An Audit Report on the La Joya Water Supply Corporation
July 2005
Report Number 05-046
Overall Conclusion
The La Joya Water Supply Corporation (Corporation) has significant deficiencies in the management of its finances and its operations. The Corporation does not safeguard assets or keep adequate or accurate fiscal records, and it misused funds. Most significantly, the Corporation does not have accurate information about its financial status, and it does not have sufficient resources to cover current liabilities; it could be short by as much as $1.4 million. This situation is compounded by (1) the Corporation's not billing for approximately $618,000 from customers for water usage over a two-year period and (2) its lack of a fiscally responsible procurement process. Furthermore, the Corporation's most recent board election violated portions of its bylaws and the Texas Water Code. If the Corporation's financial situation does not improve, it has the potential to prevent the Corporation from meeting its customers' long-term water needs.
The State Auditor's Office is unable to provide absolute assurance that amounts in this report are complete because the Corporation was not able to provide complete and reliable information. Prior to January 2005, the Corporation did not have adequate controls in place to ensure that it documented its business activities. For example, the Corporation was not able to provide receipts for funds collected (including funds placed in escrow), supporting documentation for funds spent, or an accurate list of its assets and liabilities.
With its approaching conversion to a special utility district, the Corporation is at a critical juncture and must make a determined effort to correct the deficiencies in its operations. If left uncorrected, they will continue to hinder the Corporation's ability to adequately manage its financial operations and provide services. The Corporation's immediate actions should include implementing sound management practices, such as those recommended in this report.
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