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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 three divisions and one special office: the administrative services division, special investigation division, financial audit division and the government accountability office.
The administrative services division is assigned nine employees and is made up of support staff to the office of the state Auditor. It focuses on executive management, personnel, budget, contract administration, public relations, auditor training, computer technology and information processing.

The financial audit division perform specific entity annual audits selected by the state Auditor and reviews all annual audits of public entities in the state.  This division also reviews working papers of independent public auditor (IPA) and implements regulations in the public auditing industry.

The special investigations division is responsible for managing cases coming from whistle blowers, the public and through the OSA fraud hotline.  This division than works to investigate issues of fraud waste and abuse throughout state and local government

The government accountability office (GAO) is responsible for analyzing tax dollar distribution and ensure they are made in accordance with the law. This entails investigating whether dedicated funds are spent on the programs for which they were intended. The GAO will also be assessing selected state wide financial practices such as fund balance management, contractual spending, and conducting return on investment expenditure programs.

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.