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New Mexico Auditor Hector Balderas testified before the Legislative Finance Committee that 90 governmental entities have been designated as “at risk” for their failure to submit required annual and compliance audits to the Office of the State Auditor (OSA).
Balderas explained that failure to submit timely audits can create an environment where taxpayer funds are placed at risk for fraud, waste and abuse.
“It is imperative that taxpayers monies are properly managed, especially when resources are scarce in the midst of a budget crisis,” Balderas said in a news release. “Over one billion dollars has been received by these governmental agencies at risk. This figure is even more alarming when considering that a special audit conducted by my office found that $3.3 million was embezzled from the Jemez Mountain School District over a period of seven years. During most of that time the district failed to submit audits. Now, all these agencies have been put on notice that they will be held to a higher standard of accountability.”
All 90 governmental entities have been notified by letter that the OSA has designated them at risk, he said. The designation of an agency at risk will result in special monitoring by the OSA’s Special Investigations Division (SID) until the agency completes and submits any outstanding audits.
State law requires all governmental agencies to submit annual financial and compliance audits to the OSA. State Rep. Jeannette Wallace, R-Los Alamos, Santa Fe and Sandoval, discussed the situation and how the local community faired in the audit ranking during an interview Saturday.
“I reviewed the list an neither Los Alamos County nor Los Alamos Public Schools was on it. Both of our local entities always submit their reports in a timely fashion,” Wallace said. “The Jemez Mountain School District should never have been allowed to go that long … there was a change in auditors … it was a failure in oversight … Balderas hasn’t been there that long,” Wallace said.
Wallace is a longtime member of the Legislature’s Appropriations and Finance Committee. She clarified that the list of 90 at risk entities reflects mostly smaller communities, which cannot afford the $5,000 fee for an auditor.
“We’re looking at how to help these smaller entities pay that fee and may have them at least submit a financial statement of some sort that the auditor can look at to see if there’s an evident question,” she said.
Any agency receiving state funds is required to submit an annual audit. Very few, if any, large entities are more than a year behind, Wallace said. The governmental agencies receiving the at-risk designation must submit status reports to the OSA by Nov. 2. Their report must contain a detailed explanation of the agency’s efforts to complete and submit its audit, including an explanation of the current status of any ongoing audit work, a description of any obstacles encountered by the agency in completing its audit and a projected completion date for the audit.
“Outstanding audits have historically been a problem in New Mexico. State law needs robust measures to deter agencies from noncompliance with audit requirements,” Balderas said. “I propose state law be amended to withhold legislative appropriations until their annual audits are completed and submitted to my office.
Requiring every governmental agency to be fully accountable for every taxpayer dollar must be a priority.”