A Report on the Audit of the Permanent School Fund's Fiscal Year 2004 Financial Statements Page: 2 of 11
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A Report on
The Audit of the Permanent School Fund's Fiscal Year
2004 Financial Statements
SAO Report No. 05-026
February 2005
Overall Conclusion
In our audit report dated January 14, 2005, we concluded that the Permanent
School Fund's (Fund) basic financial statements for fiscal year 2004 were
materially correct and presented in accordance with accounting principles
generally accepted in the United States of America.
We also issued a report on compliance and internal control over financial reporting
as required by auditing standards. Our procedures were not intended to provide
an opinion on compliance with laws and regulations or to provide assurance on
internal control over financial reporting. However, our procedures did not identify
any noncompliance with laws or regulations that materially affected the financial
statements or any material weaknesses in
internal control over financial reporting.
Background
The major internal controls that we The Permanent School Fund's fund balance as
tested in the process of forming our of August 31, 2004, was $19.9 billion, a $1.3
opinion on the financial statements were billion increase over the prior year.
generally operating effectively. The State Board of Education, assisted by staff
of the Agency's Permanent School Fund
Investment Office, oversees the Fund's financial
Although it is not directly related to investments. The School Land Board, assisted
controls over financial reporting, we by General Land Office staff, oversees the
identified an issue that warrants action Fund's land and mineral rights and can make
real estate investments.
from Texas Education Agency (Agency)
management and management of the
Agency's Permanent School Fund Investment Office. Specifically, Investment
Office management does not have evidence that members of the State Board of
Education (Board) or the Board's service providers made required annual ethics
disclosures in fiscal year 2004. In addition, the Board members did not obtain
required annual ethics training in fiscal year 2004. The Board members received
ethics training in fiscal year 2003 and are scheduled for ethics training during the
spring of 2005. This issue is discussed in Chapter 1 of this report.
Furthermore, Agency and Investment Office management may consider whether
conducting criminal background checks on employees in certain positions will
help reduce the Agency's and the Fund's risk of fraud. This issue is discussed in
Chapter 2 of this report.
Issue for Legislative Consideration
Constitutional language related to calculating the distribution to the Available
School Fund is subject to interpretation. The Legislature may want to consider
" n CiItor's
This audit was conducted in accordance with Government Code, Section 321.0131.
For more information regarding this report, please contact Carol Smith, Audit Manager, or John Keel, State Auditor,
John Keel, CPA at (512) 936-9500.
State Auditor
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Texas. Office of the State Auditor. A Report on the Audit of the Permanent School Fund's Fiscal Year 2004 Financial Statements, report, February 2005; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth518380/m1/2/?q=%22~1~1%22~1&rotate=180: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.