Texas government accounting principles

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The Texas State Auditor's Office (SAO) is the independent auditor for Texas state government. The SAO operates with oversight from the Legislative Audit Committee (LAC), a six-member permanent standing committee of the Texas Legislature. The LAC consists of the Lieutenant Governor, the Speaker of the House of Representatives, one member of the Senate appointed by the Lieutenant Governor, and the chairmen of the Senate Finance Committee, House Appropriations Committee and the House Ways and Means Committee.[1]

The SAO is authorized, by Chapter 321, Texas Government Code, to perform audits, reviews, and investigations of any entity receiving state funds, including state agencies and higher education institutions. Audits are performed in accordance with generally accepted government auditing standards, which include standards issued by the American Institute of Certified Public Accountants. The SAO audit reports are published online. John Keel has been State Auditor since 2004.[2]

In a report published in May 2012, The Institute for Truth in Accounting (IFTA) rated Texas “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 23 states timely, 24 states tardy, and 3 states excessively tardy. IFTA does not consider the state's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[3] Texas' CAFRs are annual publications of the Texas Comptroller of Public Accounts. Susan Combs was elected Texas Comptroller of Public Accounts in 2006. The Comptroller is the chief steward of the state’s finances, acting as tax collector, chief accountant, chief revenue estimator and chief treasurer for all of state government.[4]

Accounting transparency checklist

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Comprehensive Y
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Balanced budget Y
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Timeliness P
Usability P

The good

  • The website has Comprehensive Annual Financial Reports (CAFR) dating back to 2000.[5]
  • An independent auditor’s report is published on page 17 of the document.[6]
  • It provides supplements to the budget workup, starting on page 144.
  • The budget is posted using organized and consistent methods of financial reporting.
  • Texas law requires a balanced budget, but a deficit is permitted.[7]
  • It includes all costs incurred by the government, including long-term liabilities, starting on page 34 of the document.[6]
  • The CAFR compares estimated and actual budgetary numbers, such as on page 144 of the document.[6]

The bad

  • The Texas office was somewhat tardy in submitting the budget.
  • The CAFR is posted in a PDF format, so it’s not searchable online.

External links