THE DIRTY 59: The New Mexico auditor’s office reports that 59 entities in the state that spend or receive taxpayer money are behind on filing their audits.
By law, every organization in New Mexico that receives or spends public funds has to turn in an audit each year.
“If a government is going to spend taxpayer money they should be able to account and submit a full accounting of those activities every year,” State Auditor Hector Balderas said. “It’s a fundamental check and balance the taxpayer deserves.”
But a list compiled by the State Auditor’s Office and a review by New Mexico Watchdog show a staggering number are behind on their audits — and some of them haven’t turned one in for years.
“It’s a big deal,” Balderas said.
According to the State Auditor, there are 59 entities labeled as “at risk” because they are behind schedule for turning in their annual audits.
Some of the entities are small — such as the village of Maxwell, a ranching community up in Colfax County with a population of just 247. The public officials there haven’t filed an audit since Fiscal Year 2007 — some six years ago.
But some of them are large — such as the city of Española, that has a population well over 10,000. The city government hasn’t filed a completed audit since FY2009.
Then there’s Gallup, a city of more than 21,000 with a general fund of about $30 million, that hasn’t turned in an audit since FY2011.
The list includes 30 municipalities, five state agencies and three counties that have gone at least one year without filing a audit of what they’ve done with the taxpayer money they’ve spent or received.
Why haven’t they turned in their audits?
We’d like to know but phone calls from New Mexico Watchdog to the financial officials and political leaders in Española, Gallup and Sunland Park (non-compliant for the last two years) went unreturned.
Balderas says his office gets a lot of excuses, chief among them: entities say they can’t find an independent auditor to go through their records or they complain about the cost involved. Balderas says “some of those complaints are valid” and his office tries to work with the entities that are behind schedule, similar to the way a bank or a credit agency works with a customer who falls behind on their payments.
But there could be other issues at work.
“There is a culture of a lack of accountability,” Balderas said. “They really think I’m bugging them” when his office contacts the scofflaws.
Some years, as many as 90 entities receiving or spending taxpayer dollars have not filed their required audits — which, Balderas estimates, comes to about $1 billion.
There have also been cases where entities avoided turning in audits to hide embezzlement.
In 2009, a scandal broke out in the Jemez Mountains Schools where more than $3.3 million was stolen. The school district had been two years behind on its audits.
“I want to be very clear,” Balderas said. “At a lot of these governments, you have very well-intentioned political leaders at the helm. But sometimes they’re not trained in their responsibilities … I had very well-intentioned leaders in the Jemez Mountain case who didn’t even know how to read a financial statement or a budget.”
But the law is the law and any organization that receives New Mexico taxpayer dollars must account for its finances — just as every taxpayer has to turn in an income tax return to the Internal Revenue Service and the state.
Balderas said there are instances “where criminally speaking, public officials have purposely either lied to auditors, delayed the audit process, purposely impeded in hiring an auditor specifically for the purpose of not being discovered.”
Update: The Rio San Jose Flood Control District near Grants has the longest streak: It hasn’t filed a report with the State Auditors Office since FY2004.
In an e-mail to New Mexico Watchdog, Cynthia Spidle of the RSJFCD wrote:
“The Rio San Jose Flood Control District is not unwilling to have an audit done on its finances. The last time we had an audit, we had no major findings according to the OSA. The auditor that we hired had to wait nine months to receive his final payment, which can be hard on a small audit firm. We send out RFPs every year, to auditors on the OSA’s list. We are lucky if we get one response back. Usually the firm wants a lot of money for a very small audit, due to regulations from the OSA’s Office. At present we are waiting for a reply from the State Auditor’s Office on the auditor that we have recommended to complete the audits.”
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In Part 2 of our investigation we’ll take a look at what can be done to get the scofflaws to turn in their audits.
Here’s the list of the 59 entities that are late:
At Risk Agencies in New Mexico — State Auditors Office April 15 2013