A Performance Audit
An Audit Report on the Lower Colorado River Authority
The Lower Colorado River Authority (LCRA) generally had processes and controls over financial management and managing capital projects to ensure that it complied with LCRA policies and procedures and state requirements. However, the LCRA should strengthen certain controls over irrigation billing, accounts payable and compensation, to ensure that it complies with all applicable requirements and that all financial processes are consistently implemented. It also should document and consistently follow its policies and procedures for financial processes.
The Colorado River Authority (LCRA) has sufficient controls in place to ensure that energy invoices to generation and transmission customers are accurate and processed in a timely manner and in accordance to applicable requirements. Additionally, the LCRA accurately invoiced customers for energy and raw water based on approved rates and according to the contract terms.
The LCRA Sent Irrigation Invoices in a Timely Manner; However, It Lacked Adequate Controls to Ensure That the Invoices Were Accurate and Complied with Requirements
Auditors identified significant weaknesses in LCRA’s controls over three areas related to irrigation billing:
• The LCRA did not ensure that water usage data used to produce the invoices was accurately entered into its billing system.
• The LCRA allowed changes to water usage data in its billing system without requiring the reason for the change to be documented or the changes to be reviewed.
• The LCRA did not ensure that the supplemental agricultural use contracts and invoices that auditors tested clearly communicated how irrigation charges are assessed.
The LCRA Ensured That Invoices from Vendors Were Properly Approved and Supported; However, It Should Implement Controls to Comply With the Prompt Payment Act
The LCRA’s controls ensured that all 45 payment vouchers totaling $3.2 million tested were properly approved and supported, and that payments were made to valid vendors. However, the LCRA does not have controls in place to ensure that it makes prompt payments for applicable goods and services as required by Texas Government Code, Chapter 2251.
Additionally, the LCRA does not have a process to ensure that the related business department approves invoices from vendors in a timely manner.
Compensation Increases for Executive Management Were Properly Approved and Complied With LCRA Policies; However, the LCRA Did Not Consistently Document Its Justifications for the Increases
The LCRA had adequate controls in place to ensure that compensation increases to executive management were approved and appropriate based on its policies; however, it did not consistently document its justifications for compensation increases at the time of the bonus awards.
For 12 of the 44 compensation increases tested, the LCRA did not document its justification for the increase at the time of the compensation award. All 12 were bonus payments, totaling $98,596.
The LCRA’s Procurement and Contracting Process Was Operating Effectively; However, the LCRA Should Updates its Desk Procedures for Procuring Fuel and Energy Contracts
LCRA had documented policies for the purchase of goods, services, software, construction and professional and consulting services. For all 19 contracts for goods and services tested, which had a combined value of $604 million, the LCRA ensured that each contract was executed by an appropriately authorized agent, it obtained conflict of interest documentation for contract approvers, it properly approved the contract prior to execution, it adequately reviewed the contract purchases, and it completed supplier evaluations required by LCRA policy.
The LCRA Complied With Its Internal Policies and Procedures for Identifying, Planning, and Executing Capital Projects
The LCRA properly managed and monitored all 15 capital projects tested, with a combined lifetime budget of $303.5 million.
The LCRA Had Sufficient Access and Application Controls Over Its Information Technology; However, It Should Improve Its Change Management Process
The LCRA’s key controls related to passwords, user access, backup and recovery of production servers, automated jobs, and disaster recovery were working as intended.
However, the LCRA did not consistently ensure proper segregation of duties when making changes to key application systems.
Graphics, Media, Supporting documents