. The assessor assesses property values for taxation purposes, but can’t collect the money, because the treasurer handles the money. They collect the ad valorem taxes and other revenues, but they don’t get to spend the money because the county clerk is the one responsible for spending the money, and she ensures that all purchases are made with the proper bidding requirements followed. Then finally, the board of county commissioners approves every expenditure that comes through the county, and they approve the final budget.”
Counties are also required to publish in their local newspaper county commissioner minutes, the annual salaries and a monthly list of all expenditures.
“Municipalities and schools are not required to do this,” Byrd said.
She reiterated that the SAI’s office does not audit individual school districts or cities and towns, though those entities are required by law to have an annual financial statement audit performed by an outside CPA firm, which is then filed with the SAI’s office.
For the state auditor to audit a school or city or town, the audit must be formally requested by specific state officers, or by citizen petition, as investigative audits or performance audits.
When investigative audits are requested, the municipality or school district is required to pay the cost of the audit, which is typically anywhere between $50,000 to $90,000.
Byrd said she is often asked why, as a state agency, the SAI’s office charges for investigative audits. She said it is because the legislature does not fully appropriate the auditor’s office. Only about 30% of what it costs to fund the office is set aside and the rest of it has to be made up.
“So, we are forced to charge for our audit fees, rather than (the legislature) fully appropriating us,” Byrd said.