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Local Government Assistance

Justice of the Peace Manual February 2002 CHAPTER 4

Financial Procedures
CHAPTER 4 (Part 1) CHAPTER 4 (Part 2) CHAPTER 4 (Part 3)

(Part 1)
Although major responsibilities of the justice of the peace are presiding over the justice and small claims courts, justices also have responsibilities in the financial management area. Some of these responsibilities, such as monthly reporting requirements, are spelled out in detail in the statutes. Other responsibilities, such as bookkeeping, are only mentioned briefly in the statutes. The limited coverage in the statutes, however, should not minimize the importance of these areas. A justice of the peace must have a sound financial management system. It should accurately account for all transactions, provide reliable and timely information, and help to ensure that the chances for errors and other irregularities are minimal. The law does not specifically authorize a justice of the peace to maintain a checking account. In fact, the Attorney General has issued an opinion that says it is prohibited except for restitution funds. [176] For this reason, we suggest an account in the county depository or subdepository and covered by the depository contract. This will facilitate the rapid deposit and safekeeping of the funds. This contributes to a good financial management system to protect the interests of the justice and the public. Funds held for third parties that may be held in a judge's bank account include restitution for hot checks, restitution ordered by the judge up to

$500, cash bonds in civil cases, cash bail bonds and payments in satisfaction of judgments not yet transferred to the clerk. Each justice of the peace sits as judge of the small claims court and the justice court. The small claims court has concurrent jurisdiction with the justice court in actions by any person for the recovery of money in which the amount involved, exclusive of costs, does not exceed $5,000.[177] The following are some of the most important statutes concerning the justice of the peace: Small Claims Court Civil Fees collected by Justice of the Peace Justice Courts Criminal Trials Costs paid by Defendants Collection and record keeping Government Code, Chapter 28 Local Government Code, Chapter 118, Subchapter E Government Code, Chapter 27 Code of Criminal Procedure, Chapter 45 Code of Criminal Procedure, Chapter 102 Code of Criminal Procedure, Chapter 103

Criminal and Civil Cases
Financial management activity in a justice's office centers on the flow of events in the office. Generally, the flow follows one of two courses, depending upon whether the matter is of a civil or criminal nature. In actual practice, not all of the following events will occur in each instance. The general flow of events (Exhibit 1) is shown on the next page.

Procedures Manual
Definition A procedures manual is a detailed description of how each function in the office is performed. A procedures manual should include, at a minimum, the following: 1. organization chart; 2. list of employee positions, including job requirements and responsibilities; 3. description and/or flowchart of each function in the office from start to finish; 4. bookkeeping system to be used and maintenance; 5. reports to be completed (how to complete them, and who to send

them to); 6. internal controls that should be followed (see following subsection); and 7. any other information that would be useful in carrying out the duties and responsibilities of the office in an efficient and effective manner. Preparing a Procedures Manual The quickest and often the most effective way of preparing a procedures manual is to let the employees do it themselves. They know better than anyone what they do and how they do it. Have staff list their duties and responsibilities and describe each step of functions they perform. The justice should review the information and make corrections and additions where necessary. Benefits of a Good Procedures Manual A good procedures manual has three important benefits: 1. helps auditors familiarize themselves with the operations of the justice office. Without this tool, auditors may have to spend costly time learning the operations. 2. informs management (commissioners court) of the justice office operations. This information can be particularly helpful during budget hearings. 3. trains new employees and justices. The manual should be reviewed in detail by the justice on a yearly basis and updated. Specific changes should be made throughout the year as necessary.

Internal Control
Basic Principles of Internal Control "Internal control" is the plan of organization and procedures used to carry out the functions of the justice of the peace's office. A sound system of internal financial controls is very important to minimize the possibilities for errors and misuse of funds. Good internal control in a justice of the peace's office also makes the work of both the county auditor and independent auditor easier and less time consuming. Internal control principles can be applied to any justice of the peace office, no matter how large or small. The four basic principles behind every system of internal control are:

1. Appropriate division of duties, 2. Qualified personnel, 3. Sound procedures for authorizing, recording and reporting transactions, and 4. Management oversight to ensure actual performance is consistent with 1, 2 and 3 above. Appropriate Division of Duties If possible, three different people within a justice of the peace's office should perform the following three basic functions: 1. Authorization (approval) of transactions, 2. Recording of transactions, and 3. Custody of assets (cash and other property). For example, a clerk making collections and issuing receipts (having custody of assets) should not be the person who balances and prepares the bank deposit and approves the day's receipts. Neither of these persons should record the day's receipts in the cash receipts journal. If one person performs two, or all three of these functions, there is no independent check for mistakes. Therefore, errors are likely to go undiscovered for long periods. Fraud is also much easier if, for example, the same person collects cash, prepares the bank deposit and/or records the receipts in the books. Small Justice of the Peace Offices In many justice of the peace offices, it is often not practical to maintain a strict separation of duties due to a limited staff size. If such is the case, other means will have to be used to help assure reliable internal control. For example: 1. 2. 3. 4. 5. 6. Rotation of duties among personnel; More strict supervision; Special double-checking of work; Enforced vacations; Additional training to improve quality of personnel; and More frequent internal audits.

Also, just two people can maintain a reasonably good separation of duties. For an example, when money is received, see (Exhibit 2). The basic principle to remember is that no single person handles a transaction from beginning to end. County auditors (or county treasurers in counties without a county

auditor) are required by law to perform internal audits of justice of the peace offices. [178] These internal audits are even more critical when an office is small, with just one or two people. If the internal audits are not being done, justices should request them for their own protection. It is also recommended that each justice periodically request to be included when the outside audit is performed. Qualified Personnel Staff positions should naturally be filled with the most qualified and competent people possible. Unqualified applicants tend to be less able to perform their duties without undue errors, and some special training may be required. Over-qualified applicants sometimes do not perform well either, if they are not challenged by the tasks at hand. All personnel should understand how their duties fit in with the duties of others in the office. Sound Procedures All justice of the peace offices should have logical, consistent procedures that describe in detail the duties that must be performed, how they are to be performed and who is to perform them. If personnel clearly understand what is expected of them, they will tend to do a better, more accurate job. Also, they will make fewer errors and there will be less chance of fraud if individuals understand what they should be doing. Procedures should provide: 1. use and control of pre-numbered forms; 2. cross-referencing of documents (citation numbers, docket numbers, receipt numbers); 3. periodic reconciliation of subsidiary records to control totals; 4. proper authorizations of transactions; 5. effective, timely reporting of transactions; 6. safeguarding of assets; 7. appropriate flow of documents; 8. reasonable amount of checking work of others; and 9. bonding of all employees with access to cash and other valuables. These procedures should be developed in cooperation with the county auditor and county treasurer. Management Oversight of Actual Performance

Qualified personnel, a division of duties and sound written procedures will not guarantee a good system of internal control. The system must also be followed. Results must be periodically monitored to see if the system is working as it should. Such verification is part of the job of a justice of the peace as head of a county office. Internal Control Checklist The following internal control checklists (Exhibit 3) are a means for assessing the quality of internal controls in a justice of the peace office. Justices should periodically assess the adequacy of internal controls in their offices and the county auditor (or county treasurer if there is no county auditor) should make assessments of each justice office in a county a part of their regular internal audit programs.

How Cases are Initiated
Civil Matters In civil matters, a case is initiated when a plaintiff presents a claim or demand to the justice. The claim or demand is referred to as a petition, and in most instances may be verbal. Once the justice determines what rights the plaintiff is claiming, the petition is sufficient and the case is considered filed. Oral Pleadings The pleadings shall be verbal, except where otherwise specially provided; but a brief statement thereof may be noted on the docket; provided that after a case has been appealed and is docketed in the county (or district) court all pleadings shall be made in writing. [179] Issuance and Form of Citation Issuance When a claim or demand is lodged with a justice for suit, the clerk when requested shall issue a citation and deliver the citation as directed by the requesting party. The party requesting the citation shall be responsible for obtaining service of the citation and a copy of the petition if any is filed. Upon request, the clerk shall issue separate or additional citations. [180] Form The citation shall: be styled "the State of Texas"; be signed by the clerk under seal of court or by the Justice of the Peace; contain name and location of the court; show the date the petition was filed; show the date the citation was issued; show the file number and names of parties;

state the nature of the plaintiff's demand, be directed to the defendant, show the name and address of the attorney for the plaintiff; contain the time within which these rules require defendant to file a written answer with the clerk who issued citation; contain the address of the clerk; and notify the defendant that in case of failure of the defendant to file an answer, judgment by default may be rendered for the relief demanded in the petition. The citation shall direct the defendant to file a written answer to plaintiff's petition on or before 10:00 a.m. on the Monday after the expiration of 10 days after the date the citation is served. Notice The citation shall include the following notice to defendant: "You have been sued. You may employ an attorney. If you or your attorney do not file a written answer with the clerk who issued this citation by 10:00 a.m. on the Monday following the expiration of 10 days after you were served this citation and petition, a default judgment may be taken against you." Copies The party filing any pleading upon which the citation is to be issued and served shall furnish the clerk with a sufficient number of copies for use in serving the parties, and when copies are furnished the clerk shall not charge for the copies. Criminal Cases A complaint is sufficient, without regard to its form, if it substantially satisfies the following requisites: must be in writing; must begin with, "In the name and by the authority of the State of Texas"; must state the name of the accused, if known, or if unknown, must include a reasonably definite description of the accused; must show that the accused has committed an offense against the law of this state, or state that the affiant (one who makes an affidavit) has good reason to believe and does believe that the accused has committed an offense against the law of this state; must state the date the offense was committed as definitely as the affiant is able to provide; must bear the signature or mark of the affiant; and must conclude with the words "Against the peace and dignity of the state." A complaint filed in justice court must allege that the offense was

committed in the county in which the complaint is made. Any officer authorized to administer oaths may swear to a complaint. If the defendant does not object to a defect, error or irregularity of form or substance in a charging instrument before the date on which the trial on the merits commences, the defendant waives and forfeits the right to object to the defect, error or irregularity. The trial court is not prohibited from requiring that an objection to a charging instrument be made at an earlier time. [181] If written notice of an offense for which maximum possible punishment is by fine only or of a violation relating to the manner, time and place of parking has been prepared, delivered and filed with the court and a legible duplicate copy has been given to the defendant, the written notice serves as a complaint to which the defendant may plead "guilty," "not guilty" or "nolo contendere." If the defendant pleads "not guilty" to the offense, a complaint shall be filed that conforms to the requirements set forth above, and that complaint serves as an original complaint. A defendant may waive the filing of a sworn complaint and elect that the prosecution proceed on the written notice of the charged offense if the defendant agrees in writing with the prosecution, signs the agreement and files it with the court. [182] A complaint is a sworn allegation charging the accused with the commission of an offense. A defendant is entitled to notice of a complaint against the defendant not later than the day before the date of any proceeding in the prosecution of the defendant under the complaint. The defendant may waive the right to notice. [183]

Docket Books
Justices of the peace are required to keep docket books for criminal and civil cases and enter certain information concerning the cases. Civil Cases Each justice shall keep a civil docket in which the justice shall enter the name of the plaintiff's attorney, as well as: 1. the title of all suits commenced before the justice; 2. the time when the first process was issued against the defendant, when returnable and the nature thereof; 3. the time when the parties, or either of them, appeared before the justice, either with or without a citation;

4. a brief statement of the nature of the plaintiff's demand or claim, and the amount claimed and a brief statement of the nature of the defense made by the defendant, if any; 5. every adjournment, stating at whose request and to what time; 6. the time when the trial was had, stating whether the same was by a jury or by the justice; 7. the verdict of the jury, if any; 8. the judgment signed by the justice and the time of signing it; 9. all applications for setting aside judgments or granting new trials and the order of the justice thereon, with the date thereof; 10. the time of issuing execution, to whom directed and delivered, and the amount of debt, damages and cost; and, when any execution is returned, shall note such return on said docket, with the manner in which it was executed; 11. any stays and appeals that may be taken, and the time when taken, the amount of the bond and the names of the sureties; and 12. such other dockets, books and records required by law or rules, and shall keep a fee book in which shall be taxed all costs accruing in every suit commenced before him. [184] Criminal Cases The justice or judge of each court, or if directed by the justice or judge, the clerk of the court, shall keep a docket containing the following information: 1. the style and file number of each criminal action; 2. the nature of the offense charged; 3. the plea offered by the defendant and the date the plea was entered; 4. the date the warrant, if any, was issued and the return made thereon; 5. the date the examination or trial was held, and if a trial was held, whether it was by a jury or by the justice or judge; 6. the verdict of the jury, if any, and the date of the verdict; 7. the judgment and sentence of the court, and the date each was given; 8. the motion for new trial, if any, and the decision thereon; and 9. whether an appeal was taken and the date of that action. [185] The information in the docket may be processed and stored by the use of electronic data processing equipment, at the discretion of the justice of the peace. In addition to the above information, it is recommended that certain other information be recorded in the docket books, such as:

the name of the defendant's attorney; and the amount of any payments received or refunds made and what they were for.

Endnotes

[176] 1998 Rex. Op. Att'y Gen. DM-396. [177] V.T.C.A. Government Code, §28.003 [178] V.T.C.A. Local Government Code, §§115.002, 115.901. [179] Texas Rules of Civil Procedure Rule 525. [180] Texas Rules of Civil Procedure Rule 534. [181] Vernon's Ann. C.C.P., art. 45.019. [182] Vernon's Ann. C.C.P., art. 27.14(d). [183] Vernon's Ann. C.C.P., art. 45.018. [184] Texas Rules of Civil Procedure Rule 524. [185] Vernon's Ann. C.C.P., art. 45.017. Carole Keeton Strayhorn Texas Comptroller of Public Accounts Window on State Government Contact Us Privacy and Security Policy