Summary of Report 04-023

An Audit Report on the Soil and Water Conservation Board

March 2004

Report Number 04-023

Overall Conclusion

The Texas State Soil and Water Conservation Board's (Board) past financial reports have not consistently been reliable, in part because the Board has lacked basic written procedures for budgeting and accounting. The Board has met reporting requirements specific to itself, but it has not submitted several key reports required from all state agencies. Some of the reports it did submit contained some deficiencies. For example, the Board's Legislative Appropriations Request did not accurately project future expenditures.

While there are opportunities for the Board to improve its oversight controls of expenditures made or approved by the local soil and water districts, it generally safeguards the physical, cash, and information technology assets held at the central office. The Board's largest expenditures are for cost-share projects implemented by private landowners, such as for brush control. Local districts approve the payments for these projects. The Board needs to strengthen its guidance and oversight of such pass-through expenditures. For example, the Board allows landowners to contract with themselves and related parties. Because this audit focused on the Board's administrative functions and budget, we cannot provide assurance that district-level controls are in place and working effectively. However, we are currently following up on several questionable transactions approved by districts.

The Board was appropriated $538,265 for its indirect administration strategy for each year of the 2002-2003 biennium. The Board's actual administrative expenditures for these years exceeded its appropriations by 16 percent and 5 percent, respectively. These overages were within the Board's authority to transfer funds across strategies, and the transfers from other strategies did not exceed 25 percent.

The Board also lacks procedures for reporting on its performance. It reports that it meets most of its performance measures; however, our most recent audit of the Board's performance measures could not certify the measures as accurate. This audit confirmed that the Board lacks sufficient procedures and definitions to ensure accurate, consistent performance reporting and progress toward its goals and objectives.

With the exception of not submitting some required reports (as discussed above), the Board complies with key requirements from the Government Code (such as Open Meetings), the Agriculture Code, and the General Appropriations Act. The Board has implemented management recommendations from the Texas Sunset Advisory Commission. However, the Board has not maintained a complaint file as required by Section 201.0231 of the Agriculture Code.

In fiscal year 2003, the Board's expenditures to local conservation districts totaled $3.5 million, and payments to landowners for cost-share programs (such as for brush control) totaled $13.8 million.