New
Mexico Register / Volume XXXI, Issue 5 / March 10, 2020
TITLE 2 PUBLIC
FINANCE
CHAPTER 2 AUDITS
OF GOVERNMENTAL ENTITIES
PART 2 REQUIREMENTS
FOR CONTRACTING AND CONDUCTING AUDITS OF AGENCIES
2.2.2.1 ISSUING AGENCY: Office of the State Auditor.
[2.2.2.1 NMAC - Rp, 2.2.2.1 NMAC, 3/10/2020]
2.2.2.2 SCOPE: Agencies as defined by the Audit Act and
independent public accountants interested in contracting to perform audit
services for those agencies.
[2.2.2.2 NMAC - Rp, 2.2.2.2 NMAC, 3/10/2020]
2.2.2.3 STATUTORY AUTHORITY: Audit Act, Sections 12-6-1 to 12-6-14 NMSA
1978.
[2.2.2.3 NMAC - Rp,
2.2.2.3 NMAC, 3/10/2020]
2.2.2.4 DURATION: Permanent.
[2.2.2.4 NMAC - Rp, 2.2.2.4 NMAC, 3/10/2020]
2.2.2.5 EFFECTIVE DATE: March 10, 2020, unless a later date is cited
at the end of a section.
[2.2.2.5 NMAC - Rp, 2.2.2.5 NMAC, 3/10/2020]
2.2.2.6 OBJECTIVE: The objective is to establish policies,
procedures, rules and requirements for contracting and conducting financial
audits, special audits, attestation engagements, performance audits, and
forensic audits of governmental agencies of the state of New Mexico.
[2.2.2.6 NMAC - Rp, 2.2.2.6 NMAC, 3/10/2020]
2.2.2.7 DEFINITIONS: This section describes certain terms used in
2.2.2 NMAC. When terminology differs
from that used at a particular organization or under particular standards,
auditors should use professional judgment to determine if there is an
equivalent term:
A. Definitions beginning with the
letter “A”:
(1) “AAG GAS” means
AICPA Audit and Accounting Guide - Government auditing standards and Single
Audits (latest edition).
(2) “AAG
SLV” means AICPA Audit and Accounting Guide - State and Local Governments
(latest edition).
(3) “Agency” means
any department, institution, board, bureau, court, commission, district or
committee of the government of the state, including district courts, magistrate
or metropolitan courts, district attorneys and charitable institutions for
which appropriations are made by the legislature; any political subdivision of
the state, created under either general or special act, that receives or
expends public money from whatever source derived, including counties, county
institutions, boards, bureaus or commissions; municipalities; drainage,
conservancy, irrigation, or other special districts; and school districts; any
entity or instrumentality of the state specifically provided for by law,
including the New Mexico finance authority, the New Mexico mortgage finance
authority, the New Mexico lottery authority and every office or officer of any
entity listed in Paragraphs (1) through (3) of Subsection A of Section 12-6-2
NMSA 1978.
(4) “Audit”
may refer to or include annual financial and compliance audit, special audit,
attestation engagement, performance audit, forensic audit or AUP, unless
otherwise specified.
(5) “Auditor” means
independent public accountant.
(6) “AICPA”
means American institute of certified public accountants.
(7) “AU-C” means U.S. auditing
standards-AICPA (Clarified).
(8) “AUP” means agreed upon procedures.
B. Definitions beginning with the
letter “B”: [RESERVED]
C. Definitions beginning with the
letter “C”:
(1) “CPA” means certified public
accountant.
(2) “CPE” means continuing professional
education.
(3) “CYFD”
means the New Mexico children youth and families department.
D. Definitions beginning with the
letter “D”:
(1) “DFA” means the New Mexico department
of finance and administration.
(2) “DOH”
means the New Mexico department of health.
(3) “DOT”
means the New Mexico department of transportation.
E. Definitions beginning with the
letter “E”: “ERB”
means the New Mexico education retirement board.
F. Definitions beginning with the
letter “F”:
(1) “FCD” means financial control division
of the department of finance and administration.
(2) “FDIC” means federal deposit insurance corporation.
(3) “FDS” means financial data schedule.
G. Definitions beginning with the
letter “G”:
(1) “GAAP” means accounting principles
generally accepted in the United States of America.
(2) “GAGAS” means the most recent revision
of government auditing standards issued by the comptroller general of the
United States (yellow book).
(3) “GAO”
means the government accountability office, a division of the OSA.
(4) “GASB” means governmental accounting
standards board.
(5) “GAAS” means auditing standards
generally accepted in the United States of America.
(6) “GSD” means the New Mexico general
services department.
(7) “GRT” means gross receipts tax.
H. Definitions beginning with the
letter “H”:
(1) “HED” means the New Mexico higher
education department.
(2) “HSD”
means the New Mexico human services department.
(3) “HUD” means United States (US)
department of housing and urban development.
I. Definitions beginning with the
letter “I”:
(1) “IPA” means independent public
accountant.
(2) “IRC” means internal revenue code.
J. Definitions beginning with the
letter “J”: [RESERVED]
K. Definitions beginning with the
letter “K”: [RESERVED]
L. Definitions beginning with the
letter “L”:
(1) “LGD” means the local government
division of department of finance and administration (DFA).
(2) “Local
public body” means a mutual domestic water consumers association, a land
grant, an incorporated municipality
or a special district.
M. Definitions beginning with the letter
“M”: [RESERVED]
N. Definitions beginning with the
letter “N”:
(1) “NCUSIF” means national credit union
shares insurance fund.
(2) “NMAC” means New Mexico administrative
code.
(3) “NMSA” means New Mexico statutes
annotated.
O. Definitions beginning with the
letter “O”:
(1) “Office” or “OSA” means the New Mexico office of the state auditor.
(2) “OMB” means the United States office of
management and budget.
P. Definitions beginning with the
letter “P”:
(1) “PED” means the New Mexico public
education department.
(2) “PERA” means the New Mexico public
employee retirement association.
(3) “PHA” means public housing authority.
Q. Definitions beginning with the
letter “Q”: [RESERVED]
R. Definitions beginning with the
letter “R”:
(1) “REAC” means real estate assessment
center.
(2) “REC” means regional education
cooperative.
(3) “Report” means a document issued as a result
of an annual financial and compliance audit, special audit, attestation
engagement, performance audit, forensic audit, or AUP engagement regardless of
whether the document is on the contractor’s letterhead or signed by the
contractor.
(4) “RSI” means required supplementary
information.
S. Definitions beginning with the
letter “S”:
(1) “SAS” means the AICPA’s statement on
auditing standards.
(2) “SHARE” means statewide human resources
accounting and management reporting system.
(3) “SI”
means supplementary information.
(4) “State auditor” may refer to either the
elected state auditor of the state of New Mexico, or personnel of his office
designated by him.
(5) “STO” means state treasurer’s office.
T. Definitions beginning with the
letter “T”:
(1) “Tier”
is established based on the amount of each local public body’s annual revenue,
pursuant to Section 12-6-3 NMSA 1978 and 2.2.2.16 NMAC.
(2) “TRD”
means the New Mexico taxation and revenue department.
U. Definitions beginning with the letter
“U”:
(1) “UFRS” means uniform financial
reporting standards.
(2) “Uniform guidance” Title 2 U.S. Code of
Federal Regulations Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards.
(3) “U.S. GAO” means the United States
government accountability office.
V. Definitions beginning with the
letter “V”: [RESERVED]
W. Definitions beginning with the letter
“W”: [RESERVED]
X. Definitions beginning with the
letter “X”: [RESERVED]
Y. Definitions beginning with the
letter “Y”: [RESERVED]
Z. Definitions beginning with the
letter “Z”: [RESERVED]
[2.2.2.7 NMAC - Rp, 2.2.2.7 NMAC, 3/10/2020]
2.2.2.8 THE
PROCUREMENT AND AUDIT PROCESS:
A. Firm profiles: For an IPA to be included on the state
auditor’s list of approved firms, an IPA shall submit a firm profile online
annually on the fifth business day in January, in accordance with the
guidelines set forth herein. The OSA
shall review each firm profile for compliance with the requirements set forth
in this rule. IPAs shall notify the
state auditor of changes to the firm profile as information becomes
available. The state auditor shall
approve contracts only with IPAs who have submitted
a complete and correct firm
profile that has been approved by the OSA, and who have
complied with all the requirements of this rule, including but not limited to:
(1) Subsection
A of 2.2.2.14 NMAC, continuing professional education requirements for all
staff that the firm will use on any New Mexico governmental engagements;
(2) listed
professional service contracts the firm entered into;
(3) for IPAs who have audited agencies under this rule in the
past, they shall have previously complied with: 2.2.2.9 NMAC, report due dates, including notifying
the state auditor regarding late audit reports and 2.2.2.13 NMAC, review of
audit reports and audit documentation.
B. List of approved firms: The state auditor shall maintain a list of
independent public accounting (IPA) firms that are approved and eligible to compete
for audit contracts and AUP engagements with agencies. The state auditor’s list of approved firms
shall be reviewed and updated on an annual basis. An IPA on the list of approved firms is
approved to perform government audits until the list of approved firms is
published for the following year; provided that the OSA may restrict firms at
any time for failure to submit firm profile updates timely. An IPA that is included on the state
auditor’s list of approved firms for the first time shall be subject to an OSA
quality control review of the IPA’s working papers. This review shall be conducted as soon as the
documentation completion date, as defined by AU-C Section 230, has passed (60
days after the report release date). The state auditor shall approve contracts
only with IPA firms that have submitted a complete and correct firm profile
complying with all the requirements set forth in this rule and that has been
approved by the OSA. The OSA shall
inform all IPAs whose firm profiles were submitted by the due date whether they
are on the list of approved firms and shall publish the list of approved firms
concurrent with notification to government agencies to begin the procurement
process to obtain an IPA to conduct the agency’s annual financial audit.
C. Disqualified firms: An IPA firm
shall not be included on the list of approved firms if any of the following
applies to that IPA:
(1) the firm received a peer review rating of “failed”;
(2) the firm does not have a current New Mexico firm permit to practice;
(3) the
firm profile does not include at least one certified public accountant with a
current CPA certificate who has met the GAGAS CPE requirements described at
Subsection A of 2.2.2.14 NMAC, to perform GAGAS audits;
(4) the IPA has been restricted in the past and has not
demonstrated improvement (this includes submitting excessively deficient audit
reports or having excessively deficient workpapers);
(5) the IPA made false statements in their firm profile or any
other official communication with the OSA that were misleading enough to merit
disqualification; or
(6) any other reason determined by the state auditor to serve
the interest of the state of New Mexico.
(1) IPAs may be
placed on restriction based on the OSA’s review of the firm profile and
deficiency considerations as described below.
Restriction may take the form of limiting either the type of engagements
or the number of audit contracts, or both, that the IPA may hold. The OSA may impose a corrective action plan
associated with the restriction. The
restriction remains in place until the OSA notifies the IPA that the
restriction has been modified or removed.
The deficiency considerations include, but are not necessarily limited
to:
(a) failure
to submit reports in accordance with report due dates provided in Subsection A
of 2.2.2.9 NMAC, or the terms of their individual agency contract(s);
(b) failure to submit late report notification letters in
accordance with Subsection A of 2.2.2.9 NMAC;
(c) failure
to comply with this rule;
(d) poor
quality reports as determined by the OSA;
(e) poor
quality working papers as determined by the OSA;
(f) a
peer review rating of “pass with deficiencies” with the deficiencies being
related to governmental audits;
(g) failure
to contract through the OSA for New Mexico governmental audits or AUP
engagements;
(h) failure
to inform agency in prior years that the IPA is restricted;
(i) failure to comply with the
confidentiality requirements of this rule;
(j) failure
to invite the state auditor or his designee to engagement entrance conferences,
progress meetings or exit conferences after receipt of related notification
from the OSA;
(k) failure
to comply with OSA referrals or requests in a timely manner;
(l) suspension
or debarment by the U.S. general services administration;
(m) false
statements in the IPA’s firm profile or any other official communication with
the OSA;
(n) failure to
cooperate timely with requests from successor IPAs, such as reviewing workpapers; or
(o) any
other reason determined by the state auditor to serve the interest of the state
of New Mexico.
(2) The
OSA shall notify any IPA that it proposes to place under restriction. If the proposed restriction includes a
limitation on the number of engagements that an IPA is eligible to hold, the
IPA shall not submit proposals or bids to new agencies if the number of
multi-year proposals the IPA possesses at the time of restriction is equal to
or exceeds the limitation on the number of engagements for which the IPA is
restricted.
(3) An IPA under
restriction is responsible for informing the agency whether the restricted IPA
is eligible to engage in a proposed contract.
(4) If an agency or
local public body submits an unsigned contract to the OSA for an IPA that was
ineligible to perform that contract due to its restriction, the OSA shall
reject the unsigned contract.
E. Procedures
for imposition of restrictions:
(1) The
state auditor may place an IPA under restriction in accordance with Subsection
D of 2.2.2.8 NMAC.
(a) The state
auditor or his designee shall cause written notice of the restriction to be
sent by email and certified mail, return receipt requested, to the IPA, which
shall take effect as of the date of the letter of restriction. The letter shall contain the following
information:
(i) the
nature of the restriction;
(ii) the conditions of the restriction;
(iii) the reasons for the restriction;
(iv) the action to place the IPA on restriction is brought
pursuant to Subsection A of Section 12-6-3 NMSA 1978 and these regulations;
(v) the
IPA may request, in writing, reconsideration of the proposed contract
restriction which shall be received by the OSA within 15 calendar days from the
date of the letter of restriction; and
(vi) the e-mail or street address where the IPA’s written request
for reconsideration shall be delivered, and the name of the person to whom the
request shall be sent.
(b) The IPA’s
written request for reconsideration shall include sufficient facts to rebut on
a point for point basis each deficiency noted in the OSA’s letter of
restriction. The IPA may request an
opportunity to present in person its written request for reconsideration and
provide supplemental argument as to why the OSA’s determination should be
modified or withdrawn. The IPA may be
represented by an attorney licensed to practice law in the state of New Mexico.
(c) The IPA shall have forfeited its opportunity
to request reconsideration of the restriction(s) if the OSA does not receive a
written request for reconsideration within 15 calendar days of the date of the
letter of restriction. The state auditor
may grant, for good cause shown, an extension of the time an IPA has to submit
a request for reconsideration.
(2) The
OSA shall review an IPA’s request for reconsideration and shall make a
determination on reconsideration within 15 calendar days of the IPA response
letter unless the IPA has asked to present its request for reconsideration in
person, in which case the OSA shall make a determination within 15 calendar
days from the date of the personal meeting.
The OSA may uphold, modify or withdraw its restriction pursuant to its
review of the IPA’s request for reconsideration, and shall notify the IPA of
its final decision in writing which shall be sent to the IPA via email and
certified mail, return receipt requested.
F. Procedures to obtain
professional services from an IPA: Concurrent with publication of the list of
approved firms, the OSA shall authorize agencies to select an IPA to perform
their audit or AUP engagement. Agencies are prohibited from beginning the
process of procuring IPA services until they receive the OSA authorization. Agencies that wish to begin the IPA
procurement process prior to receiving OSA authorization may request an
exception, however any such exceptions granted by OSA are subject to changes in
the final audit rule applicable to the audit and changes in restrictions to, or
disqualifications of, IPAs. The
notification shall inform the agency that it shall consult its prospective IPA
to determine whether the prospective IPA has been restricted by the OSA as to
the type of engagement or number of contracts it is eligible to perform. Agencies that may be eligible for the tiered
system shall complete the evaluation described in Subsection B of 2.2.2.16
NMAC. Agencies that receive and expend
federal awards shall follow the uniform guidance procurement requirements from
2 CFR 200.317 to 200.326 and 200.509, and shall also incorporate applicable
guidance from the following requirements.
Agencies shall comply with the following procedures to obtain
professional services from an IPA for an audit or AUP engagement.
(1) Upon
receipt of written authorization from the OSA to proceed, and at no time before
then unless OSA has granted an exception, the agency shall identify all
elements or services to be solicited pursuant to this rule and conduct a
procurement that includes each applicable element of the annual financial and
compliance audit, special audit, attestation engagement, performance audit,
forensic audit or AUP engagement.
(2) Quotations
or proposals for annual financial audits shall contain each of the following
elements:
(a) financial statement audit;
(b) federal single audit (if applicable);
(c) financial statement preparation so long as the IPA has
considered any threat to independence and mitigated it;
(d) other non-audit services (if applicable and allowed by
current government auditing standards); and
(e) other (i.e., audits of component units such as housing
authorities, charter schools, foundations and other types of component units).
(3) The
agency is encouraged to request multiple year proposals for audit and AUP
services, however the term of the contract shall be for one year only. The parties shall enter a new audit contract
each year. The agency is responsible for
procuring IPA services in accordance with all applicable laws and regulations
which may include, but are not limited to, the State Procurement Code (Chapter
13, Article 1 NMSA 1978) or equivalent home rule procurement provisions; GSD
Rule, Section 1.4.1 NMAC, Procurement Code Regulations, if applicable; DFA
Rule, Section 2.40.2 NMAC, Governing the Approval of Contracts for the Purchase
of Professional Services; Uniform Guidance; and Section 13-1-191.1 NMSA 1978
relating to campaign contribution disclosure forms. In the event that either of the parties to
the contract elects not to contract for all of the years contemplated by a
multiple year proposal, or the state auditor disapproves the contract, the
agency shall use the procedures described above to procure services from a
different IPA.
(4) If
the agency is a component of a primary government, the agency’s procurement for
audit services shall include the AU-C 600 (group audits) requirements for the
IPA to communicate and cooperate with the group engagement partner and team,
and the primary government. This
requirement applies to agencies and universities that are part of the statewide
CAFR, other component units of the statewide CAFR and other component units of
any primary government that use a different audit firm from the primary
government’s audit firm. Costs for the
IPA to cooperate with the group engagement partner and team, and the primary
government, caused by the requirements of AU-C 600 (group audit) may not be
charged in addition to the cost of the engagement, as the OSA views this in the
same manner as compliance with any other applicable standard.
(5) Agencies
are encouraged to include representatives of the offices of separately elected
officials such as county treasurers, and component units such as charter schools
and housing authorities, in the IPA selection process. As part of their evaluation process, the OSA
recommends that agencies consider the following when selecting an IPA:
(a) responsiveness to the request for proposal (the firm’s
integrity, record of past performance, financial and technical resources);
(b) relevant experience, availability of staff with professional
qualifications and technical abilities;
(c) results of the firm’s peer and external quality control
reviews; and
(d) weighting the price criteria less than fifteen percent of
the total criteria taken into consideration by the evaluation process or
selection committee.
Upon the OSA’s
request, the agency shall make accessible to the OSA all of the IPA procurement
and selection documentation.
(6) After selecting an IPA,
each agency shall enter the appropriate requested information online on the
OSA-connect website (www.osa-app.org). In order to do this, the agency shall
register on OSA-Connect and obtain a user-specified password. The agency’s user shall then use OSA-Connect
to enter information necessary for the contract and for the OSA’s evaluation of
the IPA selection. After the agency
enters the information, the OSA-Connect system generates a draft contract
containing the information entered. The
agency shall submit to the OSA for approval a copy of the unsigned draft
contract by following the instructions on OSA-Connect. Note that the IPA recommendation form no
longer exists as a separate document, because OSA-Connect gathers and delivers to the OSA the information
historically submitted on the IPA recommendation form.
(7) The
OSA shall notify the agency as to the OSA’s approval or rejection of the
selected IPA and contract. The OSA’s
review of audit contracts does not include evaluation of compliance with any
state or local procurement laws or regulations; each agency is responsible for
its own compliance with applicable procurement laws, regulations or policies. After the agency receives notification of
approval of the selected IPA and contract from the OSA, the agency is
responsible for getting the contract signed and sent to any oversight agencies,
including DFA, for approval (if applicable).
The OSA shall not physically sign the contract. After the agency obtains all the required
signature and approvals of the contract, the agency shall submit an electronic portable document format (PDF)
copy of the final signed contract to the OSA by electronic mail to: reports@osa.state.nm.us.
(8) The
agency shall deliver the unsigned contract generated by OSA-Connect to the OSA by the due date shown below. In the event that the due date falls on a
weekend or holiday, the due date shall be the next business day. If the unsigned contract is not submitted to
the state auditor by these due dates, the IPA may, according to professional
judgment, include a finding of non-compliance with Subsection F of 2.2.2.8 NMAC
in the audit report or AUP report.
(a) Regional
education cooperatives, cooperative educational services, independent housing
authorities, hospitals and special hospital districts: April 15;
(b) school districts, counties, and higher education: May 1;
(c) incorporated counties (of which
Los Alamos is the only one), local workforce investment boards and local public
bodies that do not qualify for the tiered system: May 15;
(d) councils of governments, district courts, district
attorneys, state agencies: July 1 and the state of New Mexico CAFR: July 31;
(e) local public bodies that qualify for the tiered system
pursuant to Subsections A and B of 2.2.2.16 NMAC with a June 30 fiscal year
end: July 30;
(f) local public bodies that qualify for the tiered system
pursuant to Subsections A and B of 2.2.2.16 NMAC with a fiscal year end other
than June 30 shall use a due date 30 days after the end of the fiscal year;
(g) agencies with a fiscal year end other than June 30 shall use
a due date 30 days before the end of the fiscal year;
(h) component units that are being separately audited: on the
primary government’s due date;
(i) Charter schools that are chartered
by the PED and agencies that are subject to oversight by the HED have the
additional requirement of submitting their audit contract to PED or HED for
approval (Section 12-6-14 NMSA 1978); and
(j) In
the event the agency’s unsigned contract is submitted to the OSA, but is not
approved by the state auditor, the state auditor shall promptly communicate the
decision, including the reason(s) for disapproval, to the agency, at which time
the agency shall promptly submit a contract with a different IPA using
OSA-Connect. This process shall continue
until the state auditor approves an unsigned contract. During this process, whenever an unsigned
contract is not approved by the state auditor, the agency may submit a written
request to the state auditor for reconsideration of the disapproval. The agency shall submit its request no later
than 15 calendar days after the date of the disapproval and shall include
documentation in support of its IPA selection.
If warranted, after review of the request, the state auditor may hold an
informal meeting to discuss the request.
The state auditor shall set the meeting in a timely manner with consideration
given to the agency’s circumstances.
(9) The agency shall retain all
procurement documentation, including completed evaluation forms, for five years
and in accordance with applicable public records laws.
(10) If
the agency fails to submit an unsigned contract by the due date set forth in
this rule, or, if no due date is applicable, within 60 days of notification
from the state auditor to engage an IPA, the state auditor may conduct the
audit or select the IPA for that agency.
The reasonable costs of such an audit shall be borne by the agency
audited unless otherwise exempted pursuant to Section 12-6-4 NMSA 1978.
(11) In
selecting an IPA for an agency pursuant to Subsection F of 2.2.2.8 NMAC the
state auditor shall at a minimum consider the following factors, but may
consider other factors in the state auditor’s discretion that serve the best
interest of the state of New Mexico and the agency:
(a) the IPA shall be drawn from the list of approved IPAs
maintained by the state auditor;
(b) an IPA subject to restriction pursuant to Subsection D of
2.2.2.8 NMAC, is ineligible to be selected under this paragraph;
(c) whether the IPA has conducted one or more audits of similar
government agencies;
(d) the physical proximity of the IPA to the government agency
to be audited;
(e) whether the resources and expertise of the IPA are
consistent with the audit requirements of the government agency to be audited;
(f) the IPA’s cost profile, including examination of the IPA’s
fee schedule and blended rates;
(g) the state auditor shall not select an IPA in which a
conflict of interest exists with the agency or that may be otherwise impaired,
or that is not in the best interest of the state of New Mexico.
(12) The
state auditor shall consider, at a minimum, the following factors when
considering which agencies shall be subject to the state auditor’s selection of
an IPA:
(a) whether agency is demonstrating progress in its own efforts
to select an IPA;
(b) whether the agency has funds to pay for the audit;
(c) whether
the agency is on the state auditor’s “at risk” list;
(d) whether the agency is complying with the requirements
imposed on it by virtue of being on the state auditor’s “at risk” list;
(e) whether the agency has failed to timely submit its e-mailed
draft unsigned contract copy in accordance with the audit rule on one or more
occasions;
(f) whether the agency has failed to timely submit its annual
financial audit report in accordance with the audit rule due dates on one or
more occasions.
(13) The
state auditor may appoint a committee of the state auditor’s staff to make
recommendations for the state auditor’s final determination as to which IPAs
shall be selected for each government agency subject to the discretion of the
state auditor.
(14) Upon selection of an IPA to audit a
government agency subject to the discretion of the state auditor, the state
auditor shall notify the agency in writing regarding the selection of an IPA to
conduct its audit. The notification
letter shall include, at a minimum, the following statements:
(a) the agency was notified by the state auditor to select an
IPA to perform its audit or AUP engagement;
(b) 60 days or more have passed since
such notification, or the applicable due date in this rule has passed, and the
agency failed to deliver its draft contract in accordance with this subsection;
(c) pursuant to Subsection A of Section 12-6-14 NMSA 1978, the
state auditor is selecting the IPA for the agency;
(d) delay in completion of the agency’s audit is contrary to the
best interest of the state and the agency, and threatens the functioning of
government and the preservation or protection of property;
(e) in accordance with Section 12-6-4 NMSA 1978, the reasonable
costs of such an audit shall be borne by the agency unless otherwise exempted;
and
(f) selection of the IPA is final, and the agency shall
immediately take appropriate measures to procure the services of the selected
IPA.
G. State
auditor approval/rejection of unsigned contract: The state auditor
shall use discretion and may
reject unsigned contracts as follows:
(1) An
unsigned audit contract, special audit contract, attestation engagement
contract, performance audit contract, forensic audit contract or AUP
professional services contract under 2.2.2.16 NMAC that does not serve the best
interests of the public or the agency or local public body because of one or
more of the following reasons:
(a) lack of experience of the IPA;
(b) failure to meet the auditor rotation requirements as
follows:
(i) the IPA is
prohibited from conducting the agency audit or AUP engagement for a period of
two years because the IPA already conducted those services for that agency for
a period of six consecutive years;
(ii) if
firm A purchases the stock or assets of firm B, or if firm B merges into firm A
with firm A being the surviving firm, firm A shall not be affected for purposes
of the auditor rotation requirement; the auditor rotation clock shall continue
to run without interruption for firm B’s audit contracts, despite the fact that
such audit contracts may be issued by firm A after the purchase or merger. Because of the impact of firm purchases and
mergers on IPA independence the OSA may evaluate historical mergers when
applying this section;
(c) lack of
competence or staff availability;
(d) circumstances that may cause untimely delivery of the audit
report or AUP report;
(e) unreasonably high or low cost to the agency or local public
body;
(f) terms in the proposed contract that the state auditor
considers to be unfavorable, unfair, unreasonable, or unnecessary;
(g) lack of compliance with the procurement code, the audit act,
or this rule;
(h) the agency giving too much consideration to the price of the
IPA’s response to the request for bids or request for proposals in relation to
other evaluation criteria;
(i) newness of the IPA to the state auditor’s list of approved
firm;
(j) noncompliance
with the requirements of Section 12-6-3 NMSA 1978 the audit act by the agency
for previous fiscal years; or
(k) any other reason determined by the state auditor to be in
the best interest of the state of New Mexico.
(2) An audit contract, special audit
contract, attestation engagement contract, performance audit contract, or
forensic audit contract or AUP contract of an IPA that has:
(a) breached a prior-year contract;
(b) failed to deliver an audit or AUP
report on time;
(c) failed to
comply with state laws or regulations of the state auditor;
(d) performed
non-audit services (including services related to fraud) for an agency or local
public body it is performing an audit, special audit, attestation engagement,
performance audit, forensic audit or an AUP for, without prior approval of the
state auditor;
(e) performed non-audit services under a separate contract for
services that may be disallowed by GAGAS independence standards;
(f) failed to respond, in a timely and
acceptable manner, to an OSA audit, special audit contract, attestation
engagement contract, performance audit contract, forensic audit contract, AUP
report review or working paper review;
(g) impaired independence during an
engagement;
(h) failed to cooperate in providing prior-year working papers
to successor IPAs;
(i) not adhered to external quality control review standards as
defined by GAGAS and 2.2.2.14 NMAC;
(j) has a
history of excessive errors or omissions in audit or AUP reports or working
papers;
(k) released
the audit report or AUP report to the agency, local public body or the public
before the audit release letter or the OSA letter releasing the AUP report was
received from the OSA;
(l) failed to submit a completed signed
contingency subcontractor form, if required;
(m) failed to submit a completed firm profile as required by
Subsection A of 2.2.2.8 NMAC or failed to include all staff in the firm profile
who would be working on the firm’s engagements;
(n) reached the limit of contracts to which the state auditor
restricted the IPA;
(o) failed to
respond to communications from the OSA or engagement clients within a
reasonable amount of time; or
(p) otherwise, in the opinion of the state auditor, the IPA was
unfit to be awarded a contract.
(3) An
audit, special audit contract, attestation engagement contract, performance
audit contract, forensic audit contract or AUP contract for an IPA received by
the OSA, which the state auditor decides to perform himself with or without the
assistance of an IPA, and pursuant to Section 12-6-3 NMSA 1978, even if the
agency or local public body was previously designated for audit or AUP to be
performed by an IPA.
H. Audit contract requirements: The agency shall use the appropriate audit or
AUP engagement contract form provided by the OSA through the OSA-connect
website at www.osa-app.org. The OSA may
provide audit or agreed-upon procedures engagement contract forms to the agency
via facsimile or U.S. mail if specifically requested by the agency. Only contract forms provided by the state
auditor shall be accepted and shall:
(1) be completed and submitted in its unsigned form by the due
date indicated at Subsection F of 2.2.2.8 NMAC;
(2) for all agencies whose contracts are
approved through the DFA’s contracts review bureau, have the IPA’s combined
reporting system (CRS) number verified by the taxation and revenue department
(TRD) after approval by the state auditor; and
(3) in the compensation section of the contract, include the
dollar amount that applies to each element of the contracted procedures that
shall be performed;
I. Professional liability insurance: The IPA shall maintain professional liability
insurance covering any error or omission committed during the term of the contract. The IPA shall provide proof of such insurance
to the state auditor with the firm profile.
The amount maintained should be commensurate with the risk assumed. The IPA shall provide to the state auditor,
prior to expiration, updated insurance information.
J. Breach of contract: A breach of any terms of the contract shall
be grounds for immediate termination of the contract. The injured party may seek damages for such
breach from the offending party. Any IPA
who knowingly makes false statements, assurances, or disclosures may be
disqualified from conducting audits or AUP engagements of New Mexico
governmental agencies.
K. Subcontractor requirements:
(1) Audit firms that
have only one individual qualified to supervise a GAGAS audit and issue the
related audit report pursuant to Section 61-28B-17 NMSA 1978, and GAGAS
Paragraph 4.16 shall submit with the firm profile, a completed contingency
subcontractor form that is dated to be effective until the date the next firm
profile shall be submitted. The form
shall indicate which IPA on the state auditor’s current list of approved IPA’s
shall complete the IPA’s audits in the event the one individual with the
qualifications described above becomes incapacitated and unable to complete the
audit. See the related contingency
subcontractor form available at www.osanm.org. The OSA shall not approve audit contracts for
such a firm without the required contingency subcontractor form.
(2) In the event an
IPA chooses to use a subcontractor to assist the IPA in working on a specific
audit, then the IPA shall obtain the prior written approval of the state
auditor to subcontract a portion of the audit work. The IPA may subcontract only with IPAs who
have submitted a completed and approved firm profile to the state auditor as
required in Subsection A of 2.2.2.8 NMAC.
Subcontractors are subject to an independence analysis, which may
include the IPA rotation requirements of Subsection G of 2.2.2.8 NMAC. “Technical review contracts” are considered
subcontracting and are subject to the requirements of this Section. The audit contract shall specify
subcontractor responsibility, who shall sign the report(s), and how the
subcontractor shall be paid. For
additional information see the subcontract work section of the OSA website.
L. IPA independence: IPAs shall maintain independence with respect
to their client agencies in accordance with the requirements of government auditing standards, December
2018 revision, issued by the US-GAO (GAGAS 3.17-3.108).
(1) An
IPA may not enter into any type of fraud-related engagement, including waste
and abuse related engagements (as defined in Subsection A of 2.2.2.15 NMAC)
with a New Mexico governmental agency without first obtaining the prior written
approval of the state auditor. A copy of
the agency’s written notification to the state auditor (commonly referred to as
the 12-6-6 letter) shall accompany the IPA’s request for approval to perform a
fraud-related engagement where applicable.
This requirement applies both when the IPA is directly
contracted for the fraud-related engagement or is sub-contracted through
another contractor. See 2.2.2.15 NMAC
for the requirements to submit such reports to the OSA for review and release.
(2) A
copy of a contract for an engagement unrelated to fraud, waste or abuse, and a
copy of any report resulting from such a contract, shall be submitted to the
OSA when requested by the OSA.
M. Progress Payments: The state auditor shall approve progress and
final payments for the annual audit contract as follows:
(1) Subsection
A of Section 12-6-14 NMSA 1978 (contract audits) provides that “payment of
public funds may not be made to an independent auditor unless a contract is
entered into and approved as provided in this section.”
(2) Subsection
B of Section 12-6-14 NMSA 1978 (contract audits) provides that the state
auditor may authorize progress payments on the basis of evidence of the percentage
of audit work completed as of the date of the request for partial payment.
(3) Progress
payments up to seventy percent do not require state auditor approval provided
that the agency certifies the receipt of services before any payments are made
to the IPA. The agency shall monitor
audit progress and make progress payments only up to the percentage that the
audit is completed. If requested by the
state auditor, the agency or the IPA shall provide a copy of the approved
invoices and progress billing(s).
Progress payments of seventy percent to ninety-five percent require
state auditor approval after being approved by the agency. When component unit audits are part of a
primary government’s audit contract, requests for progress payments on the component
unit audit(s) shall be included within the primary government’s request for
progress payment approval. In this
situation, the OSA shall not process separate progress payment approvals
submitted by the component unit.
(4) The
state auditor may limit progress payments allowed to be made without state
auditor approval for an IPA whose previous audits were submitted after the due
date specified in Subsection A of 2.2.2.9 NMAC to only the first fifty percent
of the total fee.
(5) Section
12-6-14 NMSA 1978 (contract audits) provides that final payment under an audit
contract may be made by the agency to the IPA only after the state auditor has
determined, in writing, that the audit has been made in a competent manner in
accordance with contract provisions and this rule. The state auditor's determination with
respect to final payment shall be communicated as follows:
(a) stated
in the letter accompanying the release of the report to the agency; or
(b) in
the case of ongoing law enforcement investigations, stated in a letter prior to
the release of the report to the agency.
In no
circumstance may the total billed by the IPA under the audit contract exceed
the total contract amount, as amended if applicable. Further, as the compensation section of the
contract shall include the dollar amount that applies to each element of the
contracted procedures that shall be performed, if certain procedures, such as a
single audit, are determined to be unnecessary and are not performed, the IPA
may not bill the agency for these services.
Final payment to the IPA by the agency prior to review and release of
the audit report by the state auditor is considered a violation of Section
12-6-14 NMSA 1978 and this rule and shall be reported as an audit finding in
the audit report of the agency. If this
statute is violated, the IPA may be removed from the state auditor’s list of
approved auditors.
N. Contract amendment requirements:
(1) Contract
amendments to contracts for audit services, AUP services, or non-audit services
may be submitted to the OSA regarding executed contracts. Contracts may not be amended after they
expire. The contract should be amended
prior to the additional work being performed or as soon as practicable
thereafter. Any amendments to contracts
shall be made on the contract amendment form available at www.saonm.org. The OSA’s review of audit contracts and
amendments does not include evaluation of compliance with the state procurement
code or other applicable requirements.
Although the parties may amend the delivery dates in a contract, audit
report regulatory due dates cannot be modified by amendment. The OSA’s review of audit contract amendments
does not include evaluation of compliance with any state or local procurement
laws or regulations; each agency is responsible for its own compliance with
applicable procurement laws, regulations or policies.
(2) Contract amendments submitted for
state auditor approval shall include a detailed explanation of:
(a) the work to be performed and the estimated hours and fees
required for completion of each separate professional service contemplated by
the amendment; and
(b) how the work to be performed relates to the scope of work
outlined in the original contract.
(3) Since
annual financial audit contracts are fixed-price contracts, contract amendments
for fee increases shall only be approved for extraordinary circumstances,
reasons determined by the state auditor to be in the best interest of the state
of New Mexico, or a significant change in the scope of an audit. For example, if an audit contract did not
include a federal single audit, a contract amendment shall be approved if a
single audit is required. Other examples
of significant changes in the scope of an audit include: the addition of a new
program, function or individual fund that is material
to the government-wide financial statements; the addition of a component unit;
and the addition of special procedures required by this rule, a regulatory body
or a local, state or federal grantor.
Contract amendments shall not be approved to perform additional
procedures to achieve an unmodified opinion.
The state auditor shall also consider the auditor independence
requirements of Subsection L of 2.2.2.8 NMAC when reviewing contract amendments
for approval. Requests for contract
amendments shall be submitted to the OSA with the signed contract
amendment. The OSA shall review the
requests and respond to the agency and the IPA within 30 calendar days of
receipt.
(4) If
a proposed contract amendment is rejected for lack of adequate information, the
IPA and agency may submit a corrected version for reconsideration.
O. Termination
of audit contract requirements:
(1) The state auditor may terminate an audit
contract to be performed by an IPA after determining that the audit has been
unduly delayed, or for any other reason, and perform the audit entirely or
partially with IPAs contracted by the OSA (consistent with the October 6, 1993,
stipulated order, Vigil v. King, No.
SF 92-1487(C). The notice of termination
of the contract shall be in writing.
(2) If the agency or IPA terminate the audit or AUP engagement contract pursuant to
the termination paragraph of the contract, the OSA shall be notified of the
termination immediately. The party
sending out the termination notification letter shall simultaneously send a
copy of the termination notification letter to the OSA with an appropriate
cover letter, addressed to the state auditor.
(a) The
agency is responsible for procuring the services of a new IPA in accordance
with all applicable laws and regulations, and this rule.
(b) The unsigned contract for the newly
procured IPA shall be submitted to the OSA within 30 calendar days of the date
of the termination notification letter.
(c) As
indicated in Subsection A of 2.2.2.9 NMAC, the state auditor shall not grant
extensions of time to the established regulatory due dates.
(d) If
the IPA does not expect to deliver the engagement report by the regulatory due
date, the IPA shall submit a written notification letter to the state auditor
and oversight agency as required by Subsection A of 2.2.2.9 NMAC or Subsection
G of 2.2.2.16 NMAC.
[2.2.2.8 NMAC - Rp, 2.2.2.8 NMAC
3/10/2020]
2.2.2.9 REPORT
DUE DATES:
A. Report
due dates: The IPA shall deliver the organized and bound
annual financial audit report to the state auditor by 5:00 p.m. on the date
specified in the audit contract or send it postmarked by the due date. IPAs and
agencies are encouraged to perform interim work as necessary and appropriate to
meet the following due dates.
(1) The
audit report due dates are as follows:
(a) regional education cooperatives, cooperative educational
services and independent housing authorities:
September 30;
(b) hospitals and special hospital districts: October 15;
(c) higher
education, state agencies not specifically named elsewhere in this Subsection,
district courts, district attorneys, the New Mexico finance authority, the New
Mexico lottery authority, and other agencies with June 30 fiscal year-ends that
are reported as component units in the state of New Mexico comprehensive annual
financial report: November 1;
(d) school
districts, TRD, CYFD, DOH, DOT, HSD, GSD and the state of New Mexico component appropriation funds (state general
fund): November 15;
(e) the PED, the state investment council, and the three
post-employment benefit agencies (PERA, ERB and the retiree health care
authority): the Wednesday before
Thanksgiving day;
(f) counties,
incorporated counties (of which Los Alamos is the only one), workforce
investment boards, councils of governments, and the New Mexico mortgage finance
authority: December 1;
(g) local
public bodies including municipalities:
December 15;
(h) the
state of New Mexico comprehensive annual financial report (CAFR): December 31;
(i) the ERB, PERA and retiree health
care authority schedules of employer allocations reports and related employer
guides required by Subsections Z of 2.2.2.10 NMAC: June 15;
(j) agencies with a fiscal year-end other than June 30 shall
submit the audit report no later than five
months after the fiscal year-end;
(k) regarding
component unit reports (e.g., housing authorities, charter schools, hospitals,
foundations, etc.), all separate audit reports prepared by an auditor that is
different from the primary government’s auditor, are due fifteen days before the primary government’s audit report is due,
unless some other applicable due date requires the report to be submitted
earlier;
(l) any agency that requires its report to be released by
December 31st for any reason (bonding, GFOA, etc.): the earlier of its agency
due date or December 1; and
(m) late audit or AUP reports of any agency (not performed in
the current reporting period): not more than six months after the date the
contract was executed.
(2) If an audit report is not delivered
on time to the state auditor, the auditor shall include this instance of
non-compliance with Subsection A of 2.2.2.9 NMAC as an audit finding in the
audit report. This requirement is not
negotiable. If appropriate, the finding
may also be reported as a significant deficiency or material weakness in the
operation the agency’s internal controls over financial reporting pursuant to
AU-C 265.
(3) An
organized bound hard copy of the report shall be submitted for review by the
OSA with the following: copy of the
signed management representation letter and a copy of the completed state
auditor report review guide (available at www.saonm.org). A report shall not be considered submitted to
the OSA for the purpose of meeting the due date until a copy of the signed
management representation letter and the completed report review guide are also
submitted to the OSA. All separate reports
prepared for component units shall also be submitted to the OSA for review,
along with a copy of the management representation letter, and a completed
report review guide for each separate audit report. A separate component unit report shall not be
considered submitted to the OSA for the purpose of meeting the due date until a
copy of the signed management representation letter and the completed report
review guide are also submitted to the OSA.
If a due date falls on a weekend or holiday, or if the OSA is closed due
to inclement weather, the audit report is due the following business day by
5:00 p.m. If the report is mailed to the
state auditor, it shall be postmarked no later than the due date to be considered
filed by the due date. If the due date
falls on a weekend or holiday the audit report shall be postmarked by the
following business day.
(4) AU-C 700.41 requires the auditor’s
report to be dated after audit evidence supporting the opinion has been
obtained and reviewed, the financial statements have been prepared and the
management representation letter has been signed. AU-C 580.20 requires the management
representation letter to be dated the same date as the independent auditor’s
report.
(5) As
soon as the auditor becomes aware that circumstances exist that will make an
agency’s audit report be submitted after the applicable due date provided in
Subsection A of 2.2.2.9 NMAC, the auditor shall notify the state auditor in
writing. This notification shall consist
of a letter, not an email. However, a
scanned version of the official letter sent via email is acceptable. The late audit notification letter is subject
to the confidentiality requirements detailed at Subsection M of 2.2.2.10
NMAC. This does not prevent the state
auditor from notifying the Legislative Finance Committee or applicable
oversight agency pursuant to Subsections F and G of Section 12-6-3 NMSA
1978. There shall be a separate
notification for each late audit report.
The notification shall include a specific explanation regarding why the
report will be late, when the IPA expects to submit the report and a concurring
signature by a duly authorized representative of the agency. If the IPA is going to miss the expected
report submission date, then the IPA shall send a revised notification
letter. In the event the contract was
signed after the report due date, the notification letter shall still be
submitted to the OSA explaining the reason the audit report will be submitted
after the report due date. The late
report notification letter is not required if the report was submitted to the
OSA for review by the due date, and then rejected by the OSA, making the report
late when resubmitted. Reports
resubmitted to the OSA with changes of the IPA’s opinion after the report due
date shall be considered late and a late audit finding shall be included in the
audit report.
(6) The due date of any report not listed
in Subsection A of 2.2.2.9 NMAC shall be the date specified in the contract.
B. Delivery
and release of the audit report:
(1) All
Audit reports and all separate reports of component units, if applicable shall
be organized, bound and paginated. The
OSA does not accept facsimile or e-mailed versions of the audit reports for
initial review. The IPA shall deliver to
the state auditor a hard copy of the audit report for review by 5:00 p.m. on
the day the report is due. Reports
postmarked by the due date shall be considered received by the due date. Unfinished or excessively deficient reports
shall not satisfy this requirement; such reports shall be rejected and returned
to the IPA and the OSA may take action in accordance with Subsection C of
2.2.2.13 NMAC. When the OSA rejects and
returns a substandard audit report to the IPA, the OSA shall consider the audit
report late if the corrected report is not resubmitted by the due date. The IPA shall also report a finding for the
late audit report in the audit report.
The firm shall submit an electronic version of the corrected rejected
report for OSA review. The name of the
electronic file shall be “corrected rejected report” followed by the agency
name and fiscal year.
(2) Before
initial submission, the IPA shall review the report using the appropriate
report review guide available on the OSA’s website. The report review guide shall reference
applicable page numbers in the audit report.
The audit manager or person responsible for the IPA’s quality control
system shall either complete the report review guide or sign off as having reviewed
it. All questions in the guide shall be
answered, and the reviewer shall sign and date the last page of the guide. If the review guide is not accurately
completed or incomplete, the report shall not be accepted.
(3) IPAs
are encouraged to deliver completed audit reports before the due date. All reports, except for reports prepared by
the OSA, shall be addressed to the state auditor, the agency executive and
governing body (if applicable). Reports
prepared by the OSA shall be addressed to the agency executive and governing
body (if applicable). The OSA shall
review all audit reports submitted by the report due date before reviewing
reports that are submitted after the report due date. Once the review of the report is completed
pursuant to Subsection A of 2.2.2.13 NMAC, and any OSA comments have been
addressed by the IPA, the OSA shall indicate to the IPA that the report is
ready to print. After the OSA issues the
“ok to print” communication for the
audit report, the OSA shall authorize the IPA to submit the corrected report
with the following items to the OSA within five business days; an electronic
searchable version of the audit report labeled “final”, in PDF format, and an
electronic Excel version of the summary of findings report and any other
required electronic schedule (electronic schedules may not apply to engagements
pursuant to 2.2.2.15 or 2.2.2.16 NMAC) if applicable, and an electronic excel
version of the schedule of asset management costs for investing agencies, if
applicable (all available at www.saonm.org).
The OSA shall not release the report until the searchable electronic PDF
version of the report and all required electronic Excel schedules are received
by the OSA. The electronic file
containing the final audit report shall:
(a) be created
and saved as a PDF document in a single PDF file format (simply naming the file
using a PDF extension .pdf does not by itself create a PDF file);
(b) be version 5.0 or newer;
(c) not exceed 10 megabytes (MB) per file submitted (contact the
OSA to request an exception if necessary);
(d) have
all security settings like self-sign security, user passwords, or permissions
removed or deactivated so the OSA is not prevented from opening, viewing, or
printing the file;
(e) not contain any embedded scripts or executables, including
sound or movie (multimedia) objects;
(f) have
a file name that ends with .pdf;
(g) be
free of worms, viruses or other malicious content (a file with such content
shall be deleted by the OSA);
(h) be “flattened”
into a single layer file prior to submission;
(i) not contain
any active hypertext links, or any internal/external links (although it is
permissible for the file to textually reference a URL as a disabled link);
(j) be saved at
300 dots per inch (DPI) (lower DPI makes the file hard to read and higher DPI
makes the file too large);
(k) have a name
that starts with “final version,” followed by the name of the agency and the
fiscal year; and
(l) be searchable.
(4) The
IPA shall deliver to the agency the number of copies of the audit report
indicated in the audit contract only after the state auditor has officially
released the audit report with a “release letter”.
(a) The audited agency may waive the
5-day waiting period required by Section 12-6-5 NMSA 1978. To do so, the agency’s governing authority or
the governing authority’s designee must provide written notification to the OSA
of the waiver. The notification must be
signed by the agency’s governing authority or the governing authority’s
designee and be sent via letter, e-mail or fax to the attention of the state
auditor. The OSA encourages agencies
wishing to waive the five-day waiting period to provide the written notification
prior to the submission of the final
report to the OSA.
(b) The IPA shall deliver to the agency
the number of copies of the audit report indicated in the audit contract only
after the state auditor has officially released the audit report with a
“release letter”. Release of the audit report
to the agency or the public prior to it being officially released by the state
auditor shall result in an audit finding.
(5) After the release of a report, the
OSA shall provide DFA and the legislative finance committee with notification
that the report is available on the OSA website.
(6) If
an audit report is reissued pursuant to AU-C 560, subsequent events and
subsequently discovered facts, or AAG GAS 13.29-.30 for uniform guidance
compliance reports, the reissued audit report shall be submitted to the OSA
with a cover letter addressed to the state auditor. The cover letter shall explain that:
(a) the attached report is a “reissued” report;
(b) the circumstances that caused the reissuance; and
(c) a summary of the changes that appear in the reissued
report. The OSA shall subject the
reissued report to the report review process and upon completion of that report
review process, shall issue a “release letter.”
The contents of the reissued audit report are subject to the
confidentiality requirements described in Subsection M of 2.2.2.10 NMAC. Agency management and the IPA are responsible
for ensuring that the latest version of the report is provided to each
recipient of the prior version of the report.
The OSA shall notify the appropriate oversight agencies regarding the
updated report on the OSA website.
(7) If
changes to a released audit report are submitted to the OSA, and the changes do
not rise to the level of requiring a reissued report, the IPA shall submit a
cover letter addressed to the agency, with a copy to the state auditor, which
includes the following minimum elements:
(a) a statement that the changes did not rise to the level of
requiring a reissued report;
(b) a description of the circumstances that caused the resubmitted
updated report; and
(c) a summary of the changes that appear in the resubmitted
updated report compared to the prior released report. Agency management and the IPA are responsible
for ensuring that the latest version of the resubmitted report is provided to
each recipient of the prior version of the report. The OSA shall notify the appropriate
oversight agencies regarding the updated report on the OSA website.
C. Required
status reports: For an agency that has failed to submit audit
or agreed-upon procedures reports as required by this rule, and has therefore
been designated as “at risk” due to late reports, the state auditor requires
the agency to submit written status reports to the OSA on each March 15, June
15, September 15, and December 15 that the agency is not in compliance with
this rule. Status reports are not
required for agencies that are included on the “at risk” list solely due to an
adverse or disclaimed independent auditor’s opinion. The status report shall be signed by a member
of the agency’s governing authority, a designee of the governing authority or a
member of the agency’s top management.
If the agency has a contract with an IPA to conduct the audit or perform
the AUP engagement, the agency must send the IPA a copy of the quarterly status
report. IPAs engaged to audit or perform AUP engagements for agencies with late
reports are responsible for assisting these agencies in complying with the
reporting requirements of this section.
Failure to do so shall be noted by the OSA and taken in to account
during the IPA Firm Profile evaluation process.
At a minimum, the quarterly written status report shall include:
(1) a detailed explanation of the agency’s efforts to complete
and submit its audit or agreed-upon procedures;
(2) the current status of any ongoing audit or agreed-upon
procedures work;
(3) any obstacles encountered by the agency in completing its
audit or agreed-upon procedures; and
(4) a projected
completion date for the financial audit or agreed-upon procedures report.
[2.2.2.9 NMAC - Rp,
2 2.2.9 NMAC, 3/10/2020]
2.2.2.10 GENERAL CRITERIA:
A. Scope of annual financial and compliance audits:
(1) The
financial audit shall cover the entire financial reporting entity including the
primary government and the component units of the primary government, if
any. For any financial and compliance
audit the agency should produce all documents necessary to conduct the
engagement.
(a) The
primary government shall determine whether an agency that is a separate legal
entity from the primary government is a component unit of the primary
government as defined by GASBS 14, 39, 61, and 80 (as amended). The flowchart at GASBS 61.68 may be useful in
making this determination. The primary
government shall notify all other agencies determined to be component units by
September 15 of the subsequent fiscal year.
Failure to meet this due date results in a compliance finding. All agencies that meet the criteria to be a
component unit of the primary government shall be included with the audited
financial statements of the primary government by discrete presentation unless
otherwise approved by the state auditor.
An exemption shall be requested by the primary government, in writing,
from the state auditor in order to present a component unit as other than a
discrete component unit. The request for
an exemption shall include a detailed explanation, conclusion and supporting
documentation justifying the request for blended component unit presentation. Documentation of the state auditor’s approval
of the blended component unit presentation shall accompany the bound hard copy
of the report submitted to OSA for review.
Component units are reported using the government financial reporting
format if they have one or more of the characteristics described at AAG SLV
1.01. If a component unit does not
qualify to be reported using the governmental format and is not statutorily
required to be reported using the governmental format, that fact shall be explained
in the notes to the financial statements (summary of significant accounting
policies: financial reporting entity).
If there was a change from the prior year’s method of presenting a
component unit or change in component units reported, the notes to the
financial statements shall disclose the reason(s) for the change.
(b) If
a primary government has no component units, that fact shall be disclosed in
the notes to the financial statements (summary of significant accounting
policies: financial reporting entity).
If the primary government has component units that are not included in
the financial statements due to materiality, that fact shall also be disclosed
in the notes.
(c) The
state auditor requires component unit(s) to be audited by the same audit firm
that audits the primary government (except for public housing authority
component units that are statutorily exempt from this requirement,
and the statewide CAFR). Requests for
exemption from this requirement shall be submitted in writing by the primary
government to the state auditor. If the
request to use a different auditor for the component unit is approved in
writing by the state auditor, the following requirements shall be met:
(i) the IPAs of
the primary government and all component units shall consider and comply with
the requirements of AU-C 600;
(ii) the group
engagement partner shall agree that the group engagement team will be able to
obtain sufficient appropriate audit evidence through the use of the group
engagement team’s work or use of the work of the component auditors (AU-C
600.15);
(iii) the component unit auditor selected shall appear on the OSA
list of approved IPAs;
(iv) all bid and auditor selection processes shall comply with
the requirements of this rule;
(v) the
OSA standard contract form shall be used by both the primary government and the
component unit;
(vi) the primary
government, the primary engagement partner, management of the component unit,
and the component unit auditor shall all coordinate their efforts to ensure
that the audit reports of the component unit and the primary government are
submitted by the applicable due dates;
(vii) all
component unit findings shall be disclosed in the primary government’s audit
report (except the statewide CAFR which shall include only component unit
findings that are significant to the state as a whole); and
(viii) any separately issued
component unit financial statements and associated auditors’ reports shall be
submitted to the state auditor by the due date in Subsection A of 2.2.2.9 NMAC
for the review process described in Subsection A of 2.2.2.13 NMAC.
(d) With
the exception of the statewide CAFR, the following SI pertaining to component
units for which separately issued financial statements are not available shall
be audited and opined on as illustrated in AAG SLV 16.103 example A-15: financial statements for each of the
component unit’s major funds, combining and individual fund financial statements
for all of the component unit’s non-major funds, and budgetary comparison
statements for the component unit’s general fund and major special revenue
funds that have legally adopted annual budgets (AAG SLV 3.22).
(2) Audits
of agencies shall be comprised of a financial and compliance audit of the
financial statements and schedules as follows:
(a) The
level of planning materiality described at AAG SLV 4.72-4.73 and exhibit 4-1
shall be used. Planning materiality for
component units is at the individual component unit level.
(b) The
scope of the audit includes the following statements and disclosures which the
auditor shall audit and give an opinion on.
The basic financial statements (as defined by GASB and displayed in AAG
SLV exhibit 4-1) consisting of:
(i) the
governmental activities, the business-type activities, and the aggregate
discretely presented component units;
(ii) each major fund and the aggregate remaining fund information;
(iii) budgetary
comparison statements for the general fund and major special revenue funds that
have legally adopted annual budgets (when budget information is available on
the same fund structure basis as the GAAP fund structure, the state auditor
requires that the budgetary comparison statements be included as part of the
basic financial statements consistent with GASBS 34 fn. 53, as amended, and AAG
SLV 11.12 and 11.13); and
(iv) the related notes
to the financial statements.
(c) Budgetary
comparison statements for the general fund and major special revenue funds
presented on a fund, organization, or program structure basis because the
budgetary information is not available on the GAAP fund structure basis for
those funds shall be presented as RSI pursuant to GASBS 41.
(d) The
auditor shall apply procedures and report in the auditor’s report on the
following RSI (if applicable) pursuant to AU-C 730:
(i) management’s
discussion and analysis (GASBS 34.8-.11);
(ii) RSI
data required by GASBS 67 and 68 for defined benefit pension plans;
(iii) RSI
schedules required by GASBS 43 and 74 for postemployment benefit plans other
than pension plans;
(iv) RSI
schedules required by GASBS 45 and 75 regarding employer accounting and
financial reporting for postemployment benefits other than pensions; and
(v) infrastructure modified approach schedules derived from
asset management systems (GASBS 34.132-133).
(e) The
audit engagement and audit contract compensation include an AU-C 725 opinion on
the SI schedules presented in the audit report.
The auditor shall subject the information on the SI schedules to the
procedures required by AU-C 725. The
auditor shall report on the remaining SI in an other-matter
paragraph following the opinion paragraph in the auditor’s report on the
financial statements pursuant to AU-C 725. With the exception of the statewide
CAFR, the following SI schedules are required to be included in the AU-C 725
opinion if the schedules are applicable to the agency:
(i) primary government combining and individual fund financial
statements for all non-major funds (GASBS 34.383);
(ii) the schedule of expenditures of federal awards required by
uniform guidance;
(iii) the schedule
of pledged collateral required by Subsection P of 2.2.2.10 NMAC;
(iv) the
financial data schedule (FDS) of housing authorities pursuant to Subsection B
of 2.2.2.12 NMAC;
(v) the
school district schedule of cash reconciliation required by Subsection C of
2.2.2.12 NMAC. In addition, the school
district schedule of cash reconciliation SI shall be subjected to audit
procedures that ensure the cash per the schedule reconciles to the PED reports
as required by Subsection C of 2.2.2.12 NMAC;
(vi) any other SI
schedule required by this rule.
B. Governmental
auditing, accounting and financial reporting standards: The audits shall be conducted in accordance
with:
(1) the
most recent revision of GAGAS issued by the United States government
accountability office;
(2) U.S. auditing
standards-AICPA (clarified);
(3) uniform
administrative requirements, cost principles, and audit requirements for
federal awards (uniform guidance);
(4) AICPA audit and
accounting guide, government auditing standards and single audits, (AAG GAS)
latest edition;
(5) AICPA audit and
accounting guide, state and local governments (AAG SLV) latest edition; and
(6) 2.2.2 NMAC,
requirements for contracting and conducting audits of agencies, latest edition.
C. Financial
statements and notes to the financial statements: The financial
statements and notes to the financial statements shall be prepared in
accordance with accounting principles generally accepted in the United States
of America. Governmental accounting
principles are identified in the government accounting standards board (GASB)
codification, latest edition. IPAs shall
follow interpretations, technical bulletins, and concept statements issued by
GASB, other applicable pronouncements, and GASB illustrations and trends for
financial statements. In addition to the
revenue classifications required by NCGAS 1.110, the OSA requires that the
statement of revenues, expenditures, and changes in fund balance - governmental
funds include classifications for intergovernmental revenue from federal
sources and intergovernmental revenue from state sources, as applicable.
D. Requirements for preparation of
financial statements:
(1) The
financial statements presented in audit reports shall be prepared from the
agency's books of record and contain amounts rounded to the nearest dollar.
(2) The
financial statements are the responsibility of the agency. The agency shall maintain adequate accounting
records, prepare financial statements in accordance with accounting principles
generally accepted in the United States of America, and provide complete, accurate,
and timely information to the IPA as requested to meet the audit report due
date imposed in Subsection A of 2.2.2.9 NMAC.
(3) If
there are differences between the financial statements and the books, the IPA
shall provide to the agency the adjusting journal entries and the supporting
documentation that reconciles the financial statements in the audit report to
the books.
(4) If
the IPA prepared the financial statements in their entirety from the
client-provided trial balance or underlying accounting records the IPA should
conclude significant threats to independence exist. Workpapers shall
include the IPA’s documentation of threats and safeguards in accordance with
GAGAS. GAGAS Figure 2 “Independence
considerations for preparing accounting records and financial statements” may
be a useful tool to assist with GAGAS compliance. The fact that the auditor prepared the
financial statements from the client-provided trial balance or underlying
records shall be disclosed on the exit conference page of the audit report IPAs
shall not prepare financial statements from the client-provided trial balance
or underlying records if preparation of the financial statements would impair
independence.
E. Audit
documentation requirements:
(1) The
IPA’s audit documentation shall be retained for a minimum of five years from
the date shown on the opinion letter of the audit report or longer if requested
by the federal oversight agency, cognizant agency, or
the state auditor. The state auditor
shall have access to the audit documentation at the discretion of the state
auditor.
(2) When
requested by the state auditor, all of the audit documentation shall be
delivered to the state auditor by the due date indicated in the request.
(3) The
audit documentation of a predecessor IPA shall be made available to a successor
IPA in accordance with AU-C 510.07 and 510.A3 to 510.A11, and the predecessor
auditor’s contract. Any photocopy costs
incurred shall be borne by the requestor.
If the successor IPA finds that the predecessor IPA’s audit
documentation does not comply with applicable auditing standards and this rule,
or does not support the financial data presented in the audit report, the
successor IPA shall notify the state auditor in writing specifying all
deficiencies. If the state auditor
determines that the nature of deficiencies indicate that the audit was not
performed in accordance with auditing or accounting standards generally
accepted in the United States of America and related laws, rules and
regulations and this rule, any or all of the following actions may be taken:
(a) the state
auditor may require the predecessor IPA firm to correct its working papers and
reissue the audit report to the agency, federal oversight or cognizant agency
and any others receiving copies;
(b) the state auditor may deny or limit the issuance of future
audit contracts; or
(c) the state auditor may refer the predecessor IPA to the New
Mexico public accountancy board for possible licensure action.
F. Auditor
communication requirements:
(1) The IPA shall comply with the
requirements for auditor communication with those charged with governance as
set forth in AU-C 260 and GAGAS 6.06 and 6.07.
(2) After
the agency and IPA have an approved audit contract in place, the IPA shall
prepare a written and dated engagement letter during the planning stage of a
financial audit, addressed to the appropriate officials of the agency, keeping
a copy of the signed letter as part of the audit documentation. In addition to meeting the requirements of
the AICPA professional standards and the GAGAS requirements, the engagement
letter shall state that the engagement shall be performed in accordance with
2.2.2 NMAC.
(3) The audit engagement letter shall not
include any fee contingencies. The
engagement letter shall not be interpreted as amending the contract. Nothing in the engagement letter can impact
or change the amount of compensation for the audit services. Only a contract amendment submitted pursuant
to Subsection N of 2.2.2.8 NMAC may amend the amount of compensation for the
audit services set forth in the contract.
(4) A separate engagement letter and list
of client prepared documents is required for each fiscal year audited. The IPA shall provide a copy of the engagement
letter and list of client prepared documents immediately upon request from the
state auditor.
(5) The
IPA shall conduct an audit entrance conference with the agency. The OSA has the authority to notify the
agency or IPA that the state auditor shall be informed of the date of the
entrance conference, any progress meetings and the exit conference. If such notification is received, the IPA and
agency shall invite the state auditor or his designee to attend all such
conferences no later than 72 hours before the proposed conference or meeting.
(6) All
communications with management and the agency’s oversight officials during the
audit, regarding any instances of non-compliance or internal control
weaknesses, shall be made in writing.
The auditor shall obtain and report the views of responsible officials
of the audited agency concerning the audit findings, pursuant to GAGAS
6.57-6.60. Any violation of law or good
accounting practice, including instances of non-compliance or internal control
weaknesses, shall be reported as audit findings per Section 12-6-5 NMSA
1978. Separate management letter
comments shall not be issued as a substitute for such findings.
G. Reverting
or non-reverting funds: Legislation can designate a fund as reverting
or non-reverting. The IPA shall review
the state law that appropriated funds to the agency to confirm whether any
unexpended, unencumbered balance of a specific appropriation shall be reverted
and to whom. The law may also indicate
the due date for the required reversion.
Appropriate audit procedures shall be performed to evaluate compliance
with the law and accuracy of the related liability account balances due to
other funds, governmental agencies, or both.
The financial statements and the accompanying notes shall fully disclose
the reverting or non-reverting status of a fund or appropriation. The financial statements shall disclose the
specific legislation that makes a fund or appropriation non-reverting and any
minimum balance required. If
non-reverting funds are commingled with reverting appropriations, the notes to
the financial statements shall disclose the methods and amounts used to
calculate reversions. For more
information regarding state agency reversions, see Subsection A of 2.2.2.12
NMAC and the department of finance and administration (DFA) white papers
“calculating reversions to the state general fund,” and “basis of
accounting-modified accrual and the budgetary basis.” The statewide CAFR is exempt from this
requirement.
H. Referrals and Risk Advisories: The Audit Act (Section 12-6-1 et seq. NMSA 1978) states that “the
financial affairs of every agency shall be thoroughly examined and audited each
year by the state auditor, personnel of the state auditor’s office designated
by the state auditor or independent auditors approved by the state auditor.” (Section 12-6-3 NMSA 1978).
Further, audits of New Mexico governmental agencies “shall be conducted
in accordance with generally accepted auditing standards and rules issued by
the state auditor.” (Section 12-6-3 NMSA 1978).
(1) In an effort to ensure that the
finances of state and local governments are thoroughly examined, OSA may
provide IPAs with written communications to inform the IPA that OSA received
information that may suggest elevated risk in specific areas relevant to a
particular agency’s annual financial and compliance audit. These communications shall be referred to as
“referrals.” Referrals are considered confidential
workpapers. Referrals may relate to any topic,
including the scope of the annual financial and compliance audit. IPAs shall take the circumstances described
in OSA referral communications into account in their risk assessment and
perform such procedures as, in the IPA’s professional judgment, are necessary
to determine what further action, if any, in the form of additional disclosure,
findings and recommendations are appropriate in connection with the annual
audit of the agency. After the
conclusion of fieldwork but at least 14 days prior to submitting the draft
annual audit report to the OSA for review, IPAs shall provide written
confirmation to the OSA that the IPA took appropriate action in response to the
referral. This written confirmation
shall respond to all aspects of the referral and list any findings associated
with the subject matter of the referral.
IPAs shall retain adequate documentation in the audit workpapers to support the written confirmation to OSA that
the IPA took appropriate action in response to the referral. As outlined in 2.2.2.13 NMAC the OSA may
review IPA workpapers associated with the annual
audit of any agency. OSA workpaper review procedures shall include examining the IPA
documentation associated with referrals.
Insufficient or inadequate documentation may result in deficiencies
noted in the workpaper review letter and may
negatively impact the IPA during the subsequent firm profile review
process. In accordance with Subsection D
of 2.2.2.8 NMAC, an IPA may be placed on restriction if an IPA refuses to
comply with OSA referrals in a timely manner.
(2) OSA may issue written
communications to inform agencies and IPAs that OSA received information that
suggests elevated risk in specific areas relevant to the annual financial and
compliance audits of some agencies. These
communications shall be referred to as “risk advisories.” Risk advisories shall be posted on the OSA
website in the following location: https://www.saonm.org/risk_advisories. Risk advisories may relate to any topic
relevant to annual financial and compliance audits of New Mexico agencies. IPAs shall take the circumstances described
in OSA risk advisories into account in their risk assessment and perform such
procedures and testwork as, in the IPA’s professional
judgment, are necessary to determine what further action, if any, in the form
of disclosure, findings and recommendations are appropriate in connection with
the annual audit of the agency.
I. State auditor workpaper requirement: The state auditor requires that audit workpapers include a written audit program for fund balance
and net position that includes tests for proper classification of fund balance
pursuant to GASBS 54 and proper classification of net position pursuant to
GASBS 34.34-.37 (as amended) and GASBS 46.4-.5 (as amended).
J. State compliance
audit requirements: An IPA shall identify significant state
statutes, rules and regulations applicable to the agency under audit and
perform tests of compliance. In
designing tests of compliance, IPAs may reference AU-C 250 relating to
consideration of laws and regulations in an audit of financial statements and
AU-C 620 relating to using the work of an auditor’s specialist. As discussed in AU-C 250.A23, in situations
where management or those charged with governance of the agency, or the
agency’s in-house or external legal counsel, do not provide sufficient
information to satisfy the IPA that the agency is in compliance with an
applicable requirement, the IPA may consider it appropriate to consult the
IPA’s own legal counsel. AU-C 620.06 and
620.A1 discuss the use of an auditor’s specialist in situations where expertise
in a field other than accounting or auditing is necessary to obtain sufficient,
appropriate audit evidence, such as the interpretation of contracts, laws and
regulations. In addition to the
significant state statutes, rules and regulations identified by the IPA,
compliance with the following shall be tested if applicable (with the exception
of the statewide CAFR audit):
(1) Procurement
Code, Sections 13-1-1 to 13-1-199 NMSA 1978 including providing the state
purchasing agent with the name of the agency’s chief procurement officer,
pursuant to Section 13-1-95.2 NMSA 1978, and Procurement Code Regulations,
Section 1.4.1 NMAC, or home rule equivalent.
(2) Per Diem and
Mileage Act, Sections 10-8-1 to 10-8-8 NMSA 1978, and Regulations Governing the
Per Diem and Mileage Act, Section 2.42.2 NMAC.
(3) Public
Money Act, Sections 6-10-1 to 6-10-63 NMSA 1978, including the requirements
that county and municipal treasurers deposit money in their respective
counties, and that the agency receive a joint safe keeping receipt for pledged
collateral.
(4) Public
School Finance Act, Sections 22-8-1 to 22-8-48 NMSA 1978.
(5) Investment
of Public Money Act, Sections 6-8-1 to 6-8-25 NMSA 1978.
(6) Public
Employees Retirement Act, Sections 10-11-1 to 10-11-142 NMSA 1978. IPAs shall
test to ensure eligible contributions are remitted to PERA. The IPA shall evaluate controls regarding
employee eligibility for PERA and other benefits. IPAs shall evaluate risk associated with
employees excluded from PERA and test that employees are properly excluded.
(7) Educational
Retirement Act, Sections 22-11-1 to 22-11-55 NMSA 1978. IPAs shall test to ensure eligible contributions
are remitted to ERA. The IPA shall
evaluate controls regarding employee eligibility for ERA and other
benefits. IPAs shall evaluate risk
associated with employees excluded from ERA and test that employees are
properly excluded.
(8) Sale
of Public Property Act, Sections 13-6-1 to 13-6-8 NMSA 1978.
(9) Anti-Donation
Clause, Article IX, Section 14, New Mexico Constitution.
(10) Special,
Deficiency, and Supplemental Appropriations (appropriation laws applicable for
the year under audit).
(11) State agency budget
compliance with Sections 6-3-1 to 6-3-25 NMSA 1978, and local government
compliance with Sections 6-6-1 to 6-6-19 NMSA 1978.
(12) Lease
purchase agreements, Article IX, Sections 8 and 11, New Mexico Constitution; Sections
6-6-11 to 6-6-12 NMSA 1978; Montano v. Gabaldon, 108 NM 94, 766 P.2d 1328 (1989).
(13) Accounting
and control of fixed assets of state government, Sections 2.20.1.1 to 2.20.1.18
NMAC, (updated for GASBS 34 as applicable).
(14) Requirements
for contracting and conducting audits of agencies, 2.2.2 NMAC.
(15) Article
IX of the state constitution limits on indebtedness.
(16) Any
law, regulation, directive or policy relating to an agency’s use of gasoline
credit cards, telephone credit cards, procurement cards, and other
agency-issued credit cards.
(17) Retiree Health Care
Act, Sections 10-7C-1 to 10-7C-19 NMSA 1978.
IPAs shall test to ensure eligible contributions are reported to
NMRHCA. NMRHCA employer and employee
contributions are set forth in Section 10-7C-15 NMSA 1978.
(18) Governmental
Conduct Act, Sections 10-16-1 to 10-16-18 NMSA 1978.
(19) School
Personnel Act, Sections 22-10A-1 to 22-10A-39 NMSA 1978.
(20) School Athletics Equity
Act, Sections 22-31-1 to 22-31-6 NMSA 1978.
IPAs shall test whether the district has submitted the required
school-district-level reports, but no auditing of the reports or the data
therein is required.
K. Federal
requirements: IPAs shall conduct
their audits in accordance with the requirements of the following government
pronouncements and shall test federal compliance audit requirements as
applicable:
(1) government auditing standards (GAGAS) issued by the United
States government accountability office, most recent revision;
(2) uniform administrative requirements, cost principles, and
audit requirements for federal awards;
(3) compliance supplement, latest edition;
(4) catalog of federal domestic assistance (CFDA), latest
edition; and
(5) internal
revenue service (IRS) employee
income tax requirements. IRS Publication
15-B, employer’s tax guide to fringe benefits, available online, provides
detailed information regarding the taxability of fringe benefits.
L. Audit
finding requirements:
(1) Communicating
findings: IPAs shall communicate findings in accordance with generally accepted
auditing standards and the requirements of GAGAS 6.17-6.30. All finding reference numbers shall follow a
standard format with the four-digit audit year, a hyphen and a three digit
sequence number (e.g. 2019-001, 2019-002 … 2019-999). All prior year findings shall include the
finding numbers used when the finding was first reported under historical
numbering systems in brackets, following the current year finding reference
number, if different, to enable the report user to see what year the finding
originated and how it was identified in previous years. Finding reference numbers for single audit
findings reported on the data collection form shall match those reported in the
schedule of findings and questioned costs and the applicable auditor’s
report. Depending on the IPA’s
classification of the finding, the finding reference number shall be followed
by one of the following descriptions: “material weakness”; “significant deficiency”;
“material non-compliance”; “other non-compliance”; or “other matters.”
(a) IPAs shall
evaluate deficiencies to determine whether individually or in combination they
are significant deficiencies or material weaknesses in accordance with AU-C
260.
(b) Findings that
meet the requirements described in AAG GAS 4.12 shall be included in the report
on internal control over financial reporting and on compliance and other
matters based on an audit of financial statements performed in accordance with
government auditing standards. AAG GAS
13.35 table 13-2 provides guidance on whether a finding shall be included in
the schedule of findings and questioned costs.
(c) Section 12-6-5
NMSA 1978 requires that “each report set out in detail, in a separate section,
any violation of law or good accounting practices found by the audit or
examination.”
(i) When auditors detect violations of
law or good accounting practices that shall be reported per Section 12-6-5 NMSA
1978, but that do not rise to the level of significant deficiencies or material
weaknesses, such findings are considered to warrant the attention of those
charged with governance due to the statutory reporting requirement. The auditor shall communicate such violations
in the “compliance and other matters” paragraph in the report on internal
control over financial reporting and on compliance and other matters based on
an audit of financial statements performed in accordance with government
auditing standards.
(ii) Findings
required by Section 12-6-5 NMSA 1978 shall be presented in a separate schedule
of findings labeled “Section 12-6-5 NMSA 1978 findings”. This schedule shall be placed in the back of
the audit report following the financial statement audit and federal award
findings. Per AAG GAS 13.49 there is no
requirement for such findings to be included or referenced in the uniform
guidance compliance report.
(d) Each audit finding (including current
year and unresolved prior-year findings) shall specifically state and describe
the following:
(i) condition (provides a
description of a situation that exists and includes the extent of the condition
and an accurate perspective, the number of instances found, the dollar amounts
involved, if specific amounts were identified, and for repeat findings, management’s progress or lack of progress towards
implementing the prior year planned corrective actions);
(ii) criteria (identifies the required or desired state or what
is expected from the program or operation; cites the specific section of law,
regulation, ordinance, contract, or grant agreement if applicable);
(iii) effect
(the logical link to establish the impact or potential impact of the difference
between the situation that exists (condition) and the required or desired state
(criteria); demonstrates the need for corrective action in response to
identified problems or relevant risks);
(iv) cause
(identifies the reason or explanation for the condition or the factors
responsible for the difference between what the auditors found and what is
required or expected; the cause serves as a basis for the recommendation);
(v) recommendation addressing each condition and cause; and
(vi) agency
response (the agency’s comments about the finding, including specific planned corrective actions with a timeline and
designation of what employee position(s) are responsible for meeting the
deadlines in the timeline).
(e) Uniform
guidance regarding single audit findings (uniform guidance 200.511): The auditee
is responsible for follow-up and corrective action on all audit findings. As a part of this responsibility, the auditee
shall prepare a summary schedule of prior audit findings and a corrective
action plan for current year audit findings in accordance with the requirements
of uniform guidance 200.511. The
corrective action plan and summary schedule of prior audit findings shall
include findings relating to the financial statements which shall be reported
in accordance with GAGAS. The summary
schedule of prior year findings and the corrective action plan shall be
included in the reporting package submitted to the federal audit clearinghouse
(AAG GAS 13.49 fn 38). In addition to being included in the agency
response to each audit finding, the corrective action plan shall be provided on
the audited agency’s letterhead in a document separate from the auditor’s
findings. (COFAR frequently asked questions on the office of management and
budget’s uniform administrative requirements, cost principles, and audit
requirements for federal awards at 2 CFR 200, Section 511-1).
(f) All
audit reports shall include a summary of audit results preceding the
presentation of audit findings (if any).
The summary of audit results shall include the type of auditor report
issued and whether the following categories of findings for internal control
over financial reporting were identified: material weakness, significant
deficiency, and material noncompliance.
AUP reports completed pursuant to 2.2.2.16 NMAC are not required to
include a summary of audit results.
(2) Prior year
findings:
(a) IPAs
shall comply with the requirements of GAGAS Section 6.11 relating to findings
and recommendations from previous audits and attestation engagements. In addition, IPAs shall report the status of all prior-year findings and all findings from special audits
performed under the oversight of the state auditor in the current year audit
report in a summary schedule of prior year audit findings. The summary schedule of prior year audit
findings shall include the prior year finding number, the title, and whether
the finding was resolved, repeated, or repeated and modified in the current
year. No other information shall be
included in the summary schedule of prior year audit findings. All findings from special audits performed
under the oversight of the state auditor shall be included in the findings of
the annual financial and compliance audits of the related fiscal year.
(b) Uniform
guidance regarding single audit prior year findings (uniform guidance
200.511): The auditor shall follow up on
prior audit findings, perform procedures to assess the reasonableness of the
summary schedule of prior audit findings prepared by the auditee in accordance
with the uniform guidance, and report, as a current-year audit finding, when
the auditor concludes that the summary schedule of prior audit findings
materially misrepresents the status of any prior audit finding (AAG GAS 13.53).
(3) Current-year
audit findings: Written audit findings
shall be prepared and submitted to management of the agency as soon as the IPA
becomes aware of the findings so the agency has time to respond to the findings
prior to the exit conference. The agency
shall prepare “planned corrective actions” as required by GAGAS 6.57 and
6.58. The agency shall respond, in
writing, to the IPA’s audit findings within 10 business days. Lack of agency responses within the 10
business days does not warrant a delay of the audit report. The agency’s responses to the audit findings
and the “planned corrective actions” shall be included in the finding after the
recommendation. If the IPA disagrees
with the management’s comments in response to a finding, they may explain in
the report their reasons for disagreement, after the agency’s response (GAGAS
6.59). Pursuant to GAGAS 6.60, “if the
audited agency refuses to provide comments or is unable to provide comments
within a reasonable period of time, the auditors may issue the report without
receiving comments from the audited agency. In such cases, the auditors should indicate in
the report that the audited agency did not provide comments.”
(4) If
appropriate in the auditor’s professional judgment, failure to submit the
completed audit contract to the OSA by the due date at Subsection F of 2.2.2.8
NMAC may be reported as a current year compliance finding.
(5) If
an agency has entered into any professional services contract with the IPA who
performs the agency’s annual financial audit, or the scope of work on any
professional services contract relates to fraud, waste, or abuse, and the
contract was not approved by the state auditor, the IPA shall report a finding
of non-compliance with Subsection L of 2.2.2.8 NMAC.
(6) If
an agency subject to the procurement code failed to meet the requirement to
have a certified chief procurement officer during the fiscal year, the IPA
shall report a finding of non-compliance with Section 1.4.1.94 NMAC.
(7) Component
unit audit findings shall be reported in the primary government’s financial
audit report. This is not required for
the statewide CAFR unless a finding of a legally separate component unit is
significant to the state as a whole.
(8) Except
as discussed in Subsections A and E of 2.2.2.12 NMAC, release of any portion of
the audit report by the IPA or agency prior to being officially released by the
state auditor is a violation of Section 12-6-5 NMSA 1978 and requires a
compliance finding in the audit report.
(9) In
the event that an agency response to a finding indicates in any way that the
OSA is the cause of the finding, the OSA may require that a written response
from the OSA be included in the report, below the other responses to that
finding.
M. Exit conference and related confidentiality
issues:
(1) The
IPA shall hold an exit conference with representatives of the agency’s
governing authority and top management including representatives of any
component units (housing authorities, charter schools, hospitals, foundations,
etc.) if applicable. The OSA has the
authority to notify the agency or IPA that the state auditor shall be informed
of the date of the entrance conference, any progress meetings and the exit
conference. If such notification is received, the IPA and agency shall invite
the state auditor or his designee to attend all such conferences. If component unit representatives cannot
attend the combined exit conference, a separate exit conference shall be held
with the component unit's governing authority and top management. The exit conference and presentation to governance
shall occur in the forum agreed to by the agency and the IPA, to include
virtual or telephonic options. The OSA
reserves the right to require an in-person exit conference and presentation to
the board. The date of the exit
conference(s) and the names and titles of personnel attending shall be stated
in the last page of the audit report.
(2) The
IPA, with the agency’s cooperation, shall provide to the agency for review a
draft of the audit report (stamped “draft”), a list of the “passed audit adjustments,”
and a copy of all the adjusting journal entries at or before the exit
conference. The draft audit report shall
include, at minimum, the following elements: independent auditor’s report,
basic financial statements, audit findings, summary schedule of prior year
audit findings, and the reports on internal control and compliance required by
government auditing standards and uniform guidance.
(3) Agency
personnel and the agency’s IPA shall not release information to the public
relating to the audit until the audit report is released by the OSA, and has
become a public record. This does not
preclude an agency from submitting financial statements and notes to the
financial statements, clearly marked as “draft” or “unaudited” to federal or
state oversight agencies or bond rating agencies. Any draft financial
statements provided to federal or state oversight agencies or to bond rating
agencies shall exclude draft auditor opinions and findings, and any pages
including references to auditor opinions or findings.
(4) Once
the audit report is officially released to the agency by the state auditor (by
a release letter) and the required waiting period of five calendar days has
passed, unless waived by the agency in writing, the audit report shall be presented
by the IPA, to a quorum of the governing authority of the agency at a meeting
held in accordance with the Open Meetings Act, if applicable. This requirement only applies to agencies
with a governing authority, such as a board of directors, board of county
commissioners, or city council, which is subject to the Open Meetings Act. The IPA shall ensure that the required
communications to those charged with governance are made in accordance with
AU-C 260.12 to 260.14.
(5) At
all times during the audit and after the audit report becomes a public record,
the IPA shall follow applicable standards and 2.2.2 NMAC regarding the release
of any information relating to the audit.
Applicable standards include but are not limited to the AICPA Code of
Conduct ET Section 1.700.001 and related interpretations and guidance, and
GAGAS 6.53-6.55 and GAGAS 6.63-6.65. The
IPA shall not disclose audit documentation if such disclosure would undermine
the effectiveness or integrity of the audit process. AU-C
230.A29.
N. Possible violations of criminal statutes in
connection with financial affairs:
(1) IPAs
shall comply with the requirements of GAGAS 6.19-6.24 relating to fraud,
noncompliance with provisions of laws, regulations, contracts and grant
agreements, waste and abuse. Relating to
contracts and grant agreements, IPAs shall extend the AICPA requirements
pertaining to the auditors’ responsibilities for laws and regulations to also
apply to consideration of compliance with provisions of contracts or grant
agreements. Concerning abuse, if an IPA
becomes aware of abuse that could be quantitatively, or qualitatively material
to the financial statements or other financial data significant to the audit
objectives, the IPA shall apply audit procedures specifically directed to
ascertain the potential effect on the financial statements or other financial
data significant to the audit objectives.
(2) Pursuant
to Section 12-6-6 NMSA 1978 (criminal violations), an agency or IPA shall
notify the state auditor immediately, in writing, upon discovery of any alleged
violation of a criminal statute in connection with financial affairs. If an agency or IPA has already made a report
to law enforcement that fact shall be included in the notification. The notification shall be sent by e-mail to reports@osa.state.nm, by facsimile, or by US mail. Notifications shall not be made through the
fraud hotline. The notification shall include an estimate of the dollar amount
involved and a complete description of the alleged violation, including names
of persons involved and any action taken or planned. The state auditor may cause the financial
affairs and transactions of the agency to be audited in whole or in part
pursuant to Section 12-6-3 NMSA 1978 and 2.2.2.15 NMAC. If the state auditor does not designate an
agency for audit, an agency shall follow the provisions of 2.2.2.15 NMAC when
entering into a professional services contract for a special audit, performance
audit or attestation engagement regarding the financial affairs and transactions
of the agency relating to financial fraud, waste and abuse.
(3) In
accordance with Section 12-6-6 NMSA 1978, the state auditor, immediately upon
discovery of any violation of a criminal statute in connection with financial
affairs, shall report the violation to the proper prosecuting officer and
furnish the officer with all data and information in his possession relative to
the violation.
O. Special revenue funds authority: The authority for creation of special revenue
funds and any minimum balance required shall be shown in the audit report
(i.e., cite the statute number, code of federal regulation, executive order,
resolution number, or other specific authority) on the divider page before the
combining financial statements or in the notes to the financial
statements. This requirement does not
apply to the statewide CAFR.
(1) All
monies coming into all agencies (i.e., vending machines, fees for photocopies, telephone
charges, etc.) shall be considered public monies and be accounted for as
such. For state agencies, all revenues
generated shall be authorized by legislation (MAPS FIN 11.4).
(2) If
the agency has investments in
securities and derivative instruments, the
IPA shall comply with the requirements of AU-C 501.04-.10. If the IPA elects to use the work of an
auditor’s specialist to meet the requirements of AU-C 501, the requirements of
AU-C 620 shall also be met.
(3) Pursuant
to Section 12-6-5 NMSA 1978, each audit report shall include a list of
individual deposit and investment accounts held by the agency. The information presented in the audit report
shall include at a minimum:
(a) name of depository (i.e., bank, credit union, state
treasurer, state investment council, etc.);
(b) account name;
(c) type of deposit or investment account (also required in
separate component unit audit reports):
(i) types of deposit accounts
include non-interest bearing checking, interest bearing checking, savings,
money market accounts, certificates of deposit, etc.; and
(ii) types
of investment accounts include state treasurer general fund investment pool
(SGFIP), state treasurer local government investment pool (LGIP), U.S. treasury
bills, securities of U.S. agencies such as Fannie Mae (FNMA), Freddie Mac
(FHLMC), government national mortgage association (GNMA), Sallie Mae, small
business administration (SBA), federal housing administration (FHA), etc.
(d) account balance of deposits and investments as of the
balance sheet date;
(e) reconciled balance of deposits and
investments as of the balance sheet date as reported in the financial
statements; and
(f) for state agencies only, statewide human resources
accounting and management reporting system (SHARE) fund number. In auditing the
balance of a state agency’s investment in the SGFIP, the IPA shall review the
individual state agency’s cash reconciliation procedures and determine whether
those procedures would reduce the agency’s risk of misstatement in the
investment in SGFIP, and whether the agency is actually performing those
procedures. The IPA shall also take into
consideration the complexity of the types of cash transactions that the state
agency enters into and whether the agency processes its deposits and payments
through SHARE. The IPA shall use
professional judgment to determine each state agency’s risk of misstatement in
the investment in the SGFIP and write findings and modify opinions as deemed
appropriate by the IPA. The state auditor
requires the IPAs auditing cash of state agencies to obtain a confirmation of
cash at the individual agency level from STO.
(4) Pledged
collateral:
(a) All
audit reports shall disclose applicable collateral requirements in the notes to
the financial statements. In addition, there shall be a SI schedule or note to
the financial statements that discloses the collateral pledged by each
depository for public funds. The SI
schedule or note shall disclose the type of security (i.e., bond, note, treasury,
bill, etc.), security number, committee on uniform security identification
procedures (CUSIP) number, fair market value and maturity date.
(b) Pursuant
to Section 6-10-17 NMSA 1978, the pledged collateral for deposits in banks and
savings and loan associations shall have an aggregate value equal to one-half
of the amount of public money held by the depository. If this requirement is
not met the audit report shall include a finding. No security is required for the deposit of
public money that is insured by the federal deposit insurance corporation
(FDIC) or the national credit union administration (NCUA) in accordance with
Section 6-10-16 NMSA 1978. Collateral
requirements shall be calculated separately for each bank and disclosed in the
notes.
(c) All applicable GASB 40 disclosure
requirements relating to deposit and investment risk shall be met. In
accordance with GASBS 40.8, relating to custodial credit risk, the notes to the
financial statements shall disclose the dollar amount of deposits subject to
custodial credit risk, and the type of risk the deposits are exposed to. To determine compliance with the fifty
percent pledged collateral requirement of Section 6-10-17 NMSA 1978, the
disclosure shall include the dollar amount of each of the following for each
financial institution: fifty percent pledged collateral requirement per
statute, total pledged collateral, uninsured and uncollateralized.
(d) Repurchase
agreements shall be secured by pledged collateral having a market value of at
least one hundred two percent of the contract per Subsection H of Section
6-10-10 NMSA 1978. To determine
compliance with the one hundred two percent pledged collateral requirement of
Section 6-10-10 NMSA 1978, the disclosure shall include the dollar amount of
each of the following for each repurchase agreement: one hundred two percent pledged collateral
requirement per statute, total pledged collateral.
(e) Per Subsection A of Section 6-10-16
NMSA 1978, “deposits of public money shall be secured by: securities of the
United States, its agencies or instrumentalities; securities of the state of
New Mexico, its agencies, instrumentalities, counties, municipalities or other
subdivisions; securities, including student loans, that are guaranteed by the
United States or the state of New Mexico; revenue bonds that are underwritten
by a member of the financial industry regulatory authority (known as FINRA),
and are rated “BAA” or above by a nationally recognized bond rating service; or
letters of credit issued by a federal home loan bank.”
(f) Securities shall be accepted as
security at market value pursuant to Subsection C of Section 6-10-16 NMSA 1978.
(g) State
agency investments in the state treasurer’s general fund investment pool do not
require disclosure of specific pledged collateral for amounts held by the state
treasurer. However, the notes to the
financial statements shall refer the reader to the state treasurer’s separately
issued financial statements which disclose the collateral pledged to secure
state treasurer cash and investments.
(h) If an agency has
other “authorized” bank accounts, pledged collateral information shall be
obtained from the bank and disclosed in the notes to the financial
statements. The state treasurer monitors
pledged collateral related to most state agency bank accounts. State agencies should not request the pledged
collateral information from the state treasurer. In the event pledged collateral information
specific to the state agency is not available, the following note disclosure
shall be made: detail of pledged collateral specific to this agency is
unavailable because the bank commingles pledged collateral for all state funds
it holds. However, STO’s collateral
bureau monitors pledged collateral for all state funds held by state agencies
in such “authorized” bank accounts.
(5) Agencies
that have investments in the state treasurer’s local government investment pool
shall disclose the information required by GASBS 79 in the notes to their
financial statements. Agencies with
questions about the content of these required note disclosures may contact STO
(http://www.nmsto.gov) for assistance.
(1) Prior year
balance included in budget:
(a) If the agency prepares
its budget on the accrual or modified accrual basis, the statement of revenues
and expenditures (budget and actual) or the budgetary comparisons shall include
the amount of fund balance on the budgetary basis used to balance the budget.
(b) If the agency
prepares its budget on the cash basis, the statement of revenues and
expenditures (budget and actual) or the budgetary comparisons shall include the
amount of prior-year cash balance used to balance the budget (or fund balance
on the cash basis).
(2) The
differences between the budgetary basis and GAAP basis revenues and
expenditures shall be reconciled. If the
required budgetary comparison information is included in the basic financial
statements, the reconciliation shall be included on the statement itself or in
the notes to the financial statements.
If the required budgetary comparison is presented as RSI, the
reconciliation to GAAP basis shall appear in either a separate schedule or in
the notes to the RSI (AAG SLV 11.14).
The notes to the financial statements shall disclose the legal level of
budgetary control for the entity and any excess of expenditures over
appropriations at the legal level of budgetary control. The legal level of budgetary control for
local governments is at the fund level.
The legal level of budgetary control for school districts is at the
function level. The legal level of
budgetary control for state agencies is explained at Subsection A of 2.2.2.12
NMAC. For additional information
regarding the legal level of budgetary control the IPA may contact the
applicable oversight agency (DFA, HED, or PED).
(3) Budgetary
comparisons shall show the original and final appropriated budget (same as
final budget approved by DFA, HED, or PED), the actual amounts on the budgetary
basis, and a column with the variance between the final budget and actual
amounts.
(a) If the budget
structure for the general fund and major special revenue funds is similar
enough to the GAAP fund structure to provide the necessary information, the
basic financial statements shall include budgetary comparison statements those
funds.
(b) Budgetary
comparisons for the general fund and major special revenue funds shall be
presented as RSI if the agency budget structure differs from the GAAP fund structure
enough that the budget information is unavailable for the general fund and
major special revenue funds. An example
of this “perspective difference” would occur if an agency budgets by program
with portions of the general fund and major special revenue funds appearing
across various program budgets. In a
case like that the budgetary comparison would be presented for program budgets
and include information in addition to the general fund and major special revenue
funds budgetary comparison data (GASBS 41.03 and .10).
R. Appropriations:
(1) Budget
related findings:
(a) If
actual expenditures exceed budgeted expenditures at the legal level of
budgetary control, that fact shall be reported in a finding and disclosed in
the notes to the financial statements.
(b) If
budgeted expenditures exceed budgeted revenues (after prior-year cash balance
and any applicable federal receivables used to balance the budget), that fact
shall be reported in a finding. This type of finding shall be confirmed with
the agency’s budget oversight entity (if applicable).
(2) Special,
deficiency, specific, and capital outlay
appropriations:
(a) Special,
deficiency, specific, and capital outlay
appropriations funded by severance tax bonds or general obligation bonds of the
state shall be disclosed in the notes to the financial statements. The original appropriation, the appropriation
period, expenditures to date, outstanding encumbrances and unencumbered balances
shall be shown in a SI schedule or in a note to the financial statements. The accounting treatment of any unexpended
balances shall be fully explained in the SI schedule or in a note to the
financial statements. This is a special
requirement of the state auditor and it does not apply to the statewide CAFR
audit.
(b) The
accounting treatment of any unexpended balances shall be fully explained in the
SI schedule or in a note to the financial statements regarding the special
appropriations.
S. Consideration of internal control and risk
assessment in a financial statement audit: Audits performed under this rule shall
include tests of internal controls (manual or automated) over assertions about
the financial statements and about compliance related to laws, regulations, and
contract and grant provisions. IPAs and agencies are encouraged to reference
the U.S. GAOs’ standards for internal
control in the federal government, known as the “green book”, which may be adopted by state, local, and
quasi-governmental entities as a framework for an internal control system.
T. Required auditor’s reports:
(1) The
AICPA provides examples of independent auditor’s reports in the appendix to
chapter 4 of AAG GAS and appendix A to chapter 16 of AAG SLV. Guidance is provided in footnote 4 to
appendix A to chapter 16 of AAG SLV regarding wording used when opining on
budgetary statements on the GAAP basis.
IPAs conducting audits under this rule shall follow the AICPA report
examples. All independent auditor’s reports shall include a statement that the audit
was performed in accordance with auditing standards generally accepted in the
United States of America and with
applicable government auditing standards per GAGAS 6.37. This statement shall be modified in
accordance with GAGAS 2.17b if some GAGAS requirements were not followed. Reports for single audits of fiscal years
beginning on or after December 26, 2014 shall have references to OMB Circular
A-133 replaced with references to Title 2 U.S. Code of Federal Regulations
(CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance 200.110(b), AAG GAS 4.89, Example 4-1).
(2) The
AICPA provides examples of the report on internal control over financial
reporting and on compliance and other matters based on an audit of financial
statements performed in accordance with government auditing standards in the
appendix to chapter 4 of AAG GAS. IPAs conducting audits under this rule shall
follow the AICPA report examples.
(a) The
state auditor requires the report on internal control over financial reporting
and on compliance and other matters based on an audit of financial statements
performed in accordance with government auditing standards be dated the same
date as the independent auditor’s report.
(b) No
separate management letters shall be issued to the agency by the auditor. Issuance of a separate management letter to
an agency shall be considered a violation of the terms of the audit contract
and may result in further action by the state auditor. See also Subsection F of 2.2.2.10 NMAC
regarding this issue.
(3) The AICPA
provides examples of the report on
compliance for each major federal program and on internal control over
compliance required by the uniform guidance in the appendix to chapter 13 of
AAG GAS. IPAs conducting audits under this rule shall follow the AICPA report
examples.
(4) The state
auditor requires the financial statements, RSI, SI, and other information
required by this rule, and the following reports to be included under one report cover: the independent auditor’s report;
the report on internal control over financial reporting and on compliance and
other matters based on an audit of financial statements performed in accordance
with government auditing standards; and the report on compliance for each major
federal program and on internal control over compliance required by the uniform
guidance. If applicable, the independent
auditor’s report shall include the AU-C 725 opinion on SI, the schedule of
expenditures of federal awards and the HUD financial data schedule (required by
HUD guidelines on reporting and attestation requirements of uniform financial
reporting standards). The report shall
also contain a table of contents and an official roster. The IPA may submit a written request for an exemption from the “one report cover”
requirement, but shall receive prior written approval from the state auditor in
order to present any of the above information under a separate cover.
U. Disposition
of property:
Sections 13-6-1 and
13-6-2 NMSA 1978 govern the disposition of tangible personal property owned by
state agencies, local public bodies, school districts, and state educational
institutions. At least 30 days prior to
any disposition of property included on the agency inventory list described at
Subsection W of 2.2.2.10 NMAC, written notification of the official finding and
proposed disposition duly sworn and subscribed under oath by each member of the
authority approving the action shall be sent to the state auditor.
(1) Any
joint powers agreement (JPA) shall be listed in a SI schedule in the audit
report. The statewide CAFR schedule
shall include JPAs that are significant to the state as a whole. The schedule shall include the following
information for each JPA: participants; party
responsible for operations; description; beginning and ending dates of the JPA;
total estimated amount of project and portion applicable to the agency; amount
the agency contributed in the current fiscal year; audit responsibility; fiscal
agent if applicable; and name of government agency where revenues and
expenditures are reported.
(2) For self-insurance obtained under a
JPA, see the GASB Codification Section J50.113.
(1) The
Audit Act (at Section 12-6-10 NMSA 1978) requires agencies to capitalize only
chattels and equipment that cost over five thousand dollars ($5,000). All agencies shall maintain a capitalization
policy that complies with the law. All
agencies shall maintain an inventory listing of capitalized chattels and
equipment that cost over five thousand dollars ($5,000).
(2) Agencies
shall conduct an annual physical inventory of chattels and equipment on the inventory
list at the end of each fiscal year in accordance with the requirements of
Section 12-6-10 NMSA 1978. The agency
shall certify the correctness of the inventory after the physical inventory. This certification shall be provided to the
agency’s auditors. The IPA shall audit
the inventory listing for correctness and compliance with the requirements of
the Audit Act.
X. Tax increment development districts: Pursuant to Subsection C of Section 5-15-9
NMSA 1978, tax increment development districts (TIDDs) are political
subdivisions of the state, and they are separate and apart from the
municipality or county in which they are located. Section 5-15-10 NMSA 1978
states that the district shall be governed by the governing body that adopted a
resolution to form the district or by a five-member board composed of four
members appointed by that governing body; provided, however, that the fifth
member of the five-member board is the secretary of finance and administration
or the secretary’s designee with full voting privileges. However, in the case of an appointed board of
directors that is not the governing body, at the end of the appointed
directors’ initial terms, the board shall hold an election of new directors by majority
vote of owners and qualified resident electors.
Therefore, a TIDD and its audit firm shall apply the criteria of GASBS
14, 39, 61, and 80 to determine whether the TIDD is a component unit of the
municipality or county that approved it, or whether the TIDD is a related
organization of the municipality or county that approved it. If the TIDD is determined to be a related
organization per the GAAP requirements, then the TIDD shall contract separately
for an audit separate from the audit of the municipality or county that
approved it.
Y. GASBS 68, accounting
and financial reporting for pensions:
(1) PERA and ERB
shall each prepare schedules of employer allocations as of June 30 of each
fiscal year. The state auditor requires
the following:
(a) Prior
to distribution of the schedule of employer allocations, PERA and ERB shall
obtain audits of their respective schedules.
These audits shall be conducted in accordance with government auditing
standards and AU-C 805, special considerations - audits of single financial
statements and specific elements, accounts, or items of a financial statement.
(b) Pursuant to AU-C 805.16, the PERA and
ERB auditors shall each issue a separate auditor’s report and express a
separate opinion on the AU-C 805 audit performed (distinct from the agency’s
regular financial statement and compliance audit). Additionally, the auditor
shall apply the procedures required by AU-C 725 to all supplementary
information schedules included in the schedule of employer allocations report
in order to determine whether the supplementary information is fairly stated,
in all material respects, in relation to the financial statements as a
whole. The IPA shall include the
supplementary information schedules in the related reporting in the other-matter
paragraph pursuant to AU-C 725.09, regarding whether such information is fairly
stated in all material respects in relation to the schedule of employer
allocations as a whole.
(c) PERA
and ERB shall include note
disclosures in their respective schedule of employer allocations reports that
detail each component of allocable pension expense at the fund level, excluding
employer-specific pension expense for changes in proportion. Each plan shall also include note disclosures
by fund detailing collective fund-level deferred outflows of resources and
deferred inflows of resources. The
disclosures shall include a summary of changes in the collective deferred and
inflows outflows of resources (excluding employer specific amounts), by year of
deferral.
(d) The AU-C 805 audits and resulting
separate reports on the PERA and ERB schedules of employer allocations shall be
submitted to the OSA for review and release pursuant to Subsection A of
2.2.2.13 NMAC, prior to distribution to the participant employers.
(e) As soon as the
AU-C 805 reports become public record, PERA and ERB shall make the information
available to their participant employers.
(f) PERA
and ERB shall each prepare an
employer guide that illustrates the correct use of their respective schedule of
employer allocations report by their participant employers. The guides shall explicitly distinguish
between the plan-level reporting and any employer-specific items. The calculations and record-keeping necessary
at the employer level (for adjusting journal entries, amortization of deferred
amounts, etc.) shall be described and illustrated. The employer guides shall be made available
to the participant employers by June 30 of the subsequent fiscal year.
(2) Regarding
whether the pension liability shall be included in the stand-alone financial
statements of funds, see the GASB’s comprehensive implementation guide, chapter
5, question and answer 5.129.1, which says, “except for blended component
units, which are discussed in questions 5.125.2 and 5.125.3, statement 68 does
not establish specific requirements for allocation of the employer’s
proportionate share of the collective net pension liability or other
pension-related measures to individual funds.
However, for proprietary and fiduciary funds, consideration shall be
given to NCGA statement 1, paragraph 42, as amended, which requires that
long-term liabilities that are “directly related to and expected to be paid
from” those funds be reported in the statement of net position or statement of
fiduciary net position, respectively.” Stand-alone state agency financial
statements that exclude the proportionate share of the collective net pension
liability of the state of New Mexico based on the above guidance,
shall include note disclosure referring the reader to the statewide CAFR for
the state’s net pension liability and other pension-related
information.
Z. Federal
Single Audit: OMB
Circular A-133 audits of states, local governments, and non-profit
organizations has been replaced by Title 2 U.S. Code of Federal Regulations
Part 200, uniform administrative
requirements, cost principles, and audit requirements for federal awards
(uniform guidance). The standards set
forth in Subpart F - audit requirements, became effective December 26, 2013,
and apply to audits of fiscal years beginning on or after December 26, 2014
(calendar-year-end December 31, 2015 and FY16 audits). Unaudited, but final, GASBS 77 disclosure
information shall be provided to any agency whose tax revenues are affected by
the reporting agency’s tax abatement agreements no later than September 15 of
the subsequent fiscal year. This due date does not apply if the reporting
agency does not have any tax abatement agreements that reduce the tax revenues
of another agency. All tax abatement
agreements entered into by an agency’s component unit(s) shall be disclosed in
the same manner as the tax abatement agreements of the primary government. If an agency determines that any required
disclosure is confidential, the agency shall cite the legal authority for the
determination.
AA. GASBS 75,
accounting and financial reporting for postemployment benefits other than
pensions: The retiree health
care authority (RHCA) shall prepare a schedule of employer allocations as of
June 30 of each fiscal year. The state
auditor requires the following:
(1) Prior
to distribution of the schedule of employer allocations, RHCA shall obtain an
audit of the schedule. This audit shall
be conducted in accordance with government auditing standards and AU-C 805,
special considerations - audits of single financial statements and specific
elements, accounts, or items of a financial statement.
(2) Pursuant to AU-C 805.16, the RHCA
auditors shall issue a separate auditor’s report and express a separate opinion
on the AU-C 805 audit performed (distinct from the agency’s regular financial
statement and compliance audit).
Additionally, the auditor shall apply the procedures required by AU-C
725 to all supplementary information schedules included in the schedule of
employer allocations report in order to determine whether the supplementary
information is fairly stated, in all material respects, in relation to the
financial statements as a whole. The IPA
shall include the supplementary information schedules in the related reporting
in the other-matter paragraph pursuant to AU-C 725.09, regarding whether such
information is fairly stated in all material respects in relation to the
schedule of employer allocations as a whole.
(3) RHCA shall include note disclosures in the
schedule of employer allocations report that detail each component of allocable
OPEB expense at the fund level, excluding employer-specific OPEB expense for
changes in proportion. RHCA shall also include note disclosures by fund
detailing collective fund-level deferred outflows of resources and deferred
inflows of resources. The disclosures
shall include a summary of changes in the collective deferred outflows and
inflows of resources (excluding employer specific amounts), by year of
deferral.
(4) RHCA shall each
obtain at least one concurring review of the schedule of employer allocations
by an outside IPA firm (different from the firm performing the AU-C 805
audit). The firm selected to perform the
concurring review is subject to OSA approval.
(5) The AU-C 805 audit and resulting separate
report on the RHCA schedule of employer allocations shall be submitted to the
OSA for review and release pursuant to Subsection A of 2.2.2.13 NMAC, prior to
distribution to the participant employers.
(6) As soon as the
AU-C 805 reports become public record, RHCA shall make the information
available to its participant employers.
(7) RHCA
shall prepare an employer guide that illustrates the correct use of the
schedule of employer allocations report by its participant employers. The guide shall explicitly distinguish
between the plan-level reporting and any employer-specific items. The calculations and record-keeping necessary
at the employer level (for adjusting journal entries, amortization of deferred
amounts, etc.) shall be described and illustrated. The employer guide shall be made available to
the participant employers by June 30 of the subsequent fiscal year.
(8) Stand-alone
state agency financial statements that exclude the proportionate share of the collective
OPEB liability of the state of New Mexico, shall
include note disclosure referring the reader to the statewide CAFR for the
state’s net OPEB liability and other OPEB-related information.
[2.2.2.10 NMAC -
Rp, 2.2.2.10 NMAC, 3/10/2020]
2.2.2.11 [RESERVED]
[2.2.2.11 NMAC -
Repealed 3/10/2020]
2.2.2.12 SPECIFIC
CRITERIA: The specific criteria
described in this section shall be considered in planning and conducting
governmental audits. These requirements are not intended to be all-inclusive;
therefore, OSA recommends that IPAs review the NMSA and NMAC while planning
governmental audits.
A. Pertaining to audits of state agencies:
(1) Due dates for
agency audits: audit reports of agencies under the oversight of DFA FCD are due
to OSA in accordance with the requirements of Subsection D of Section 12-6-3
NMSA 1978 and Subsection A of 2.2.2.9 NMAC.
(2) All the
individual SHARE funds shall be reported in the financial statements, either
within the basic financial statements or as SI.
(3) Accounts payable
at year-end and reversion calculation:
If goods and services were received (as defined by generally accepted
accounting principles) by the end of the fiscal year but not paid for by the
end of the fiscal year, an accounts payable shall be reported for the
respective amount due in both the government-wide financial statements and the
fund financial statements. The “actual” expenditures in the budgetary
comparison exclude any accounts payable that were not paid timely and therefore
require a request to the financial control division to pay prior year bills out
of current year budget. They are paid
out of the budget of the following fiscal year.
An agency’s reversions are calculated using the budgetary basis expenditures because the agency does not have the
legal authority to obligate the state for liabilities once the appropriation
period has lapsed. Thus, the agency
cannot keep the cash related to accounts payable that were not paid timely. This results in a negative fund balance in
the modified accrual basis financial statements of a reverting fund.
(4) Net position/fund balance:
(a) Pursuant to
GASBS 63.8 the government-wide statement of net position and the proprietary
fund statement of net position show net position as:
(i) net
investment in capital assets as defined by GASBS 63.9;
(ii) restricted (distinguishing between major categories of
restrictions) as defined by GASBS 63.10; and
(iii) unrestricted as defined by GASBS 63.11.
(b) Governmental
fund financial statement fund balances shall be reported in accordance with
GASBS 54.
(5) Book
of record:
(a) The
state maintains the centralized accounting system SHARE. The SHARE data and reports are the original
book of record that the auditor is auditing.
Each fiscal year, the agency shall record all audit adjusting journal
entries in SHARE. The financial
information in SHARE shall agree to the agency’s audited financial statements,
with the exception of accounts payable as explained in Subsection A of 2.2.2.12
NMAC. If the agency maintains a separate
accounting system, it shall be reconciled with the SHARE system and all
applicable adjustments shall be recorded in SHARE in the month in which the
transactions occurred. DFA FCD provides
guidance to agencies, which IPAs shall review, regarding policy and procedure
requirements. These documents are
available on the DFA FCD website and include:
(i) the manual
of model accounting practices (MAPs);
(ii) various white papers, yearly closing instructions; and
(iii) various accounting guideline memos.
(b) The
statement of revenues and expenditures in the audit report shall be presented
in accordance with GAAP, by function or program classification and object
code. However, the budgetary comparison
statements shall be presented using the level of appropriation reflected in the
final approved budget. The SHARE chart
of accounts reflects the following appropriation unit levels:
|
Appropriation
unit code/appropriation unit description |
|
|
200 |
personal services
& employee benefits |
|
300 |
contractual
services |
|
400 |
other |
|
500 |
other
financing uses |
|
600 |
non-budgeted |
(c) Revenue
categories of appropriations to state agencies are listed below. The budgetary comparison statements for state
agencies shall be presented in the audit report by the revenue categories shown
below and by the expenditure categories that appear in the agency’s final
approved budget.
(i) state general fund;
(ii) other
state funds;
(iii) internal
service funds/inter-agency transfers; or
(iv) federal
funds.
(d) For more detail
about the SHARE chart of accounts see the DFA website.
(6) Reversions
to state general fund:
(a) All
reversions to the state general fund shall be identified in the financial
statements by the fiscal year of appropriation (i.e., reversion to state
general fund - FY 16). The gross amount
of the appropriation and the gross amount of the reversion shall be shown
separately.
(b) Subsection A of Section 6-5-10 NMSA
1978 states “all unreserved undesignated fund balances in reverting funds and
accounts as reflected in the central accounting system as of June 30 shall
revert by September 30 to the general fund.
The division may adjust the reversion within 45 days of release of the
audit report for that fiscal year.”
Failure to transfer reverting funds timely in compliance with the
statute requires an audit finding.
(7) Non-reciprocal
(not payments for materials or services rendered) interfund
(internal) activity includes:
(a) transfers; and
(b) reimbursements (GASBS 34.410):
(i) intra-agency
transfers between funds within the agency shall offset (i.e. balance). Reasons for intra-agency transfers shall be
fully explained in the notes to the financial statements. In the separate audit reports of state
agencies, transfers between their internal funds are shown as other financing
sources or uses in the fund financial statements and as transfers (that get
eliminated) in the government-wide financial statements;
(ii) inter-agency
transfers (between an agency’s internal funds and other funds of the state that
are outside the agency such as state general fund appropriations, special
appropriations, bond proceeds appropriations, reversions to the state general
fund, and transfers to/from other state agencies) shall be segregated from
intra-agency transfers and fully explained in the notes to the financial
statements along with the agency number and SHARE fund number to whom and from
whom transferred. The transfers may be
detailed in supporting schedules rather than in the notes, but agency and SHARE
fund numbers shall be shown. The
schedule shall be presented on the modified accrual basis. The IPA is responsible for performing audit
procedures on all such inter-agency transfers.
(c) Regarding
inter-agency transfers between legally separate component units and the primary
government (the state of New Mexico):
(i) if the inter-agency transfer is
between a blended component unit of the state and other funds of the state,
then the component unit’s separately issued financial statements report such
activity between itself and the primary government as revenues and
expenses. When the blended component
unit is included in the primary government’s financial statements, such inter-agency
transfers are reclassified as transfers (GASBS 34.318);
(ii) all resource flows between a
discretely presented component unit of the state and other funds of the state shall
be reported as external transactions - revenues and expenses - in the primary
government’s financial statements and the component unit’s separately issued
financial statements (GASBS 34.318);
(d) All transfers to
and from SHARE fund 853, the state general fund appropriation account, shall be
clearly identifiable in the audit report as state general fund appropriations,
reversions, or collections;
(e) Reimbursements
are transfers between funds that are used to reallocate the revenues and
expenditures/expenses to the appropriate fund.
Reimbursements are not reported as inter-fund activity in the financial
statements.
(8) General
services department capital projects: in general, GSD records the state of New
Mexico capitalized land and buildings for which it is responsible, in its
accounting records. The cost of
furniture, fixtures, and moveable equipment owned by agencies is to be
capitalized in the accounting records of the agency that purchased them. The agency shall capitalize those assets based
on actual amounts expended in accordance with GSD instructions issued in
Section 2.20.1.10 NMAC.
(9) State-owned
motor vehicle inventory: successful management of state-owned vehicles pursuant
to the Transportation Services Act (Sections 15-8-1 to 15-8-11 NMSA 1978) is
dependent on reliable and accurate capital assets inventory records and
physical verification of that inventory.
Thus, the annual audit of state agencies shall include specific tests of
the reliability of the capital assets inventory and verification that a
physical inventory was conducted for both the agency's owned vehicles and
long-term leased vehicles.
(10) Independent auditor’s
report: The independent auditor’s report
for state agencies, district attorneys, district courts, and the educational
institutions created by New Mexico Constitution Article XII, Sec. 11 shall
include an emphasis of matter paragraph referencing the summary of significant
accounting principles disclosure regarding the reporting agency. The emphasis of matter paragraph shall
indicate that the financial statements are not intended to present the
financial position and changes in financial position of the primary government,
the state of New Mexico, but just the financial position and the changes in
financial position of the department.
The emphasis of matter paragraph shall follow the example provided in
AAG SLV 16.103 ex. A-17.
(11) Budgetary
basis for state agencies: the state budget is adopted on the modified accrual
basis of accounting except for accounts payable accrued at the end of the
fiscal year that do not get accrued by the statutory deadline per Section
6-10-4 NMSA 1978. Those accounts payable
that do not get paid timely or accrued by the statutory deadline shall be paid
out of the next year’s budget. If an
agency needs to recognize additional accounts payable amounts that were not
accrued by the statutory deadline, then the budgetary statements and the fund
financial statements require a reconciliation of expenditures, as discussed at
Subsection Q of 2.2.2.10 NMAC. All
transactions are recorded in the state’s book of record, SHARE, under the
modified accrual basis of accounting except for accounts payable not meeting
the statutory deadline; therefore, the “actual” expenditures in the budgetary comparison
schedules equal the expenditures as recorded in SHARE for the fund. Encumbrances related to single year
appropriations lapse at year end.
Appropriation periods are sometimes for periods in excess of 12 months
(multiple-year appropriations). When multiple-year appropriation periods lapse, the authority for
the related budgets also lapse and encumbrances can no longer be charged to
those budgets. The legal level of
budgetary control shall be disclosed in the notes to the financial
statements. Per Subsection C of Section
9 of the General Appropriation Act of 2017, all agencies, including legislative
agencies, may request category transfers among personal services and employee
benefits, contractual services and other.
Therefore, the legal level of budgetary control is the appropriation
program level (A-Code, P-Code, and Z-Code).
A-Codes pertain to capital outlay appropriations (general
obligation/severance tax or state general fund). P-Codes pertain to program/operating funds.
Z-Codes pertain to special appropriations.
The IPA shall compare total expenditures for each program to the
program’s approved final budget to evaluate compliance.
(12) Budgetary
comparisons of state agencies shall show the original and final appropriated
budget (same as final budget approved by DFA), the actual amounts on the
budgetary basis, and a column with the variance between the final budget and
actual amounts. If a state agency
presents budgetary comparisons by fund, the appropriation program code(s)
(A-Code, P-Code, and Z-Code) shall be reported on the budgetary comparison
schedule.
(13) Accounting for special capital outlay
appropriations financed by bond proceeds:
(a) STO administers
the debt service funds for various bond issues that are obligations of the
state of New Mexico. STO does not report
in its departmental financial statements bonds payable that are obligations of
the state of New Mexico. These payables
and the related bond face amounts (proceeds) are reported in the state’s
CAFR. The note disclosures associated
with STO’s departmental financial statements shall explain that, by statute,
STO is responsible for making the state’s bond payments and keeping the related
records; however, it is not responsible for the related debt, the state is. Additionally, the note disclosures associated
with STO’s departmental financial statements shall refer the reader to detailed
SI in the STO audit report and the statewide CAFR. The STO departmental financial statements
shall include SI regarding the state of New Mexico bond obligations. The SI schedules shall show;
(i) the beginning and end-of-year bond
payable balances, increases and decreases (separately presented), and the
portions of each bond issuance that are due within one year, as required by GASBS
34.119;
(ii) the details of debt service requirements to maturity, as
required by GASBS 38.10; and
(iii) any violations of bond covenants and related actions taken
to address violations of bond covenants, as required by GASBS 38.9 and Section
12-6-5 NMSA 1978.
(b) DFA has provided
accounting and reporting guidance for state agencies that receive or administer
special capital outlay appropriations from the state legislature that are
financed by bond proceeds. DFA’s
guidance is available in the “FYI 2008 Audit Forum 9/30/08” section of DFA’s
website at http://www.nmdfa.state.nm.us/Forums.aspx. In the notes to the financial statements,
agencies disclose that the bond proceeds were allocated by the legislature to
the agency to administer disbursements to the project recipients, and the
agency is not obligated in any manner for the related indebtedness. Agencies also disclose the specific revenue
recognition policy for these appropriations.
Each agency’s IPA shall audit the agency’s financial statement
presentation of this capital outlay project information to ensure that they are
presented in accordance with accounting principles that are generally accepted
in the United States.
(14) Amounts “due from other
state agencies” and “due to other state agencies”: if a state agency reports
amounts “due from” or “due to” other state agencies the notes shall disclose
the amount “due to” or “due from” each agency, the name of each agency, the
SHARE fund account numbers, and the purpose of the account balance.
(15) Investments in the
state general fund investment pool (SGFIP): these balances are presented as
cash and cash equivalents in the statements of net position and the balance
sheets of the participant agencies, with the exception of the component
appropriation funds (state general fund).
The notes to the financial statements of the component appropriation
funds shall contain GASBS 40 disclosures for the SGFIP. This disclosure may refer the reader to the
separate audit report for STO for additional information regarding the SGFIP.
(16) Format for the
statement of activities: state agencies
that have more than one program or function shall use the financial statement
format presented in GASBS 34, Illustrations B-1 through B-4. The simplified statement of activities (GASBS
34, Illustration B-5) may not be used for agencies that have multiple programs
or functions. GASBS 34.41 requires governments to report direct expenses for
each function.
B. Pertaining to audits of housing authorities:
(1) Housing
authorities within the state of New Mexico consist of regional housing
authorities, component units or departments of local governments, component
units of housing authorities, and housing authorities created by
intergovernmental agreements between cities and counties that are authorized to
exercise all powers under the Municipal Housing Law, Section 3-45-1 et seq., NMSA 1978.
(2) The
financial statements of a housing authority that is a department, program or
component unit of a primary government shall be included in the financial audit
report of the primary government by discrete presentation unless an exemption
from this requirement has been obtained from the state auditor. In the event that a primary government
determines that a housing authority is a department or program of, rather than
a component unit of, the primary government, a request for exemption from the
discrete presentation requirement shall be submitted to the state auditor, by
the primary government. The request for
exemption shall include evidence that the housing authority is not a separate
legal entity from the primary government and that the corporate powers of the
housing authority are held by the primary government. Evidence included in the request shall
address these issues:
(a) the housing
authority is not a corporation registered with the secretary of state;
(b) there
was never a resolution or ordinance making the housing authority a public body
corporate; and
(c) the
housing authority was authorized under Section 3-45-1 et seq., NMSA 1978.
(d) Upon receipt of the exemption granted
by the state auditor from the requirement for discrete presentation, the
housing authority department or program shall be included in the financial
report of the primary government like any other department or program of the
primary government.
(3) Audits of public
housing authorities that are departments of a local government shall be
conducted by the same IPA that performs the audit of the local government. Separate audit contracts shall not be
approved.
(a) Local
governments are encouraged to include representatives from public housing
authorities that are departments of the local government in the IPA selection
process.
(b) The
IPA shall include the housing authority’s governing board and management
representatives in the entrance and exit conferences with the primary
government. If it is not possible to
hold such combined conferences, the IPA shall hold separate entrance and exit
conferences with housing authority’s management and a member of the governing
board. The OSA has the authority to
notify the agency or IPA that the state auditor shall be informed of the date
of the entrance conference, any progress meetings and the exit conference. If such notification is received, the IPA and
agency shall invite the state auditor or his designee to attend all such
conferences no later than 72 hours before the proposed conference.
(4) The following
information relates to housing
authorities that are component units of a local government.
(a) The housing
authority shall account for financial activity in proprietary funds.
(b) At the public
housing authority’s discretion, the agency may “be audited separately from the audit
of its local primary government entity.
If a separate audit is made, the public housing authority audit shall be
included in the local primary government entity audit and need not be conducted
by the same auditor who audits the financial affairs of the local primary
government entity” (Subsection E of Section 12-6-3 NMSA 1978). Statute further stipulates in Subsection A of Section 12-6-4 NMSA 1978 that “a public housing
authority other than a regional housing authority shall not bear the cost of an
audit conducted solely at the request of its local primary government entity.”
(c) Audit reports of separate audits of
component unit housing authorities shall be released by the state auditor
separately from the primary government’s report under a separate release letter
to the housing authority.
(5) Public housing authorities and their
IPAs shall follow the requirements of guidelines
on reporting and attestation requirements of uniform financial reporting
standards (UFRS), which is available on the U.S. department of housing and
urban development’s website under a search for UFRS. Additional administrative issues related to
audits of public housing authorities follow.
(a) Housing authority audit contracts
include the cost of the audit firm’s AU-C 725 opinion on the financial data
schedule (FDS). The preparation and
submission cost for this HUD requirement shall be included in the audit
contract. The public housing authority
shall electronically submit a final approved FDS based on the audited financial
statements no later than nine months after the public housing authority’s
fiscal year end. The IPA shall:
(i) electronically
report on the comparison of the electronic FDS submission in the REAC staging
database through the use of an identification (ID) and password;
(ii) include a hard copy of the FDS in the audit report;
(iii) render
an AU-C 725 opinion on the FDS; and
(iv) explain in the notes any material differences between the
FDS and the financial statements.
(b) The
IPA shall consider whether any fee accountant used by the housing authority is
a service organization and, if applicable, follow the requirements of AU-C 402
regarding service organizations.
(c) The IPA shall
provide the housing authority with an itemized cost breakdown by program area
for audit services rendered in conjunction with the housing authority.
(6) Single audit
reporting issue: If a single audit is
performed on the separate audit report for the public housing authority,
including the housing authority’s schedule of expenditures of federal awards,
the housing authority federal funds do not need to be subjected a second time
to a single audit during the single audit of the primary government. In this
situation, the housing authority’s federal expenditures do not need to be
included in the primary government’s schedule of expenditures of federal
awards. See AAG GAS 6.15 for more
information.
C. Pertaining to audits of school districts:
(1) In the event
that a state-chartered charter school subject to oversight by PED is not
subject to the requirement to use the same auditor as PED, that charter school
is reminded that their audit contract shall be submitted to PED for
approval. Charter schools shall ensure that
sufficient time is allowed for PED review refer to Subsection F of 2.2.2.8 NMAC
for the due date for submission of the audit contract to the OSA.
(2) Regional
education cooperative (REC) audits:
(a) A separate
financial and compliance audit is required on activities of RECs. The IPA shall provide copies of the REC
report to the participating school districts and PED once the report has been
released by the state auditor.
(b) Audits of RECs
shall include tests for compliance with Section 6.23.3 NMAC.
(c) Any ‘on-behalf’
payments for fringe benefits and salaries made by RECs for employees of school
districts shall be accounted for in accordance with GASB Cod. Sec. N50.135 and
communicated to the employer in accordance with GASB Cod. Sec. N50.131.
(d) The audit report
of each REC shall include a cash reconciliation schedule which reconciles the
cash balance as of the end of the previous fiscal year to the cash balance as
of the end of the current fiscal year.
This schedule shall account for cash in the same categories used by the
REC in its monthly cash reports to the PED.
If there are differences in cash per the REC financial statements and
cash per the REC accounting records, the IPA shall provide the adjusting
entries to the REC to reconcile cash per the financial statements to cash per
the REC accounting records. If cash per
the REC accounting records differs from the cash amount the REC reports to PED
in the monthly cash report, the IPA shall issue a finding which explains that
the PED reports do not reconcile to the REC accounting records.
(3) School district
audits shall address the following issues:
(a) Audits of school
districts shall include tests for compliance with Section 6.20.2 NMAC and PED’s
manual of procedures for public schools accounting and budgeting (PSAB), with
specific emphasis on supplement 7, cash controls.
(b) The
audit report of each school district shall include a cash reconciliation
schedule which reconciles the cash balance as of the end of the previous fiscal
year to the cash balance as of the end of the current fiscal year. This schedule is also required for each
charter school chartered by a school district and each charter school chartered
by PED. This schedule shall account for
cash in the same categories used by the district in its monthly cash reports to
PED. Subsection D of Section 6.20.2.13
NMAC states that school districts shall use the “cash basis of accounting for
budgeting and reporting”. The financial
statements are prepared on the accrual basis of accounting. Subsection E of Section 6.20.2.13 NMAC states
that “if there are differences between the financial statements, school
district records and department records, the IPA should provide the adjusting
entries to the school district to reconcile the report to the school district
records.” If there are difference
between the school district records and the PED report amounts, other than
those explained by the adjusting entries, the IPA shall issue a finding which
explains that the PED reports do not reconcile to the school district records.
(c) Any joint
ventures or other entities created by a school district are agencies subject to
the Audit Act.
(d) Student
activity funds: Risk should be assessed
and an appropriate sample tested regarding controls over student activity
funds.
(e) Relating
to capital expenditures by the New Mexico public school facilities authority
(PSFA), school districts shall review capital expenditures made by PSFA for
repairs and building construction projects of the school district. School districts shall also determine the
amount of capital expenditures that shall be added to the capital assets of the
school district and account for those additions properly. The IPA shall test the school district capital
asset additions for proper inclusion of these expenditures.
(f) Sub-funds
of the general fund: school district audit reports shall include individual
fund financial statements for the following sub-funds of the general fund: operational, transportation, instructional
materials and teacherage (if applicable).
(4) Pertaining
to charter schools:
(a) A charter school
is a conversion school or start-up school within a school district authorized
by the local school board or PED to operate as a charter school. A charter school is considered a public
school, accredited by the state board of public education and accountable to
the school district’s local school board, or PED, for ensuring compliance with
applicable laws, rules and charter provisions.
A charter school is administered and governed by a governing body in a
manner set forth in the charter.
(b) Certain GASBS 14
criteria (as amended by GASBS 39, 61, and 80) shall be applied to determine
whether a charter school is a component unit of the chartering entity (the
district or PED). The chartering agency
(primary government) shall make the determination whether the charter school is
a component unit of the primary government.
(c) No charter school that has been
determined to be a component unit may be omitted from the financial statements
of the primary government based on materiality.
All charter schools that are component units shall be included in the
basic financial statements using one of the presentation methods described in
GASBS 34.126, as amended.
D. Pertaining
to audits of counties: Tax roll reconciliation county
governments: Audit reports for counties
shall include two SI schedules.
(1) The
first one is a “tax roll reconciliation of changes in the county treasurer’s
property taxes receivable” showing the June 30 receivable balance and a
breakout of the receivable for the most recent fiscal year ended, and a total
for the previous nine fiscal years. Per
Subsection C of Section 7-38-81 NMSA 1978, property taxes that have been
delinquent for more than 10 years, together with any penalties and interest,
are presumed to have been paid.
(2) The
second schedule titled “county treasurer’s property tax schedule” shall show by
property tax type and agency, the amount of taxes: levied; collected in the current year;
collected to-date; distributed in the current year; distributed to-date; the
amount determined to be uncollectible in the current year; the uncollectible
amount to-date; and the outstanding receivable balance at the end of the fiscal
year. This information is necessary for
proper revenue recognition on the part of the county as well as on the part of
the recipient agencies, under GASBS 33.
If the county does not have a system set up to gather and report the
necessary information for the property tax schedule, the IPA shall issue a
finding.
E. Pertaining
to audits of educational
institutions:
(1) Educational
institutions are reminded that audit contracts shall be submitted to HED for
approval. Refer to Subsection F of
2.2.2.8 NMAC for the due date for submission of the audit contract to the OSA.
(2) Budgetary
comparisons: the legal level of
budgetary control per Section 5.3.4.10 NMAC shall be disclosed in the notes to
the financial statements. The state
auditor requires that every educational institution’s audit report include
budgetary comparisons as SI. The
budgetary comparisons shall be audited and an auditor’s opinion shall be
rendered. An AU-C 725 opinion does not meet
this requirement. The budgetary
comparisons shall show columns for: the original budget; the revised budget;
actual amounts on the budgetary basis; and a variance column. The IPA shall confirm the final adjusted and
approved budget with HED. The IPA shall
compare the financial statement budget comparison to the related September 15
budget submission to HED. The only differences that should exist between the
HED budget submission and the financial statement budgetary comparisons are
adjustments made by the institution after September 15 and audit adjustments. If the HED budget submission does not tie to
the financial statement budgetary comparison, taking into account only those
differences, then the IPA shall write a related finding. A reconciliation of actual revenue and
expense amounts on the budgetary basis to the GAAP basis financial statements
shall be disclosed at the bottom of the budgetary comparisons or in the notes
to the financial statements. The
reconciliation is required only at the “rolled up” level of “unrestricted and restricted
- all operations” and shall include revenues and expenses. HED approved the following categories which
shall be used for the budgetary comparisons.
(a) Unrestricted and restricted - All
operations (schedule 1): beginning
fund balance/net position; unrestricted
and restricted revenues; state
general fund appropriations; federal
revenue sources; tuition and fees; land and permanent fund; endowments and private gifts; other; total unrestricted & restricted revenues; unrestricted and restricted expenditures; instruction; academic support; student services; institutional support; operation
and maintenance of plant; student
social & cultural activities; research; public service; internal services; student aid, grants & stipends; auxiliary services; intercollegiate athletics; independent operations; capital outlay; renewal &
replacement; retirement of
indebtedness; total unrestricted
& restricted expenditures; net transfers; change in fund balance/net position (budgetary basis); ending fund
balance/net position.
(b) Unrestricted instruction
& general (schedule 2): beginning
fund balance/net position; unrestricted
revenues; tuition; miscellaneous fees; federal government appropriations; state government appropriations; local government appropriations; federal government contracts/grants; state government contracts/grants; local government contracts/grants; private contracts/grants; endowments; land & permanent fund; private
gifts; sales and services; other; total unrestricted revenues;
unrestricted expenditures; instruction; academic support; student services; institutional
support; operation & maintenance
of plant; total unrestricted expenditures;
net transfers; change in fund
balance/net position (budgetary basis); ending
fund balance/net position.
(c) Restricted
instruction & general (schedule 3):
beginning fund balance/net position;
restricted revenues; tuition; miscellaneous fees; federal government appropriations; state government appropriations; local government appropriations; federal government contracts/grants; state government contracts/grants; local government contracts/grants; private contracts/grants; endowments; land & permanent fund; private
gifts; sales and services; other; total restricted revenues; restricted
expenditures; instruction; academic support; student services; institutional
support; operation & maintenance
of plant; total restricted
expenditures; net transfers; change in fund balance/net position
(budgetary basis); ending fund balance/net position.
(3) Educational
institutions shall present their financial statements using the business type
activities model.
(4) Compensated absence liability is
reported as follows: the statement of net position reflects the current portion
of compensated absences under current liabilities and the long-term portion of
compensated absences under noncurrent liabilities.
(5) Component
unit issues: educational institutions shall comply with the requirements of
Subsection A of 2.2.2.10 NMAC.
Additionally:
(a) individual
component unit budgetary comparisons are required if the component unit has a
“legally adopted budget.” A component
unit has a legally adopted budget if it receives any federal funds, state
funds, or any other appropriated funds whose expenditure authority derives from
an appropriation bill or ordinance that was signed into law; and
(b) there is no
level of materiality for reporting findings of component units that do not
receive public funds. All component unit
findings shall be disclosed in the primary government’s audit report.
(6) Management discussion
and analysis (MD&A): The MD&A of
educational institutions shall include analysis of significant variations
between original and final budget amounts and between final budget amount and
actual budget results. The analysis
shall include any currently known reasons for those variations that are
expected to have a significant effect on future services or liquidity.
(7) Educational
institutions established by Section 11 of Article XII of the New Mexico state
constitution shall provide the department of finance and administration’s
financial control division with a draft copy of their financial statements
excluding opinions and findings, pursuant to Subsection A of 2.2.2.12 NMAC.
F. Pertaining
to audits of investing agencies: Investing agencies, which are defined as STO,
PERA, ERB, and the state investment council, shall prepare schedules of asset management costs which include management fee
information by investment class.
(1) For all asset classes except private asset
classes and alternative investment classes, the schedules shall, at minimum,
include the following information:
(a) relating to
consultants: the name of the firm or individual, the location of the consultant
(in-state or out-of-state), a brief description of investments subject to the
agreement, and fees;
(b) relating
to third-party marketers (as defined
in Section 6-8-22 NMSA 1978): the name of the firm or individual, the location
of the marketer (in-state or out-of-state), a brief description of investments
subject to the agreement, and any fees, commissions or retainers;
(c) relating
to traditional asset classes: name of the investment, asset class, value of the
investment, and fees (including both “direct” and “embedded” costs).
(2) For private asset classes and
alternative investment classes, the schedules shall, at minimum, include the
following information:
(a) relating to
consultants: the aggregate fees by asset class and consultant location
(in-state or out-of-state), and a brief description of investments included in
each asset class;
(b) relating
to third-party marketers (as defined
in Section 6-8-22 NMSA 1978): aggregate fees, commissions and retainers by
asset class and third-party marketer location (in-state or out-of-state), and a
brief description of investments included in each asset class;
(c) relating
to alternative asset classes: the total fees by asset class (including both
“direct” and “embedded” costs), and a brief description of the investments
included in each asset class.
(3) These schedules shall be included as
unaudited other information in the audit report.
G. Pertaining to audits
of local public bodies; budgetary comparisons: Auditors shall test local public body budgets
for compliance with required reserves and disclose those reserves on the face
of the financial statements and in notes financial statements (if applicable).
[2.2.2.12 NMAC, Rp, 2.2.2.12 NMAC, 3/10/2020]
2.2.2.13 REVIEW OF AUDIT REPORTS AND AUDIT DOCUMENTATION:
A. Statutory
requirement to review audit reports: Subsection B of Section 12-6-14 NMSA 1978
requires the state auditor or personnel of his office designated by him examine
all reports of audits of agencies made pursuant to contract. All audits performed under contracts approved
by the state auditor are subject to review.
The OSA shall review all reports submitted by the IPA to determine if
the reports are presented in accordance with the requirements of this rule and
applicable auditing, accounting and financial reporting standards. The OSA shall review all audit reports
submitted by the report due date before reviewing reports that are submitted
after the report due date. As discussed
in Subsection B of 2.2.2.9 NMAC, audit reports reissued by the agency and IPA,
pursuant to AU-C 560, are also subject to OSA review procedures.
B. Comprehensive reviews: Released audit reports are subject to a
comprehensive report and audit documentation review by the state auditor. The IPA’s audit documentation shall be
assembled in one complete file or one complete set of files in one location,
whether the documentation is hardcopy or electronic. The documentation shall be either all
hardcopy or all electronic. OSA reviews
of audit and AUP working papers include inspection of firm documentation
related to compliance with governmental auditing, accounting and financial
reporting standards, rules and other requirements issued by GASB, AICPA, GAO,
and the OSA.
C. Consequences of deficiencies: If during the course of its review of an
audit report or the related audit documentation, the OSA finds significant
deficiencies that warrant a determination that the audit was not made in
accordance with the provisions of the contract or applicable standards and
requirements, any or all of the following action(s) may be taken;
(1) the IPA may be
required by OSA to correct the deficiencies in the report or audit
documentation, and reissue the audit report to the agency and any others
receiving copies;
(2) the IPA’s eligibility to perform future engagements may be
limited in number or type of engagement pursuant to Subsection D of 2.2.2.8
NMAC;
(3) for future audit
reports, for some or all audit contracts,
the IPA may be required to submit working papers with the audit reports for
review by the OSA prior to the release of the report; or
(4) the
IPA may be referred to the New Mexico public accountancy board for possible
licensure action.
D. Results of work paper reviews: After the review is completed, the OSA shall
issue a letter to advise the IPA about the results of the review. The IPA shall respond in writing to all
review comments when directed. If the
firm disagrees with any comments, the firm shall provide references to
professional standards supporting the firm’s disagreement. Failure to respond shall be noted during the
firm profile review process.
[2.2.2.13 NMAC -
Rp, 2 2.2.13 NMAC, 3/10/2020]
2.2.2.14 CONTINUING
PROFESSIONAL EDUCATION AND PEER REVIEW REQUIREMENTS:
A. Continuing professional education: IPAs shall ensure that all members of their
staff comply with the CPE requirements of the most recent revision of GAGAS.
Accordingly, each auditor performing work in accordance with GAGAS, except for
nonsupervisory auditors who charge less than 40 hours of their time annually to
GAGAS engagements per GAGAS 4.26, shall complete, every two years, at least 24
hours of CPE that directly relates to government auditing, the government
environment, or the specific or unique environment in which the audited agency
operates. Auditors, including internal
specialists pursuant to GAGAS 4.31, who are involved in planning, directing, or
reporting on GAGAS audits and auditors who are not involved in those activities
but charge twenty percent or more of their time annually to GAGAS audits shall
also obtain at least an additional 56 hours of CPE that enhances the auditor’s
professional expertise to conduct engagements.
B. Peer review requirements: IPAs shall comply with the requirements of
the most recent revision of GAGAS relating to quality control and assurance and
external peer review.
(1) Per AICPA PRP
Section 1000 standards for performing and reporting on peer reviews, a firm’s
due date for its initial peer review is 18 months from the date the firm
enrolled in the peer review program or should have enrolled, whichever is
earlier. A firm’s subsequent peer review
is due three years and six months from the previous peer review year end.
(2) The
IPA firm profile submission to the state auditor shall include copies of the
following peer review documentation:
(a) the
peer review report for the auditor’s firm;
(b) if
applicable, detailed descriptions of the findings, conclusions and
recommendations related to deficiencies or significant deficiencies required by
GAGAS 5.91;
(c) if
applicable, the auditor's response
to deficiencies or significant deficiencies;
(d) the
letter of acceptance from the peer review program in which the firm is
enrolled; and
(e) a
list of the governmental audits reviewed during the peer review.
(3) A peer review
rating of “failed” on the auditor’s peer review shall disqualify the IPA from
performing New Mexico governmental audits.
(4) During the
procurement process IPAs shall provide a copy of their most recent external
peer review report to the agency with their bid proposal or offer. Any subsequent peer review reports received
during the period of the contract shall also be provided to the agency.
(5) The peer review
shall meet the requirements of GAGAS 5.60 to 5.95.
(6) The New Mexico
public accountancy board’s substantial equivalency provision has been replaced
with mobility pursuant to the 1999 Public Accountancy Act (61-28B NMSA
1978). If a CPA is performing any type
of attest work subject to this rule, his firm shall maintain a New Mexico firm
permit.
(7) The peer reviewer shall be familiar
with this rule. This is a requirement of
the state auditor that can be achieved by attendance at audit rule training
provided by the OSA.
C. State auditor quality control reviews: The state auditor performs its own quality
control review of IPA audit reports and working papers. An IPA that is included on the state
auditor’s list of approved firms for the first time shall be subject to an OSA
quality control review of the IPA’s working papers. This review shall be conducted as soon as the
documentation completion date, as defined by AU-C Section 230, has passed (60
days after the report release date). When
the result of the state auditor’s quality control review differs significantly
from the external quality control report and corresponding peer review rating,
the state auditor may no longer accept external peer review reports performed
by that reviewer. In making this
determination, the state auditor shall take into consideration the fact that
AICPA peer reviews are performed on a risk-based or key-element approach
looking for systemic problems, while the state auditor reviews are
engagement-specific reviews.
[2.2.2.14 NMAC -
Rp, 2.2.2.14 NMAC, 3/10/2020]
2.2.2.15 SPECIAL AUDITS, ATTESTATION
ENGAGEMENTS,
PERFORMANCE AUDITS AND FORENSIC AUDITS:
A. Fraud, waste or abuse in government
reported by agencies, IPAs or members of the public:
(1) Definition of fraud: Fraud includes, but is not limited to,
fraudulent financial reporting, misappropriation of assets, corruption, and use
of public funds for activities prohibited by the constitution or laws of the
state of New Mexico. Fraudulent
financial reporting means intentional misstatements or omissions of amounts or
disclosures in the financial statements to deceive financial statement users,
which may include intentional alteration of accounting records,
misrepresentation of transactions, or intentional misapplication of accounting
principles. Misappropriation of assets
means theft of an agency’s assets, including theft of property, embezzlement of
receipts, or fraudulent payments.
Corruption means bribery and other illegal acts. (GAO-14-704G federal
internal control standards paragraph 8.02).
(2) Definitions
of waste and abuse: Waste is the act of
using or expending resources carelessly, extravagantly, or to no purpose. Abuse involves behavior that is deficient or
improper when compared with behavior that a prudent person would consider
reasonable and necessary operational practice given the facts and
circumstances. This includes the misuse
of authority or position for personal gain or for the benefit of another. Waste
and abuse do not necessarily involve fraud or illegal acts. However, they may be an indication of
potential fraud or illegal acts and may still impact the achievement of defined
objectives. (GAO-14-704G federal internal control standards paragraph 8.03).
(3) Reports of fraud, waste &
abuse: Pursuant to the authority set
forth Section 12-6-3 NMSA 1978, the state auditor may conduct initial
fact-finding procedures in connection with reports of financial fraud, waste
and abuse in government made by agencies, IPAs or members of the public. Reports may be made telephonically or in
writing through the fraud hotline or website established by the state auditor
for the confidential reporting of financial fraud, waste, and abuse in
government. Reports may be made
telephonically to the fraud hotline by calling 1-866-OSA-FRAUD (1-866-672-3728)
or reported in writing through the state auditor’s website at
www.saonm.org. Reports received or
created by the state auditor are audit information and audit documentation in
connection with the state auditor’s statutory duty to examine and audit the
financial affairs of every agency, or in connection with the state auditor’s
statutory discretion to audit the financial affairs and transactions of an
agency in whole or in part.
(4) Confidentiality of sources: The identity of a person making a report and
associated allegations made directly to the state auditor orally or in writing,
or telephonically or in writing through the state auditor’s fraud hotline or
website, or through any other means, alleging financial fraud, waste, or abuse
in government is confidential audit information and may not be disclosed,
except as required by Section 12-6-6 NMSA 1978.
(5) Confidentiality of files: A report alleging financial fraud, waste, or
abuse in government that is made directly to the state auditor orally or in
writing, or telephonically or in writing through the state auditor’s fraud
hotline or website, any resulting special audit, performance audit, attestation
engagement or forensic audit, and all records and files related thereto are
confidential audit documentation and may not be disclosed by the agency, except
to an independent auditor, performance audit team or forensic audit team in
connection with a special audit, performance audit, attestation engagement,
forensic audit or other existing or potential engagement regarding the
financial affairs or transactions of an agency.
(6) The
OSA may make inquiries of agencies as part of the fact-finding process
performed by the OSA’s special investigations division. Agencies shall respond
to the OSA inquiries within 15 calendar days of receipt or as soon as
practicable under the circumstances with written notice to the OSA stating the
basis for any delay. IPAs shall test compliance with this requirement and
report noncompliance as a finding in the annual financial and compliance audit
report.
B. Special
audit or attestation examinations,
performance audits and forensic audits:
(1) Designation: Pursuant to Section 12-6-3 NMSA 1978, in
addition to the annual audit, the state auditor may cause the financial affairs
and transactions of an agency to be audited in whole or in part. Accordingly, the state auditor may designate
an agency for special audit, attestation engagement, performance audit or
forensic audit regarding the financial affairs and transactions of an agency or
local public body based on information or a report received from an agency, IPA
or member of the public. For purposes of
this rule, the term “special audit, attestation engagement, performance audit
or forensic audit” includes, without limitation, AUP, consulting, and contract
close-out (results-based award) engagements that address financial fraud, waste
or abuse in government. The state
auditor shall inform the agency of the designation by sending the agency a
notification letter. The state auditor
may specify the audit subject matter, the scope and any procedures required,
the AICPA professional standards that apply, and for a performance audit,
performance aspects to be included and the potential findings and reporting
elements that the auditors expect to develop.
Pursuant to Section 200.503 of Uniform Guidance, if a single audit was
previously performed, the special audit, attestation engagement, performance
audit or forensic audit shall be planned and performed in such a way as to
build upon work performed, including the audit documentation, sampling, and
testing already performed by other auditors.
The attestation and performance audit engagements may be conducted
pursuant to government auditing standards if so specified by the OSA.
(2) Costs: All reasonable costs of special audits,
attestation engagements, forensic audits, or single-entity performance audits
conducted pursuant to this Section shall be borne by the agency audited
pursuant to Section 12-6-4 NMSA 1978.
The state auditor, in its sole discretion, may apportion among the
entities audited some or all of the reasonable costs of a multi-entity
performance audit.
(3) Who
performs the engagement: The state
auditor may perform the special audit, attestation engagement, performance
audit or forensic audit, alone or with other professionals selected by the
state auditor. Alternatively, the state
auditor may require the engagement to be performed by an IPA or a team that may
be comprised of any of the following: independent public accountants; individuals
with masters degrees or doctorates in a relevant field such as business, public
administration, public policy, finance, or economics; individuals with their
juris doctorate; CFE-certified fraud examiners; CFF-certified forensic
auditors; CIA-certified internal auditors; or other specialists. If the state auditor designates an agency for
an engagement to be conducted by an IPA or professional team, the agency shall:
(a) upon
receipt of notification to proceed from the state auditor, identify all
elements or services to be solicited, obtain the state auditor’s written
approval of the proposed scope of work, and request quotations or proposals for
each applicable element of the engagement;
(b) follow
all applicable procurement requirements which may include, but are not limited
to, Uniform Guidance, Procurement Code (Sections 13-1-28 through 13-1-199 NMSA
1978), or equivalent home rule procurement provisions when selecting an IPA or
team to perform the engagement;
(c) submit the
following information to the state auditor by the due date specified by the
state auditor:
(i) a completed template for special
audits, attestation engagements, performance audits or forensic audits,
provided at www.osanm.org, which the agency shall print on agency letterhead;
and
(ii) a
completed audit contract form including the contract fee, start and completion
date, and the specific scope of services to be performed in the format
prescribed by the OSA, provided at www.osanm.org, with all
required signatures on the contract.
(d) If
the agency fails to select an IPA and submit the signed contract to OSA by the
due date specified by the state auditor, or, if none within 60 days of
notification of designation from the state auditor, the state auditor may
conduct the audit or select the IPA for that agency in accordance with the
process described at Subsection F of 2.2.2.8 NMAC.
(4) Errors:
Contracts that are submitted to the OSA with errors or omissions shall be
rejected by the state auditor. The state
auditor shall return the rejected contract to the agency indicating the
reason(s) for the rejection.
(5) Recommendation
rejections: In the event the agency’s
recommendation is not approved by the state auditor, the state auditor shall
promptly communicate the decision, including the reason(s) for rejection, to
the agency, at which time the agency shall promptly submit a different
recommendation. This process shall
continue until the state auditor approves a recommendation and related
contract. During this process, whenever a recommendation and related contract
are not approved, the agency may submit a written request to the state auditor
for reconsideration of the disapproval.
The agency shall submit its request no later than 15 calendar days from
the date of the disapproval and shall include documentation in support of its
recommendation. If warranted, after
review of the request, the state auditor may hold an informal meeting to
discuss the request. The state auditor
shall set the meeting in a timely manner with consideration given to the
agency’s circumstances.
(6) Contract
Amendments: Any proposed contract
amendments shall be processed in accordance with Subsection N of 2.2.2.8 NMAC.
(7) Access
to records and documents: For any
special audit, attestation engagement, performance audit or forensic audit, the
state auditor and any engaged professionals shall have available to them all
documents necessary to conduct the special audit, attestation engagement,
performance audit or forensic audit.
Furthermore, pursuant to Section 12-6-11 NMSA 1978, when necessary for a
special audit, attestation engagement, performance audit or forensic audit, the
state auditor may apply to the district court of Santa Fe County for issuance
of a subpoena to compel the attendance of witnesses and the production of books
and records.
(8) Entrance,
progress and exit conferences: The IPA
or other professional shall hold an entrance conference and an exit conference
with the agency, unless the IPA or other professional has submitted a written
request to the state auditor for an exemption from this requirement and has
obtained written approval of the exemption.
The OSA has the authority to notify the agency or IPA or other
professional that the state auditor shall be informed of the date of the
entrance conference, any progress meetings and the exit conference. If such notification is received, the IPA or
other professional and the agency shall invite the state auditor or his
designee to attend all such conferences no later than 72 hours before the
proposed conference or meeting. The
state auditor may also require the IPA or other professional to submit its
audit plan to the state auditor for review and approval. The date of the exit conference(s) and the
names and titles of personnel attending shall be stated on the last page of the
special audit report.
(9) Required
reporting: All reports for special
audits, attestation engagements, performance audits, or forensic audits related
to financial fraud, waste or abuse in government undertaken pursuant to
2.2.2.15 NMAC (regardless of whether they are conducted pursuant to AICPA
standards for consulting services or for attestation engagements) shall report
as findings any fraud, illegal acts, non-compliance or internal control
deficiencies, pursuant to Section 12-6-5 NMSA 1978. Each finding shall comply with the
requirements of Subsection L of 2.2.2.10 NMAC.
(10) Report
review: As required by Section 12-6-14
NMSA 1978, the state auditor shall review reports of any special audit,
attestation engagement, performance audit or forensic audit made pursuant to
this section for compliance with the professional services contract and this
rule. Upon completion of the report, the
IPA or other professional shall deliver the organized and bound report to the
state auditor with a copy of any signed management representation letter.
Unfinished or excessively deficient reports shall be rejected by the state
auditor. If the report is rejected the
firm shall submit an electronic version of the corrected rejected report for
state auditor review. The name of the
electronic file shall be “corrected rejected report” followed by the agency
name and fiscal year. The IPA or other
professional shall respond to all review comments as directed by the state
auditor.
(11) Report
release: After OSA’s review of the report for compliance with the professional
services contract and this rule, the state auditor shall authorize the IPA to
print and submit the final report. An
electronic version of the report, in the PDF format described at Subsection B
of 2.2.2.9 NMAC, shall be delivered to the state auditor within five business
days. The state auditor shall not
release the report until all the required documents are received by the state
auditor. The state auditor shall provide
the agency with a letter authorizing the release of the report pursuant to
Section 12-6-5 NMSA 1978. Agency and
local public body personnel shall not release information to the public
relating to the special audit, attestation engagement, performance audit or
forensic audit engagement until the report is released and has become a public
record pursuant to Section 12-6-5 NMSA 1978.
Except for the exception under Subsection B of 2.2.2.15 NMAC, at all
times during the engagement and after the engagement report becomes a public
record, the IPA or other professional(s) shall not disclose to the public
confidential information about the auditee or about the engagement. Confidential
information is information that is not generally known to the public through
common means of providing public information like the news media and internet.
(12) Disclosure
by professionals: The IPA or other
professional shall not disclose information identified as confidential
information provided to them by the state auditor unless otherwise specified by
the state auditor. Disclosure of
confidential information by the IPA or other professional may result in legal
action by the state auditor, or in the case of an IPA, restriction pursuant to
Subsection D of 2.2.2.8 NMAC.
(13) Payment: Progress payments up to (but not including)
ninety-five percent of the contract amount do not require state auditor
approval and may be made by the agency if the agency monitors the progress of
the services procured. If requested by
the state auditor, the agency shall provide a copy of the approved progress
billing(s). Final payments of ninety-five
percent and above may be made by the agency pursuant to either of the
following:
(a) stated in
the letter accompanying the release of the report to the agency, or
(b) in the case of ongoing law
enforcement investigations, stated in a letter prior to the release of the
report to the agency.
C. Agency-initiated
special audits, attestation engagements, performance audits and forensic audits:
(1) Applicability: With the exception of agencies that are
authorized by statute to conduct performance audits and forensic audits, this
section applies to all instances in which an agency enters into a professional
services contract for a special audit, attestation engagement, performance
audit, or forensic audit relating to financial fraud, waste or abuse, but the
agency has not been designated by the state auditor for the engagement pursuant
to Subsection B of 2.2.2.15 NMAC. For
purposes of this rule, the term “special audit, attestation engagement,
performance audit or forensic audit” includes, without limitation, AUP,
consulting, and contract close-out (results-based award) engagements that
address financial fraud, waste or abuse in government.
(2) Contracting: An agency, IPA or other professional shall
not enter into a professional services contract for a special audit,
attestation engagement, performance audit, or forensic audit regarding the
financial affairs and transactions of an agency and relating to financial
fraud, waste or abuse in government without the prior written approval of the
state auditor. The proposed professional
services contract shall be submitted to the state auditor for review and
approval after it has been signed by the agency and the IPA or other
professional, unless the agency or IPA or other professional applies to the
state auditor for an exemption and the state auditor grants the exemption. When contracting with an IPA or other
professional, the agency shall contract only with an IPA or other professional
that has been approved by the state auditor to conduct such work. The state auditor may, in its sole
discretion, require a non-IPA professional to submit proof of qualifications, a
firm profile or equivalent documentation prior to approving the contract. The contract shall include the contract fee,
start and completion date, and the specific scope of services to be performed,
and shall follow any template that the state auditor may provide.
(3) Applicability
of other rules: The provisions outlined
in Subsection B of 2.2.2.15 NMAC apply to agency-initiated special audits,
attestation engagements, performance audits and forensic audits.
[2.2.2.15 NMAC -
Rp, 2.2.2.15 NMAC, 3/10/2020]
2.2.2.16 ANNUAL FINANCIAL PROCEDURES
REQUIRED FOR LOCAL PUBLIC BODIES WITH ANNUAL REVENUES LESS THAN FIVE HUNDRED
THOUSAND DOLLARS ($500,000) (TIERED
SYSTEM):
A. Annual
revenue and state funded capital outlay expenditures determine type of
financial reporting: All local public bodies shall comply with the
requirements of Section 6-6-3 NMSA 1978. Pursuant to Section 12-6-3 NMSA 1978,
the annual revenue of a local public body determines the type of financial
reporting a local public body shall submit to the OSA. Local public bodies are mutual domestic water
consumers associations, land grants, incorporated municipalities, and special
districts.
(1) The
annual revenue of a local public body shall be calculated on a cash basis as
follows:
(a) Revenue
shall exclude capital outlay funds. OSA
defines capital outlay funds as funds expended pursuant to the Property Control
Act definition of a capital outlay project.
Per section 15-3B-2 NMSA 1978
“Capital outlay project" means the acquisition, improvement,
alteration or reconstruction of assets of a long-term character that are
intended to continue to be held or used, including land, buildings, machinery,
furniture and equipment. A “capital
outlay project” includes all proposed expenditures related to the entire
undertaking.
(b) Revenue
shall exclude federal or private grants.
For the purpose of 2.2.2.16 NMAC “private grant” means funding provided
by a non-governmental entity.
(2) For
the purposes of 2.2.2.16 NMAC “state funded capital outlay expenditures” are
expenditures made pursuant to any funding provided by the New Mexico
legislature for a capital outlay project as defined in the Property Control
Act, Section 15-3B-2 NMSA 1978, either received directly by the local public
body or disbursed through an administering agency.
B. Determination of revenue and services: Annually, following the procedures described
in Subsection F of 2.2.2.8 NMAC, the state auditor shall provide local public bodies
written authorization to obtain services to conduct a financial audit or other
procedures. Upon receipt of the
authorization, a local public body shall determine its annual revenue in
accordance with Subsection A of 2.2.2.16 NMAC.
The following requirements for financial reporting apply to the
following annual revenue amounts (tiers):
(1) if
a local public body’s annual revenue is less than ten thousand dollars
($10,000) and the local public body did not directly expend at least fifty
percent of, or the remainder of, a single capital outlay award, then the local
public body is exempt from submitting a financial report to the state auditor,
except as otherwise provided in Subsection C of 2.2.2.16 NMAC;
(2) if
a local public body’s annual revenue is ten thousand dollars ($10,000) or more
but less than fifty thousand dollars ($50,000), then the local public body is
exempt from submitting a financial report to the state auditor, except as
otherwise provided in Subsection C of 2.2.2.16 NMAC;
(3) if a local public body’s annual
revenue is less than fifty thousand dollars ($50,000), and the local public
body expended at least fifty percent of, or the remainder of, a single capital
outlay award during the fiscal year, then the local public body shall procure
the services of an IPA for the performance of a tier three AUP engagement in
accordance with the audit contract for a tier three AUP engagement;
(4) if
a local public body’s annual revenue is greater than fifty thousand dollars
($50,000) but less than two hundred-fifty thousand dollars ($250,000), then the
local public body shall procure the services of an IPA for the performance of a
tier four AUP engagement in accordance with the audit contract for a tier four
AUP engagement;
(5) if
a local public body’s annual revenue is greater than fifty thousand dollars
($50,000) but less than two hundred-fifty thousand dollars ($250,000), and the
local public body expended any capital outlay funds during the fiscal year,
then the local public body shall procure the services of an IPA for the
performance of a tier five AUP engagement in accordance with the audit contract
for a tier five AUP engagement;
(6) if a local public body’s annual
revenue is two hundred-fifty thousand dollars ($250,000) or greater, but less
than five hundred thousand dollars ($500,000), the local public body shall
procure services of an IPA for the performance of a tier six AUP engagement in
accordance with the audit contract for a tier six AUP engagement;
(7) if
a local public body’s annual revenue is five hundred thousand dollars
($500,000) or more, this section shall not apply and the local public body
shall procure services of an IPA for the performance of a financial and
compliance audit in accordance with other provisions of this rule;
(8) not-withstanding
the annual revenue of a local public body, if the local public body expended
seven hundred-fifty thousand dollars ($750,000) or more of federal funds
subject to a federal single audit during the fiscal year then the local public
body shall procure a single audit.
C. Exemption from financial reporting:
A local public body that is exempt
from financial reporting to the state auditor pursuant to Subsection B of
2.2.2.16 NMAC shall submit written certification to LGD and the state auditor.
The certification shall be provided on the form made by the state auditor,
available through OSA-Connect. The local
public body shall certify, at a minimum:
(1) the local
public body’s annual revenue for the fiscal year; and
(2) that the local public body did not expend fifty percent of
or the remainder of a single capital outlay award during the fiscal year.
(3) The
OSA will not accept the certification of exemption from financial reporting for
the current year until the prior year certifications or AUP reports (whichever
is appropriate) have been submitted.
D. Procurement of IPA services: A local public body required to obtain an AUP
engagement shall procure the services of an IPA in accordance with Subsection F
of 2.2.2.8 NMAC.
E. Access to Records and Documents: For any AUP the agency should produce all
documents necessary to conduct the engagement.
F. Requirements of the IPA selected to perform
the AUP:
(1) The
IPA shall provide the local public body with a dated engagement letter during
the planning stages of the engagement, describing the services to be
provided. See Subsection F of 2.2.2.10
NMAC for applicable restrictions on the engagement letter.
(2) The
IPA may not subcontract any portion of the services to be performed under the
contract with the local public body except for the activation of a contingency
subcontractor form in the event the IPA is unable to complete the engagement.
(3) The IPA shall hold an entrance
conference and an exit conference with the local public body unless the IPA has
submitted a written request to the OSA for an exemption from this requirement
and has obtained written approval of the exemption from the OSA. Unless the cost of the AUP is five thousand
dollars ($5,000) (excluding GRT) or less, the exit conference shall be held in
person; a telephone or webcam exit conference shall not meet this
requirement. The OSA has the authority
to notify the agency or IPA that the state auditor shall be informed of the
date of the entrance conference, any progress meetings and the exit
conference. If such notification is
received, the IPA and agency shall invite the state auditor or his designee to
attend all such conferences no later than 72 hours before the proposed
conference or meeting.
(4) The IPA shall submit the report to
the OSA for review in accordance with the procedures described at Subsection B
of 2.2.2.9 NMAC. Before submitting the report to OSA for review, the IPA shall
review the report using the AUP report review guide available on the OSA’s
website at www.saonm.org. The report
shall be submitted to the OSA for review with the completed AUP report review
guide. Once the audit report is
officially released to the agency by the state auditor (by a release letter)
and the required waiting period of five calendar days has passed, unless waived
by the agency in writing, the audit report shall be presented by the IPA, to a
quorum of the governing authority of the agency at a meeting held in accordance
with the Open Meetings Act, if applicable.
This requirement only applies to agencies with a governing authority,
such as a board of directors, board of county commissioners, or city council,
which is subject to the Open Meetings Act.
The IPA shall ensure that the required communications to those charged
with governance are made in accordance with AU-C 260.12 to 260.14.
(1) Progress
payments up to ninety-five percent of the contract amount do not require state
auditor approval and may be made by the local public body if the local public
body ensures that progress payments made do not exceed the percentage of work
completed by the IPA. If requested by
the state auditor, the local public body shall provide the OSA a copy of the
approved progress billing(s).
(2) Final
payments from ninety-five percent to one hundred percent may be made by the
local public body pursuant to either of the following:
(a) stated in the letter accompanying the release of the report
to the agency, or
(b) in the case of ongoing law enforcement investigations,
stated in a letter prior to the release of the report to the agency. In this
situation a letter releasing the report to the agency will be issued when it is
appropriate to release the report.
H. Report
due dates, notification letters and confidentiality:
(1) For local public bodies with a June
30 fiscal year-end that qualify for the tiered system, the report or
certification due date is December 15.
Local public bodies with a fiscal year end other than June 30 shall
submit the AUP report or certification no later than five months after the
fiscal year-end. Late AUP reports (not
the current reporting period) are due not more than six months after the date
the contract was executed. An organized
bound hard copy of the report shall be submitted to the OSA. AUP reports submitted via fax or email shall
not be accepted. A copy of the signed
dated management representation letter shall be submitted with the report. If a due date falls on a weekend or holiday,
or if the OSA is closed due to inclement weather, the report is due the
following business day by 5:00 p.m. If
the report is mailed to the state auditor, it shall be postmarked no later than
the due date to be considered filed by the due date. If the due date falls on a weekend or holiday
the audit report shall be postmarked by the following business day.
(2) As
soon as the IPA becomes aware that circumstances exist that will make the local
public body’s AUP report be submitted after the applicable due date, the
auditor shall notify the state auditor of the situation in writing. This notification shall consist of a letter,
not an email. However, a scanned version
of the official letter sent via email is acceptable. The late AUP notification letter is subject
to the confidentiality requirements detailed at Subsection M of 2.2.2.10
NMAC. This does not prevent the state
auditor from notifying the legislative finance committee or applicable oversight
agency pursuant to Subsections F and G of Section 12-6-3 NMSA 1978. There shall be a separate notification for
each late AUP report. The notification
shall include a specific explanation regarding why the report will be late,
when the IPA expects to submit the report and a concurring signature by the
local public body. If the IPA will not
meet the expected report submission date, then the IPA shall send a revised
notification letter. In the event the
contract was signed after the report due date, the notification letter shall
still be submitted to the OSA explaining the reason the AUP report will be
submitted after the report due date. The
late report notification letter is not required if the report was submitted to
the OSA for review by the deadline, and then rejected by the OSA, making the
report late when resubmitted.
(3) Local public body personnel shall not
release information to the public relating to the AUP engagement until the
report is released and has become a public record pursuant to Section 12-6-5
NMSA 1978. At all times during the
engagement and after the AUP report becomes a public record, the IPA shall
follow applicable professional standards and 2.2.2 NMAC regarding the release
of any information relating to the AUP engagement.
I. Findings: All AUP engagements shall report as findings
any fraud, illegal acts, non-compliance or internal control deficiencies,
consistent with Section 12-6-5 NMSA 1978.
The findings shall include the required content listed at Subparagraph
(d) of Paragraph (1) of Subsection L of 2.2.2.10 NMAC.
J. Review of AUP reports and related workpapers: AUP shall be reviewed by the OSA for
compliance with professional standards and the professional services
contract. Noncompliant reports shall be
rejected and not considered received.
Such reports shall be returned to the firm and a copy of the rejection
letter shall be sent to the local public body.
If the OSA rejects and returns an AUP report to the IPA, the report
shall be corrected and resubmitted to the OSA by the due date, or the IPA shall
include a finding for non-compliance with the due date. The IPA shall submit an electronic version of
the corrected rejected report for OSA review.
The name of the electronic file shall be “corrected rejected report”
followed by the agency name and fiscal year.
The OSA encourages early submission of reports to avoid findings for
late reports. After its review of the
AUP report for compliance with professional standards and the professional
services contract, the OSA shall authorize the IPA to print and submit the
final report. An electronic excel
version of the findings summary form and an electronic version of the AUP
report, in PDF format as described at Subsection B of 2.2.2.9 NMAC, shall all
be delivered to the OSA within five business days. The OSA shall not release the AUP report
until the electronic version of the report is received by the OSA. The OSA shall provide the local public body
with a letter authorizing the release of the report after the required five day
waiting period. Released reports may be
selected by the OSA for comprehensive report and workpaper
reviews. After such a comprehensive
report and workpaper review is completed, the OSA
shall issue a letter to advise the IPA about the results of the review. The IPA shall respond to all review comments
as directed. If during the course of its
review, the OSA finds significant deficiencies that warrant a determination
that the engagement was not performed in accordance with provisions of the contract,
applicable AICPA standards, or the requirements of this rule, any or all of the
following action(s) may be taken:
(1) the
IPA may be required to correct the deficiencies in the report or audit
documentation, and reissue the AUP report to the agency and any others
receiving copies;
(2) the IPA’s
eligibility to perform future engagements may be limited in number or type of
engagement pursuant to Subsection D of 2.2.2.8 NMAC;
(3) for
future reports, for some or all contracts, the IPA may be required to submit
working papers with the reports for review by the OSA prior to the release of
the report; or
(4) the IPA may be
referred to the New Mexico public accountancy board for possible licensure
action.
K. IPA
independence:
IPAs shall maintain independence with respect to their client agencies
in accordance with the requirements of government auditing standards,
December 2018 revision, issued by the US-GAO (GAGAS 3.17-3.108).
HISTORY of
2.2.2 NMAC:
Pre-NMAC
Regulatory Filing History: The material
in this part was derived from that previously filed with the State Records
Center and Archives under SA Rule No. 71-1, Regulations of State Auditor
Relating to Audit Contracts with Independent Auditors by State Agencies, filed
5/14/1971; SA Rule No. 71-2, Regulations of State Auditor for Audits by
Independent Auditors, filed 5/27/1971; SA Rule No. 72-1, Regulations of State
Auditor Relating to Audit Contracts With Independent Auditors by Agencies of
the State of New Mexico, filed 6/1/1972; SA Rule No. 72-2, Regulations of State
Auditor for Audits by Independent Auditors, filed 6/1/1972; SA Rule No. 74-1,
Regulations of State Auditor Relating to Reporting Statutory Violations, filed
2/28/1974; SA Rule No. 74-2, Rotation of Assignments, filed 2/28/1974; SA No.
78-1, Regulations Governing the Auditing of New Mexico Governmental Agencies,
filed 11/3/1978; Amendment No. 1 to SA Rule 78-1, Regulations Governing the
Auditing of New Mexico Governmental Agencies, filed 5/28/1980; SA Rule No.
82-1, Regulation Governing the Auditing of New Mexico Governmental Agencies,
filed 12/17/1982; SA Rule No. 84-1, Regulations Governing the Auditing of
Agencies of the State of New Mexico, filed 4/10/1984; SA Rule No. 85-1,
Regulations Governing the Auditing of Agencies of the State of New Mexico,
filed 1/28/1985; SA Rule No. 85-3, Regulation for State Agencies Concerning
NCGA Statement No. 4 - Accounting and Financial Reporting Principles for Claims
and Judgements and Compensated Absences, filed 4/16/1980; SA Rule No. 85-4, Regulations
Governing the Auditing of Housing Authorities of the State of New Mexico, filed
6/12/1985; SA Rule No. 85-5, Regulations Pertaining to Single Audits of State
Agencies and Local Public Bodies, filed 6/17/1985; SA Rule No. 85-6, Audits of
Grants to Subrecipients, filed 6/17/1985; SA Rule
86-1, Regulations Governing the Audits of Agencies of the State of New Mexico,
filed 1/20/1986; SA Rule No. 86-2, Regulation Governing Violations of Criminal
Statutes in Connection with Financial Affairs, filed 3/20/1986; SA Rule No.
86-3, Professional Services Contracts, filed 7/9/1986; SA Rule 87-1,
Regulations Governing the Audits of Agencies of the State of New Mexico, filed
2/13/1987; SA Rule 87-2, Approval of Audit Contracts, filed 4/2/1987; SA Rule
87-3, Audit Requirements for Deferred Compensation, Retirement Plans, Budget
and Public Money for the State of New Mexico, filed 8/14/1987; SA Rule 88-1,
Regulations Governing the Audits of Agencies of the State of New Mexico, filed
2/10/1988; SA Rule 89-1, Regulations Governing the Audits of Agencies of the
State of New Mexico, filed 3/10/1989; SA Rule 90-1, Regulations Governing the
Audits of Agencies of the State of New Mexico, filed 3/1/1990; SA Rule 90-3,
Auditor's Responsibilities Related to Fees Collected on Convictions Relating to
Intoxicating Liquor and Controlled Substances, filed 5/7/1990; SA Rule 91-1,
Regulations Governing the Audits of Agencies of the State of New Mexico, filed
3/13/1991; SA Rule 92-1, Regulations Governing the Audits of Agencies of the State
of New Mexico, filed 3/6/1992; SA Rule 93-1, Regulations Governing the Audits
of Agencies of the State of New Mexico, filed 2/25/1993; SA Rule 94-1,
Regulations Governing the Audits of Agencies of the State of New Mexico, filed
2/25/1994; Amendment 1 to SA Rule 94-1, Regulations Governing the Audits of
Agencies of the State of New Mexico, filed 5/16/1994; SA Rule 95-1, Regulations
Governing the Audits of Agencies of the State of New Mexico, filed 3/16/1995;
and 2 NMAC 2.2, Requirements for Contracting and Conducting Audits of Agencies,
filed 4/2/1996.
History of Repealed Material:
2 NMAC 2.2, Requirements for Contracting and
Conducting Audits of Entities - Repealed, 3/30/2001.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 3/29/2002.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 4/30/2003.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 3/31/2004.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 5/13/2005.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 3/16/2006.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 4/16/2007.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 4/15/2008.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 2/27/2009.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 2/12/2010.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 2/28/2011.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 2/15/2012.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 2/28/2013.
2.2.2 NMAC Requirements for Contracting and Conducting Audits of Entities
- Repealed, 2/28/2014.
2.2.2 NMAC
Requirements for Contracting and Conducting Audits of Entities - Repealed,
3/16/2015.
2.2.2 NMAC
Requirements for Contracting and Conducting Audits of Entities - Repealed,
3/15/2016.
2.2.2 NMAC
Requirements for Contracting and Conducting Audits of Entities - Repealed,
3/14/2017.
2.2.2 NMAC
Requirements for Contracting and Conducting Audits of Entities - Repealed,
2/27/2018.
2.2.2 NMAC
Requirements for Contracting and Conducting Audits of Entities - Repealed,
3/10/2020.
Other
History:
2.2.2 NMAC
Requirements for Contracting and Conducting Audits of Entities, filed
2/15/2018, is replaced by 2.2.2 NMAC Requirements for Contracting and
Conducting Audits of Entities, effective 3/10/2020.