Agua SUD audit again shows operating loss

PALMVIEW — The results of the financial audit were presented to the Agua Special Utility District board of directors earlier this week which showed the utility district had an operating loss of $1.7 million.

The audit, for the 2018 fiscal year, was presented by Rick Longoria of Burton McCumber & Longoria, the CPA firm that conducted the audit. Longoria presented the findings to the board during a meeting Tuesday which included that the district had $9.3 million in operating revenues and $11 million in operating expenses.

The lack of more revenue could be due to their water sales which didn’t grow as much as revenues from connections, Longoria told the board. He attributed that, in part, to rain which likely curbed water usage among customers.

Longoria noted that on a pure, operating basis they were not generating enough water revenue to cover its direct operating expenses which has been the case for most years. However, there have been some years when they have.

“I think the long-term goal should be always try to make that a positive number,” Longoria said. “Right now, because you have contributions coming in, it works but at some time, who knows?”

Their overall net position was positive at $98 million and their working capital, which is the ratio of current assets to current liabilities, was also positive.

Current assets were $3.8 million while current liabilities were $3.2 million making their working capital 1.1621.

However, Longoria noted that the ratio has been declining over the last few years. In 2016, the working capital was 2.821 while in 2017 it was approximately 2.2.

“At the end of the day, there was an increase in the net position of the district for the year,” Longoria told the board.

Agua SUD General Manager J.E. “Eddie” Saenz addressed some of the additional findings in the report which included issues with their procurement process, which is the process by which they contract for services.

Saenz said the utility district has old contracts in place stemming from when they were in receivership that have just continued to be renewed over the years.

“What we have been trying to do is at least address the bigger ticket items but we are going to take their advice,” Saenz told the board, noting they had been working on addressing those issues since they were also raised in the previous audit.

A full copy of the audit was requested by The Monitor but was not provided as of press time.

At the conclusion of his presentation, Longoria emphasized that the focus should be on implemental internal controls within Agua SUD to ensure compliance.

“The spirit, if you will, of those comments is to help you be better,” he told the board. “I think as a governance board, if you look at that as an opportunity to improve and make yourself better, that’s a positive outcome.”