KINNEY COUNTY, Texas — A forensic audit of Kinney County’s financial practices has uncovered serious concerns about oversight, reporting, and compliance with state law. The audit, prepared by CPA Don B. Southerland Jr. and issued November 1, 2024, examined county financial activity from 2020 through April 2024.

The report revealed that the County Auditor’s Office has not conducted departmental audits for more than eight years. Instead, its duties have largely been limited to budgeting, purchasing, accounts payable, and grant certification. This left major gaps in financial oversight, as key responsibilities such as surprise cash counts and departmental audits were not being performed.

Among the most troubling findings was the discovery of an abandoned motor vehicle escrow account managed by the Sheriff’s Office without approval from the Commissioners Court. The account received funds from vehicle sales, impound fees, and other sources, but lacked proper documentation and oversight. More than $1.6 million flowed through the account between 2020 and 2024, with over $1 million in expenditures that were never budgeted. The audit determined the account was unlawfully opened and used to make purchases ranging from equipment to meals, marketing, gifts, and donations. Auditors recommended the immediate closure of the account and the transfer of all funds back to the county.

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The Sheriff’s Office was also found to have paid staff and outside workers without using the county payroll system and without issuing the proper W-2 or 1099 forms. These actions created potential violations of IRS reporting requirements and bypassed safeguards designed to ensure transparency in payroll operations.

Concerns were also raised about the County Clerk’s Office, which failed to provide requested financial records, including bank statements and reconciliations. Reports submitted to the Commissioners Court were found to be incomplete and did not reflect actual transactions, limiting the ability of county leaders to track spending and revenue accurately.

The Treasurer’s Office, while found to be generally compliant, was encouraged to take on the responsibility for accounts payable to strengthen checks and balances. The audit noted that the Treasurer’s Office had managed its duties with more transparency but needed additional authority to ensure effective oversight of county finances.

The report also pointed to problems with grant management and inventory tracking. Kinney County has received significant funding from federal and state sources, including Operation Lone Star. Auditors noted that grant-funded assets were not consistently tracked and inventory records were often incomplete, raising concerns about accountability for millions of dollars in outside funds.

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In response to these findings, the report called for immediate reforms. Recommendations included developing an annual audit schedule for every county department, removing the County Auditor as a signatory on accounts, reassigning accounts payable responsibilities to the Treasurer, closing unauthorized accounts such as the one managed by the Sheriff’s Office, and enforcing proper payroll procedures with full compliance to IRS standards. The audit also urged the County Clerk to provide accurate and timely reporting to Commissioners Court and to strengthen transparency across the office.

The report concluded that Kinney County has suffered from a void in financial management due to years of neglect and the absence of proper audits. This lack of oversight allowed offices, particularly the Sheriff’s Office, to manage millions of dollars in public funds with minimal accountability.

The release of the audit comes at a time when Kinney County has faced growing scrutiny for its law enforcement expenditures, especially those tied to Operation Lone Star. Auditors warned that unless strong financial controls are put in place, taxpayer dollars will remain at risk of mismanagement.

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Kinney Co Forensic Audit – Corrected Download