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An Audit Report on The Port of Houston Authority's Promotion and Development Fund

January 2002

Report Number 02-019

Overall Conclusion

The Port of Houston Authority's (Authority) monthly reports on expenditures from its Promotion and Development Fund (Fund) contain the required elements (check number, amount, payee, and general purpose) for each expenditure and provide a reasonably accurate picture of Fund activity.

However, some expenditures from the Fund, such as for golf outings and receptions, would have been questionable if paid with State funds. (The Authority is not subject to state purchasing laws and regulations, and these expenditures appear to be consistent with the purpose of this Fund.) Other expenditures, such as for an employee picnic, do not appear to be directly related to promotion and development. Many of the expenditures are routine and operational in nature. The statute states that expenditures from the Fund are to be for "unusual purposes and occasions" not covered by other law. The Authority's current interpretation may not be consistent with this aspect of the law.

Key Facts and Findings

Texas Water Code, Chapter 60, allows the Authority to set aside up to 5 percent per calendar year of its gross income for promotion and development of the port. In calendar year 2000, the Authority transferred approximately 2.6 percent of its gross income from operations into the Fund.
For the two-year period ending August 31, 2001, the Authority wrote approximately 3,200 checks totaling $7 million from the Fund. Most of the expenditures were for advertising and professional fees and services.
There are opportunities for the Authority to strengthen controls over the use of the Fund, including ways to improve the monthly reports provided to the Harris County Auditor.

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