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After several rocky years of financial disorder, the North Central Regional Transit District has had its second good audit.
The audit was on time with very few findings. Even having the audit completed on time has been a major success.
“The past two audits have shown marked improvement in terms of internal controls as well as timeliness of getting the audits done. While there were findings, the trend is in the right direction,” Council Chair Geoff Rodgers said. Rodgers is the current council representative on the NCRTD board and serves as treasurer. “I think this is a tribute to Mr. Mortillaro’s and the staff’s professionalism. That being said, we all realize there is still more we can do to improve.”
Anthony Mortillaro was named executive director in September 2011.
It is difficult to find what led to three years of unfiled audits with findings ranging from unauthorized salary increases to missing disbursement documentation.
Former councilor Mike Wismer was the county’s representative on the board when those issues came to light. If Wismer’s memory serves him correctly, the failure to conduct audits was a misunderstanding about roles and responsibilities. The City of Santa Fe was serving as NCRTD’s fiscal agent, creating some confusion about who was responsible for conducting the audits.
Once those audits were conducted, the findings revealed a serious lack of oversight.
Other findings included an unrestricted debit card — which could have potentially been used to access millions of dollars, inconsistent travel per diem and cell phone policies, a missing laptop and a slew of accounting errors.
The audit findings were glossed over until citizens brought the issue to the attention of the NCRTD board. The board, in turn, demanded action.
There was one bright spot in all this disorder.
“All the audits the district has had were unqualified audits, which is the best you can get. That implies that there was no financial impropriety,” Mortillaro said.
While Mortillaro began putting policies in place to tighten NCRTD’s financial practices, Financial Manager Kelly Muniz started untangling the accounting nightmare. Muniz, who was hired shortly before Mortillaro, worked with auditors to simultaneously complete the three back audits and the FY2011 audit. During that period, she also helped complete a randomly conducted Federal financial management overview for grant funding and worked to correct the findings from the delayed audits.
The efforts showed success. The 2011 audit was conducted on time with no new findings. All but five of 17 findings from previous years had been corrected.
The recently released FY2012 audit was also unqualified. This audit did have four new findings, as well as one from previous years yet to be corrected.
The uncorrected finding, carried over from 2008, required better controls over maintaining the general ledger and audit report. New findings showed that bank accounts were not being reconciled with the general ledger in a timely fashion, some disbursements were not properly recorded and that listing of capital assets and identification of Federal expenditures needed improvement.
The management response attributed the findings to losing two of three finance personnel that year. Muniz took a position with the State of New Mexico halfway through the fiscal year and the financial specialist left shortly thereafter.
The auditors agreed with that assessment.
“Pat (Lopez, finance analyst), the person who’s left, said, ‘What are my priorities?’ I said making sure the employees get paid every two weeks and making sure all our vendors get paid,” Mortillaro said. “He was juggling a job that usually requires three people. We brought in temps to help, but then he had to train them as well.”
NCRTD was also moving its offices to the new Jim West Regional Transit Center during that period.
“Most of those things were easily correctable and already have been, now that we have a full staff,” Mortillaro said.
“I’ve always approached it from the standpoint that our goal is no findings. But I am also a realist. Our staff is human, and sometimes things will fall through the cracks. But we learn from those and correct them. The important thing is that there’s no financial improprieties and there’s no financial mismanagement.”
“We’re fully staffed today with people who are very qualified,” Mortillaro said. “And Glenda here is changing processes and fine-tuning things even more than they were in the past.”
New Finance Manager Glenda Aragon, who was hired Nov. 5, has worked as an auditor. Aragon has not only corrected the findings but instituted procedures to prevent them from occurring again.
Aragon has had the Government Finance Officers Associations of the United States and Canada code of ethics enlarged and posted in all three finance offices. Her goal is to get NCRTD to the point where it qualifies for the GFOA’s Certificate of Achievement for Excellence in Financial Reporting and the Award for Distinguished Budget Presentation for the FY2012 budget.
Mortillaro and his staff are currently taking measures to address some of the same revenue issues Los Alamos County is facing, resulting from falling GRT and the need to repay substantial FY2011 GRT to Los Alamos National Laboratory. A substantial amount of NCRTD’s funding comes from Los Alamos County and a four-county voter approved GRT.
Mortillaro is pleased with how the situation has turned around and NCRTD’s overall financial picture.
“The NCRTD has great financial assets. It’s very well positioned, because we have some pretty conservative financial practices,” Mortillaro said.
“That’s one of the things I did when I first came here, was have the board adopt a whole new set of financial policies, and also readopt a reserve policy. Our reserve policy is 25 percent minimum. State law only requires on- month reserve, which is eight percent. Our goal is 25 percent, and we’ve met or exceeded that.”
Board Chair Daniel Barrone, who is a Taos County commissioner, is also pleased with the direction NCRTD is heading.
“We’ve come a long way. We’re still a fairly new entity, and the minimal amount of findings that were found is very good,” Barrone said. “Our staff is coming up and continuing to move forward on the financial management of the entity.”