Overview of the Office of the State Auditor

A Matter of Quality and Timeliness

The New Mexico State Auditor's Office and independent public accountants from around the state have worked together during the past year to improve the quality and timeliness of the audits upon which other public bodies rely.

Audits by independent public accountants have come under more thorough review by the State Auditor's Office.

The State Auditor returned numerous audits for additional work last year, and accountants have responded favorably to the quality review.

When the state's leaders prepared the New Mexico Constitution in 1911 for impending statehood in the following year, they created a strong, independent auditor's office to oversee how government officials would spend taxpayers' hard-earned dollars.

In 1968 a state court said the State Auditor's Office should serve as a completely independent representative of the people, accountable to no one else. It should have the power, duty and authority to examine and review the activities of government officials and entities receiving money from state tax revenue, the court said.

The Office of the State Auditor conducts and oversees audits of government entities, making sure they are completed in a timely and efficient manner within professional standards. The State Auditor's Office then reports to the citizens of New Mexico on the accountability of state and local governments. New initiatives are also proposed wherever possible to improve management in government.

The office also provides information and technical assistance for government agencies and independent public accountants.

The Office of the State Auditor is a part of the executive branch of state government. But to be truly effective, the auditor maintains independence from both the governor and the Legislature while examining and auditing the financial affairs of more than 544 state and local entities.

The office implemented a formal quality control system that is monitored and evaluated periodically to ensure that the State Auditor's Office is in compliance with professional standards. External, independent auditors examine office procedures for compliance with professional standards. To ensure the state auditor is accountable to the public, he is elected to a four-year term and may only serve two consecutive terms.

Organization of the Office of the State Auditor

The State Auditor's Office is comprised of two divisions: the administrative services division and the audit division.

The administrative services division is assigned nine employees and is made up of support staff to the audit division. It focuses on executive management, personnel, budget, contract administration, public relations, auditor training, computer technology and information processing.

The audit division, the larger of the two divisions, is assigned 22 employees to perform audits and audit reviews.

Using Audits as Management Tools

Elected and appointed officials often dread being audited and think the process is complete and successful if the report reveals few or no problems with how taxpayers' money was spent. To taxpayers and public officials, a correct and timely audit that justifiably cites problem areas is of more value than an incorrect audit that does not. Audit reports should not just be filed away when complete. They are not produced for the exclusive use of government managers, but are also for the use of the public. A good audit report shows how government managers and employees administer public money. Public officials should use audit reports and findings as a management tool to guide their decisions during the coming year.

The role of Oversight Agencies

The Department of Finance and Administration, Commission on Higher Education or the State Department of Education approves the budgets of state agencies, local governmental entities, colleges, universities and school districts. The State Auditor's Office audits those budgeted revenues and expenditures at the end of the fiscal year.

Some agencies and local governments encounter serious problems during the course of the year. When this occurs, the appropriate oversight agency becomes involved in the day-to-day operations of that entity. In most cases, if the governing body reads, comprehends and acts on issues presented in the prior year's audit report, oversight agencies do not have to assume control.

Clear responsibility is assigned to the New Mexico State Auditor for reviewing books from the govenor's office to irrigation districts.

Agencies that must be audited annually under state law are any department, institution, board, bureau, court, commission, district or committee of state government.

This includes district courts, district attorneys and charitable institutions that accept appropriations from the Legislature. It also includes every political subdivision, office and officer of the state created under either general or special act that receives or spends public money, such as counties, county institutions, boards, bureaus or commissions; municipalities and their institutions, boards, bureaus or commissions; drainage districts, irrigation districts, fire districts or other special districts; and school districts and their subdivisions.

According to state law, the Office of the State Auditor also must be informed of incidents involving fraud or misappropriation of funds. The office is then required to report this information to the proper law enforcement agency. The state statute regarding this matter is:

The Requirements for Contracting and Conducting Audits of Agencies, 2.2.2 NMAC, Section 10.L, states:

Possible Violations of Criminal Statutes in Connection With Financial Affairs

Every agency and IPA, pursuant to section 12-6-6 NMSA 1978 (Criminal Violations), shall notify the State Auditor immediately, in writing, upon any discovery of any possible criminal statute violation in connection with its financial affairs. The notification shall include an estimate of the dollar amount involved, and a complete description of the violation, including names of persons involved and any action taken or planned. The State Auditor shall immediately report the violation to the proper prosecuting officer and furnish the officer with all data and information in his possession relative to the violation.

Education puts us on the same page.

Proactive Approach Reduces Need for Corrective Action

Since 1999, the State Auditor's Office has conducted about 40 seminars on a variety of topics to assist governmental entities and independent public accountants in meeting audit requirements.

Through its educational efforts, the State Auditor's Office has reached out to independent public accountants, state agencies and local governmental entities to help them improve their performance while accounting for tax dollars, promote accountability in government and increase the accessibility of the Office of the State Auditor.

The State Auditor's Office in New Mexico is now known for working with its clients to help them improve their accounting systems and help them better serve taxpayers.

Much attention has been focused on helping governmental entities prepare for the change to the financial reporting method required in Government Accounting Standards Board Statement Nos. 34 and 35.

Implementation of the new financial reporting method will make government reporting similar to that of publicly held companies. This should make government financial reporting easier to understand for both the public and the governing boards.

The State Auditor's Office has conducted training sessions to help independent public accountants plus state and local government and education officials prepare for the change.

The intent is to proactively assist governmental bodies rather than be forced to issue adverse audit reports later.

In addition to providing ongoing advice to agencies in making the change, the State Auditor's Office has sponsored seminars in conjunction with the New Mexico Society of Certified Public Accountants. More than 1,285 people have attended these training sessions.

The training has led to a greater understanding of the new method of financial reporting and will make it easier for agencies and governmental entities to implement the change.

Proclamations

 

Vision, Mission & Objectives

Our Mission and Core Values

The State Auditor's Office will meet its constitutional responsibilities to audit the financial affairs of every agency annually. The agency will work to help improve the accountability and performance of state and local governments for the benefit of the citizens of New Mexico. To accomplish our mission, the State Auditor's Office will maintain high standards of professionalism, objectivity, independence, accuracy and responsiveness.

The core values we have adopted to support this mission include the following:

Integrity:

The State Auditor's Office sets high standards for the conduct of its work. The office takes an approach that is professional, objective, fact-based, nonpartisan, fair, impartial and balanced to all its activities.

Reliability:

The goal of the State Auditor's Office is to ensure that its work is timely, accurate, useful, clear and fair.

Accountability:

The State Auditor's Office is accountable to the taxpayers through elections every four years. It also works to ensure the accountability of all other government agencies in New Mexico through the audit process.

State Auditors on the Job

Expanding the Audit Pool

The State Auditor's Office continually solicits new firms to join the pool of independent public accountants eligible to compete for the annual financial and compliance audits.

The pool has been expanded in recent years as the Office of the State Auditor improved relationships with independent public accountants.

Expanding the number of accountants in the bidding process is intended to make bids more competitive and increases the quality of the audits.

Accounting firms must provide to the State Auditor's Office an organizational chart, results of an external quality peer review conducted every three years, proof of professional liability insurance, proof of an accounting license, a list of all certificate holders, a list of any professional service contracts performed for government entities and an individual firm profile document.

Financial and Compliance Audits

All state agencies, local governments, colleges and universities, and public schools must be examined annually under New Mexico law. Audits begin near the end of the fiscal year on June 30 in New Mexico. More than 544 audits are performed with a cost of more than $6 million. The agencies being audited pay for these audits.

Independent public accountants across the state perform most of the audits. The Office of the State Auditor and various professional organizations establish the stringent criteria for auditing governmental agencies. Accountants compete through a bid process governed by the state procurement code, price and professional competency for these audit contracts from state and local agencies.

Once selected by the state or local agency, the State Auditor's Office approves the contracts with the independent public accountants. Contracts may be renewed for no more than six consecutive years. The State Auditor's Office requires agencies to change auditors after six years to make sure an auditor's independence is maintained.

The state auditor's staff travels throughout New Mexico to meet with public accountants and financial department employees of governmental entities to discuss state and federal changes in accounting and auditing standards. The office conducts educational sessions for accountants and governmental employees as necessary to help them stay current on accounting changes.

Reviewing the Audits and Distributing Reports

When audits are completed, they are sent to the State Auditor's Office in Santa Fe for review. Each audit report is checked for accuracy and reviewed with an eye toward the public body's compliance with appropriate accounting procedures and standards.

The review procedures have become more extensive to ensure the quality of the audit reviews themselves. If after review, the report is not approved, it will be returned to the independent public accountant for corrections and for explanations.

Audit reports become public documents ten days after the State Auditor's Office releases them. Once the report is released and becomes a public record, copies are sent to the Legislative Finance Committee, the Department of Finance and Administration and the State Treasurer's Office. Copies of school district audit reports are forwarded to the State Department of Education. Copies of reports for colleges and universities are sent to the Commission on Higher Education. Copies are also sent to applicable state agencies.

Audit reports are also available for public review at the audited agency or at the State Auditor's Office.

Special Audits and Fraud Audits

Annual audit reports can help administrators identify problems at an early stage so they can be addressed before they worsen.

State government alone has a budget in excess of $4 billion. This increases dramatically when federal funds are added. Government agencies must adhere to federal and state laws, rules and regulations when spending tax dollars regardless of the source of the money.

The New Mexico State Auditor's Office has the authority to perform special audits to detect problems and assist in corrective measures.

The State Auditor's Office also is responsible for fraud audits. Under certain circumstances, they are completed with assistance from the New Mexico Attorney General's Office or district attorneys. Special and fraud audits can be initiated after routine annual reviews suggest further examination of an agency's records is required.

Information regarding fraud form government employees or other citizens can trigger such audits if reported to the State Auditor's Office.

Information can be reported to the New Mexico State Auditor's Office at 1-800-432-5517 or 505-827-3500; or in writing to 213 Warner Circle, Santa Fe, NM 87505-5499. All Information reported in this manner will be reviewed thoroughly and professionally.

Auditor Works with a Diverse List of Clients

The State Auditor's Office has a diverse list of clients that range from large state agencies to small special districts. Serving such a diverse group of clients requires expertise in a number of accounting and auditing areas.

The office conducts audits on a variety of agencies to give its staff as wide a range of expertise as possible so that all clients may be better served through professional, experienced employees. The governmental entities that the State Auditor's Office serves are:

State agencies	90
District Attorneys	15
District Court	14
Municipalities	104
Municipal gas companies	2
Municipal housing authorities	33
Municipal self insurance funds	1
Counties	33
County housing authorities	9
County insurance funds	2
School Districts	90
Charter Schools	31
Regional education cooperatives	6
Regional center cooperatives	6
Colleges and universities	19
Hospitals	12
Independent housing authorities	5
Special districts	41
Soil and Water Districts	47
Mutual Domestic Water Conservation Districts	8
Total	568