# THF,ATTORNEY GENERAL OF TEXAS

AUIWI-IN. Tncx~s 78711

April 7, 1977

The Honorable Robert E. Schneider Opinion No. H- 975 Executive Director Texas Water Rights Commission Re: Auditing requireStephen F.Austin State Office Bldg. ments forwater districts. Austin, Texas 78701

DearMr. Schneider:

You inquire about audit requirements forwater districts. In 1973, the Legislature enacted abill, now codified in sections 50.371-.376 of theWater Code, requiring an annual audit of all districts created pursuant to article 3, section 52(b)(1)and (21,and article 16, section 59of theTexas Constitution. Water Code 9 50.001(l). A number ofpre-lY73 enactments dealwith audit and accounting requirements for
some of the samewater districts. You askwhether the 1973 legislation impliedly repealed certain existing audit statutes and ifnot, how apparent inconsistencies between old and new audit requirements can be resolved.

The 1973act requires thegoverning bodies of certain water control and improvement districts, freshwater supply districts, utility districts and other districts created under general or special law toprovide water and sewer services tohave the district's accounts audited each year according togenerally accepted accounting principles by a certified public accountant orpublic accountant holding a permit from theTexas State Board of Public Accountancy. Water Code 95 50.371(a),(b); 50.372. Accounts kept by a district depository or treasurer must also be available for audit. Id. 9 50.373. TheAct requires the audit to be completedyithin 120days after the close of the district's fiscal year. Id. S 50:371(c). The audit report must be filed with the TexasTater Rights Commission, thedistrict office, and either the county clerk or adesignated city official, depending on the location of thedistrict. Id. 9 50.374. Other sections.requir,etheWater Rights CommEion to review the audit andprovide for enforcement of theAct. Id. SS - 50.374, 50.375, 50.376.

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The Honorable Robert E. Schneider -page 2 (H-975)

Other Water Code sections governing audits forwater districts are as follows: Section 50.021 (districtswithin counties of 500,000 or more); section 51.359 (controland improvement districts): section 53.149 (freshwater supply districts); section 54.309 (municipal utility districts); section 55.429 (water improvement districts); section 56.181 (drainagedistricts): section 57.173 (levee improvement districts); and sections 61.213, 62.158 and 63.224 (navigation districts). You suggest that theseprovisions have been impliedly repealed.

The lawdoes not favor repeal by implication but instead will attempt to reconcile apparent conflicts between different laws relating to the same subject. Gordon v. Lake, 356 S.W.Zd
-- 138 (Tex.1962). Where a conflict does exist between two statutes, the last enacted, as themost recent expression of leaislative intent, will control and imDliedlv reDea1 inconsistent prior enactments. Commercial Standard Fire and Marine $0. v. --

Commissioner of Insurance, 429 S.W.2d 930 (Tex.Civ. App. --Austin 1x8, nowrit); Attorney General Opinion H-90 (1973).

In themost part, the 1973 audit requirements do not conflict with prior laws on the subject. Where the new provisions differ from the old they aremore often repetit,ive

or cumulative of them than inconsistent with them. Most of thepre-1973 statutes require ayearly auditwithout stating how it should be done. The district's compliance with the detailed specifications set out in sections 50.371-.376 will usually fulfill its responsibilities under prior law.

The pre-1973 statutes impose on certain districts additional responsibilities not required by.sections 50.371-

.376. These districts must comply with both enactments. For example, some of the older statutes require the audit report tobe filedwith the county auditor or inanother off,icenot required by section 50.374. Water Code 99 50.021(c), 51.359(c), 53.149(b), 55.429(b), 62.158(d), 63.224(c). We believe that the filing provisions are cumulative, and that the district must file itsreport inall locations specified by both statutes.

Some of the.pre-1973 statutes prescribe different qualifications for the auditor than does section 50.371(b), which specifies thathemust be "acertified public accountant or public accountant holding apermit from the Texas State

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Board of Public Accountancy." For example, certain earlier provisions require a "competent person
. . .qualified under law" or a "competent auditor." Water Code SS 50.021(b), 55.429(a). Others permit the district tohave either the county auditor or an independent public accountant perform the audit. Water Code 59 51.359(a), 62.158(b), 63.224(b). Others specify that a certified public accountant must perform the audit. Water Code 5 54.309(a). Inmost cases, appointment of an auditor who qualifies under section 50.371(b) will also fulfill the requirements of the earlier provisions. If the county auditor has the qualifications required by section 50.371(b), hemay be appointed. Where adistrict cannot complywith both section 50.371(b) and the earlier provision, it should comply with section 50.371(b) as the latest expression of legislative intent as to the auditor's qualifications. SeeAttorney General Opinion H-40 .(1973). - Section 50.371(c) requires that the audit be completed within 120days of the close of the fiscal year, while sections 53.149 and 55.429 require completion within a shorter period of time. These provisions are not facially irreconcilable, since an audit completed within onemonth of the end of the fiscal year, isnecessarily completed within 120days thereof. However, since the 120day time allowance may benecessary to secure an audit performed according to generally accepted auditing standards asdirected in section 50.372,we believe theLegislature intended toallow the district 120days in which to complete the audit. Construed as an affirmative provision toallow the auditor 120days, section 50.371(c) is inconsistent with earlier statutes providing less time and therefore impliedly repeals those provisions. All districts will have 120days inwhich to complete the audits required by section 50.371 etseq. and by the relevant specific statute. - Although most of thepre-1973 statutes require annual audits, section 51.359(b) requires water conservation and improvement districts tohave semi-annual audits, while section 51.359(a) permits these districts tohavemonthly
or quarterly audits aswell. We believe that theprovision requiring two audits, each ofwhich would cover only a six month period, is inconsistent with and impliedly repealed by themore recently enacted law requiring an annual audit covering a fullyear's transactions. We do not believe,that sections 50.371--376 are inconsistent with section 51.359(a). The district is still permitted tohave optional quarterly
ormonthly audits inaddition to the required annual audit.

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The Honorable Robert E. Schneider -page 4 (H-975)

The older statutes contain nopenalty for failure to audit while section 50.374(e) and (f)provide a civil penalty. This difference isnot an inconsistency. Itmerely means that districts subject to the requirements of sections 50.371-

.376 are also subject to itspenalty provisions forviolations thereof. Similar violations of the old statute donot subject them toanypenalty.

The pre-1973 provisions for some districts require the county treasurer to act asdistrict treasurer and give him responsibilities related to the day-to-day handling of funds. Water Code 99 56.181(c), 57.173(c), 61.213. These sections require the treasurer to report to the commissioners court about the financial condition of the district. They do not give either thedistrict or the treasurer any duty to conduct an audit and hence are not inconsistent with sections 50.371--376.

You suggest that section 50.372, insofar as itdirects the Commission to adopt amanual of accounts, is inconsistent with therequirement in section 50.021(b) that thedistrict keep "acomplete system of accounts" or the requirements in sections 56.181(b) and 57.173(b) that the county treasurer pay out district funds only onproperly signed vouchers. Section 50.372 does not expressly require any departure from these practices mandated by the older statutes. We do not believe that theCommission may adopt amanual of accounts that requires accounting procedures inconsistent with the procedures required by statute. Accident Board, See Kelly v. Industrial 358S.W.2d 874 (Tex.Civ.App. --Austin 1962,writ ref'd). Cf. Garner v. Lumberton Independent School District, 430xW.2d 418,423 (Tex.Civ.App. -- Austin 1968, nowrit)(grant of authority to administrative body to suspend legislative act not favored).

You also ask about the effect of the 1973 law on articles 1667 through 1671,V.T.C.S. Article 1667 applies to counties of a specified population which have a county auditor and in which exists an improvement, navigation, drainage or road district. The county auditor is to exercise financial control
over these districts asprovided inarticles 1668 through 1671. V.T.C.S. art. 1667. These provisions give him certain responsibilities for supervising district funds, such as keeping accounts, auditing and approving bills fordistrict expenditures and countersigning warrants. V.T.C.S. arts.

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The Honorable Robert Ed.Schneider -page 5 (H-975)

1668, 1669, 1671. He also checks reports thatdistrict officers are required to file and informs the commissioners court of the condition of the district as revealed by the reports. V.T.C.S. art. 1671.

County auditors incounties with apopulation of 330,000
ormore have additional responsibilities. They must prescribe theaccounting system, forms andprocedures used by thedistrict andmust make monthly and annual reports "similar in all respects to those required of him concerning county finances." V.T.C.S. art. 1670. In thesemonthly and annual presentations to the commissioners court and district judge, the county auditor reports the condition of each account, receipts and disbursals from each fund, indebtedness and other information hedeems proper. V.T.C.S. art. 1665. Thus, articles 1667 through 1671 authorize the county auditor to supervise district finances on aday-to-day basis, and require him to keep the county commissioners informed about the financial state of thedistrict. These articles do not require county auditors toperform thekind of comprehensive annual audit mandated by section 50.371 of theWater Code, although auditors in counties of 330,000 ormore must submit some kind of audit results to ,theTexas Water Rights Commission. Sections 50.374 and 50.375, however, require the Commission to receive and review the audit report of each district.

Because the 1973 enactment differs from sections 1667 through 1671 inboth itspurpose and in thekind of accounting procedure it requires, we believe it isnot in conflict with the earlier legislation. Although county auditors in counties of 330,000 ormore may duplicate some of thework done by a public accountant appointed under section 50.371, such overlap merely reflects thenature of improvement districts which
are of local and statewide concern. See Tex. Const. art. 16, 5 59(a), k). In addition, this officehas determined that the county auditor was not relieved ofhis article 1667 duties by legislation requiring the district tohave an annual audit done by anoutside auditor. Attorney General Opinions H-809 (19761,WW-1200 (1961);see Skelton 5 Cameron County Water Control & Imrovement Dist. No. 5, 49 S.W.2d 510 (Tex.Civ. APP. --Sam9mrrdism'd).

You also ask about the effect of sections 50.371-.376 on articles 1676a.and 167613,V.T.C.S., each ofwhich applies to districts incounties within specified population brackets. Articles 1676a and 1676b expressly supersede other audit requirements and state that only their provisions along with certain other statutes shall apply to their respective districts.

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V.T.C.S. art. 1676a, 99 3, 4; 167613,99 3, 4. Sections 50.371-.376, on the other hand, apply to allwater districts and therefore conflict with articles 1676a and 1676b. We believe that sections 50.371-.376 impliedly repeal the conflicting provisions of articles 1676a and 167633. Thus, the audit requirements of sections 50.371-.376 apply to districts described by sections 1676a and 1676b.
Finally, you askwhether theTexas Water Rights Commission may accept for final filing awater district audit report prepared by a county auditor not licensed by theTexas State Board of Public Accountancy when the county auditor audits adistrict under the authority of one of the pre-1973 audit statutes. An audit report prepared by someone who lacks the credentials required by section 50.371(b) does not fulfill the requirements of sections 50.371 through 50.376. TheWater Code directs theCommission to review the report and notify the district of anyviolations of law. Sec. 50.375(a). The district must remedy objections and correct violations ofwhich ithas been notified before finally filing thereport with theCommission. Water Code 950.375(b). If the district does not remedy such objections andviolations, including aviolation of theprovision which states the auditor's qualifications, the Commission should not accept the audit report for final filing.

SUMMARY

Sections 50.371-.376 of theWater Code are generally consistent with certain other Water Code provisions on audit requirements forwater districts, but repeal provisions on qualifications of the auditor and time for completing the audit tom the extent of any inconsistency: Sections 50.371-.376 are not inconsistent with articles 1667 through 1671,V.T.C.S., but
are inconsistent with articles 1676a and 1676b and therefore impliedly repeal the latter two provisions to the extent of any inconsistency. The Texas Water Rights Commission should not accept for final filing an audit report prepared by someone who does notmeet the qualifications of section 50.371(b) but should inform thedistrict of thisviolation and not accept the report until theviolation iscorrected.

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The Honorable Robert E. Schneider -page 7 (H-975)

APPROVED:

c. ROBERT HEATH, Chairman Opinion Committee

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