Can a Texas county auditor who is also a CPA ethically audit an emergency services district?

TX AG Opinion GA-0711: Can a county auditor who is a CPA ethically run a required audit?

Plain-English summary

The Kerr County Attorney asked the Attorney General to define "audit" as used in Health and Safety Code section 775.082, which requires an emergency services district to file an audit report of its fiscal accounts and records with the commissioners courts. The audit is normally prepared by an independent certified public accountant licensed in Texas, unless the commissioners court orders the county auditor to do it. The real question was whether a county auditor who is also a CPA, and so bound by the CPA rules of professional conduct including independence standards, could ethically perform the audit that chapter 775 directs.

The Attorney General turned to the Texas State Board of Public Accountancy, the agency that regulates the profession. The Board pointed to Occupations Code section 901.004(a), which says the Public Accountancy Act does not restrict an official act of a person acting as an officer of the state or a county, including a county auditor. Based on that, the Board concluded that the Kerr County auditor, acting under a state law that requires an audit, would not violate the Public Accountancy Act or its regulations even if the audit did not comply with the Board's attestation standards. In other words, the Board reads section 901.004 to except a county auditor, when acting as county auditor, from the Act's regulation.

Courts give serious weight to an agency's reasonable construction of a statute it enforces when that construction does not contradict the plain text. The opinion found the Board's reading reasonable, noting that it respects the autonomous office of county auditor and balances that office's statutory duties against the Board's professional standards. Deferring to that construction, the Attorney General concluded that a county auditor who is a CPA may ethically perform an audit under section 775.082.

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The audit requirement and the accountancy statutes cited here may have been amended since 2009, and the Board's stated position can change. Confirm the current law and the Board's current guidance before relying on this opinion.

Who this opinion affected (as of 2009)

County auditors who are CPAs: The opinion concluded they could ethically perform a section 775.082 audit, because the accountancy board reads the Public Accountancy Act not to restrict their official acts as county auditor.

Emergency services districts: The opinion confirmed they must file an audit report, which the commissioners court may direct the county auditor to prepare rather than an outside CPA.

Commissioners courts: The opinion bore on whether a court could order its county auditor, who happened to be a CPA, to do the district's audit without putting the auditor in an ethical bind.

Common questions

Can a county auditor who is a CPA do a county-ordered audit?
Yes, the opinion said. The Texas State Board of Public Accountancy reads Occupations Code section 901.004 to exempt a county auditor's official acts from the Public Accountancy Act, and the Attorney General deferred to that.

Doesn't the CPA independence rule block it?
The Board concluded that an audit performed under a state law requiring it would not violate the Act or its regulations, even if it did not meet the Board's attestation standards.

Why did the AG defer to the accountancy board?
The opinion explained that courts give serious weight to an agency's reasonable construction of a statute it enforces, and the Board's reading did not contradict the plain text of section 901.004.

Who must file the audit in the first place?
The opinion noted that section 775.082 requires an emergency services district to file an audit report of its fiscal accounts and records with the specified commissioners courts.

Background and statutory framework

Health and Safety Code section 775.082 requires an emergency services district to file an audit report, prepared by an independent licensed CPA unless the commissioners court orders the county auditor to perform it (Tex. Health & Safety Code Ann. § 775.082(b), (c) (Vernon Supp. 2008)). The Texas State Board of Public Accountancy regulates the profession (Tex. Occ. Code Ann. §§ 901.051, 901.151(a)(1) (Vernon 2004)) and reads section 901.004(a), which says the Public Accountancy Act does not restrict an official act of an officer of the state or a county including a county auditor, to except a county auditor acting in that capacity (id. § 901.004(a)). Courts give serious consideration to an agency's reasonable construction of a statute it enforces that does not contradict the plain text (Flores v. Emps. Ret. Sys., 74 S.W.3d 532, 545 (Tex. App.-Austin 2002, pet. denied)). The opinion found the construction reasonable, as it respects the autonomous office of county auditor and balances its duties against the Board's standards (Tex. Const. art. XVI, § 1; Tex. Loc. Gov't Code Ann. § 84.002 (Vernon 2008); Tex. Occ. Code Ann. §§ 901.156, 901.165 (Vernon 2004)), and deferred to it.

Citations

Statutes:

• Tex. Health & Safety Code Ann. § 775.082(b), (c) (Vernon Supp. 2008)
• Tex. Occ. Code Ann. §§ 901.051, 901.151(a)(1), 901.004(a), 901.156, 901.165 (Vernon 2004)
• Tex. Const. art. XVI, § 1
• Tex. Loc. Gov't Code Ann. § 84.002 (Vernon 2008)

Cases:

• Flores v. Emps. Ret. Sys., 74 S.W.3d 532, 545 (Tex. App.-Austin 2002, pet. denied)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0711
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2009/ga0711.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

April 27, 2009

The Honorable Rex Emerson
Kerr County Attorney
County Courthouse, Suite BA-103
700 Main Street
Kerrville, Texas 78028

Opinion No. GA-0711

Re: Definition of "audit" for purposes of section 775.082, Health and Safety Code (RQ-0759-GA)

Dear Mr. Emerson:

You initially ask us to define the term "audit" as it is used in section 775.082 of the Health and Safety Code.[1] Section 775.082 requires an emergency services district to file an "audit report of [its] fiscal accounts and records" with the specified commissioners courts. TEX. HEALTH & SAFETY CODE ANN. § 775.082(b) (Vernon Supp. 2008). The audit is to be prepared by "an independent certified public accountant . . . licensed in this state, unless the commissioners court by order requires the audit to be performed by the county auditor [by a specified date]." Id. § 775.082(c). You state that issues arise when the county auditor is also a certified public accountant ("CPA") and subject to the CPA rules of professional conduct, including standards concerning independence. See Request Letter at 1-2. Thus, the question ultimately raised in your request letter is "whether the County Auditor who is a CPA can ethically perform an audit as directed under [chapter] 775." Id. at 2.

The Texas State Board of Public Accountancy ("TSBPA"), the agency charged with regulating the public accountancy profession, has answered that question. See TEX. OCC. CODE ANN. §§ 901.051 (Vernon 2004) (providing for TSBPA board), 901.151(a)(1) (providing that Board shall administer chapter 901). In its briefing submitted to our office, the TSBPA cites to section 901.004(a), Occupations Code, which provides that the Public Accountancy Act does not: "(1) restrict an official act of a person acting in the person's capacity as: (A) an officer of the state or of a county, municipality, or other political subdivision, including a county auditor; . . ." TSBPA Brief at 1-2 (citing TEX. OCC. CODE ANN. § 901.004(a) (Vernon 2004)). Based on this provision, the TSBPA states that

it is our belief that the Kerr County Auditor acting in her capacity pursuant to a state law which requires the performance of an audit, even if it means an audit not in compliance with this agency's attestation standards, would not be in violation of the Public Accountancy Act or the regulations promulgated pursuant to that Act.

Id. at 2. With its brief, the TSBPA indicates that it effectively construes section 901.004 to except a county auditor, when acting in the capacity of county auditor, from the regulation of the Public Accountancy Act and regulations and standards adopted thereunder.

"An administrative agency's construction or interpretation of a statute, which the agency is charged with enforcing, is entitled to serious consideration by reviewing courts, so long as that construction is reasonable and does not contradict the plain language of the statute." Flores v. Emps. Ret. Sys., 74 S.W.3d 532, 545 (Tex. App.-Austin 2002, pet. denied). The TSBPA's construction of section 901.004 does not contradict the plain language of the section. The TSBPA's construction is not unreasonable in that it respects the autonomous nature of the office of county auditor and balances that office's statutory duties against obligations imposed by the professional standards adopted by the TSBPA. See TEX. CONST. art. XVI, § 1 (oath of office); TEX. LOC. GOV'T CODE ANN. § 84.002 (Vernon 2008) (appointment of auditor by district judges); TEX. OCC. CODE ANN. §§ 901.156 (Vernon 2004) (authorizing TSBPA to adopt standards of professional conduct), 901.165 (authorizing TSBPA to adopt by reference standards for attest services developed by American Institute of Certified Public Accountants or other nationally recognized accountancy organization). Because in our view such a construction is not unreasonable and does not contradict the statute, it is one to which this office will defer.

SUMMARY

In light of, and in deference to, the Texas State Board of Public Accountancy's view of section 901.004, Occupations Code, a county auditor who is a certified public accountant may ethically perform an audit under section 775.082, Health and Safety Code.

Very truly yours,

ANDREW WEBER
First Assistant Attorney General

JONATHAN K. FRELS
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee

[Footnote 1: Request Letter at 2 (available at http://www.texasattorneygeneral.gov).]