AUSTIN - Some of the largest issuers for the state of Texas are concerned they could be required to get costly, separate financial audits each year to comply with secondary disclosure requirements by the Securities and Exchange Commission.

Although many issuers have been told their participation in a comprehensive statewide audit could meet the SEC requirements, they intend to seek clarification from the federal agency when they make their comments by July 15 on the proposed disclosure rules.

"It's mainly a question of what needs to be audited," said Bruce Salzer, director of funds management for the Texas Veterans Land Board. "If we can use the state audit, we will be okay. But a separate audit would not be inexpensive because we have a lot of debt."

Separate audits could cost anywhere from $10,000 to more than $100,000 depending on the size of the agency and the amount of debt issued, industry sources said.

Salzer and representatives of about five other large state issuers including the Texas Public Finance Authority and the Water Development Board talked about secondary disclosure requirements last week at a meeting held by the Texas Bond Review Board.

It was organized to discuss a state response to the SEC's proposed rules that, among their things, would bar dealers from underwriting an offering unless the issuer has agreed to provide financial information and notices of material events to a nationally recognized repository.

At the meeting, state officials decided to compile a group of individual comments from issuers and send them in a packet to the SEC with a cover letter from the Bond Review Board. The board's executive director, Albert Bacarisse, said he plans to finish the letter by June 15.

By submitting both an individual and a group response, the issuers hope to underscore their own needs as well as some joint concerns.

Last week's meeting indicated that the concerns focused on the audit requirements because many state agencies already believe they already are complying with most aspects of the secondary disclosure rule.

"It's a positive step. I think disclosure is important," said John Roan, assistant vice chancellor for finance for the University of Texas system. "I don't find anything insurmountable in complying."

Depending on the SEC requirements, Roan said, the University of Texas could add more financial details to its annual report to comply with standards for annual audited information.

However, bond attorneys and a representative from the state of Texas auditor's office said they thought the current state audit might provide enough detail on various agencies' financial information.

"We hope the SEC will give their stamp of approval to what the state of Texas does," said Jerry E. Turner, a partner with the law firm of Vinson && Elkins in Austin, which represents several of the state's largest issuers. "It's prudent to ask the SEC to address the issue in the regulations."

Carol Ann Smith, who represented the state auditor's office at the meeting, said Texas already is providing more financial information on its agencies than most states after Texas officials instituted a more comprehensive audit in 1987, including cash flow for bond repayment.

But if more information is needed, Smith said, supplemental financial data could be added to existing Bond Review Board publications.

Other concerns were raised. Kevin Ward, the development fund manager for the Water Development Board, said he is not sure what is considered a material event and needs to be released to a nationally recognized repository.

He said he also wanted some clarification on disclosure requirements for "significant obligors."

The proposed rule would require issuers of pooled financings to provide financial and operating information on obligors that account for 20% or more of the cash flow servicing a municipal security.

For the Water Development Board, the city of Houston is a significant obligor for its revolving fund used to finance water and wastewater projects.

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