NEW MEXICO STATE AUDITOR

Transcription

1 NEW MEXICO STATE AUDITOR AUDIT RULE 2018 WAYNE A. JOHNSON State Auditor NEW MEXICO GOVERNMENT AGENCIES Agency Type # Agency Type # State Agencies (exc. PED) 92 Housing Authorities* 45 Public Education Department 1 Regional Housing Authorities State-Chartered Charter Schools 58 3 Municipalities* 107 Soil & Water Districts 47 Counties 33 Special Districts 57 Schools and School Districts 92 District Charter Schools 39 Mutual Domestic Water Association 220 Higher Education 17 Component Units of Higher Ed. 23 Regional Educational Co-ops* 11 District Attorneys 15 Workforce Dev. Boards 5 District Courts 14 Public Improvement Districts 13 Hospitals & Special Hospital Dist.* 9 Tax Increment Development Districts* 8 Councils of Governments* 7 Land Grants 23 Acequias and Ditches 442 Total Entities = 1,381 (*includes component units) Entity Count in 2015 was ~ 980 ORGANIZATIONAL CHART Executive Management State Auditor, Wayne Johnson Deputy State Auditor, Jack Emmons, CPA, CFE Chief of Staff, Bobbie Shearer Chief Government Accountability Officer and General Counsel, Barbara Bruin, JD Deputy Chief of Staff, Enrique Knell 1

2 ORGANIZATIONAL CHART Financial Audit Division Deputy State Auditor, Jack Emmons, CPA, CFE Financial Audit Director, Lynette Kennard, CPA, CGFM Audit Manager, Elise Mignardot, CPA Audit Manager, Vacant Audit Manager, Shannon Sanders, CPA, CFE Supervision per job basis Audit Supervisor, Vacant Audit Supervisor, Kevin Chavez Audit Supervisor, Vacant Audit Supervisor, Lisa Jennings, MBA Audit Supervisor, Jessica Lucero Supervision per job basis Senior Auditor, Ralen Randel, CGFM, MACCT, MBA, MA Senior Auditor, Vacant Senior Auditor, Antonio Baca, CPA Supervision per job basis Staff Auditor, Anne Kelbley Staff Auditor, Vacant ORGANIZATIONAL CHART Special Investigations Deputy State Auditor, Jack Emmons, CPA, CFE Special Investigations Director, Vacant Audit Supervisor, Hamish Thomson, CPA/CFF, CFE Audit Supervisor, Chelsea Martin, CPA, CFE, CICA, CRFAC Senior Auditor, Cindy Padilla Staff Auditor, Guadalupe Jaramillo Senior Auditor, Terry Becenti, CFE Staff Auditor, Brendan Miller ORGANIZATIONAL CHART Administrative Services Chief of Staff, Bobbie Shearer IT Director, Arthur Baca Operations Administrator, Vacant Budget & Finance Director, Antonio Medina Exec. Sec. Adm., Amanda Herrera Human Resource Manager, Lori Johnson 2

3 ORGANIZATIONAL CHART Government Accountability Office, Compliance and Regulation Division Chief Government Accountability Officer and General Counsel, Barbara Bruin, JD Government Accountability Office Compliance and Regulation Division Senior Analyst, Joe Johnson Compliance and Quality Control Director, Vacant Records Custodian, Bernadet Martinez Contracts Admin, Frank Valdez AUDIT FEE HISTORY PERIOD AUDITS TOTAL CONTRACT AMOUNT HOURS AVERAGE PER AUDIT AVERAGE PER HOUR TOTAL IPA s REC'D CONT PER CONT/ IPA 30-Jun $19,616, ,969 $34, $ Fee Increase $916, Jun $20,170, ,962 $32, $ Fee Increase $553, Jun $20,290, ,140 $31, $ Fee Increase $120, Jun $19,054, ,438 $32, $ Fee Decrease ($1,236,012.09) Helping government work better by combating fraud, waste and abuse. STATE AUDITOR VISION Annual audit accountability and finding reduction Accessible and responsive to agencies and IPAs Support for At Risk entities and Small Political Subdivisions Robust investigative efforts and case load reduction NEW MEXICO STATE AUDITOR 3

4 WHAT WE SEE IN THE FUTURE Possible audits of public financing The future of CAFR preparation - Senate Bill Joint task force CPA society and state officials - CAFR is the latest in the country - Timely CAFR should increase our bond rating thus lower interest rate. Performance Audits - Internal control and compliance part of current audits - Revenues should be same or more for all firms Honor Roll Accounting & Financial Solutions, LLC CliftonLarsonAllen, LLP Hinkle + Landers, PC Integrity Accounting & Consulting, LLC Kriegel/Gray/Shaw & Co., PC Kubiak, Melton, & Associates, LLC Manning Accounting and Consulting Services, LLC Precision Accounting, LLC Honor Roll Criteria More than ten audits No significant deficiencies No late reports Pass peer review 4

5 CONTRACTING AUDIT RULE 2018 BASIC OVERVIEW OF THE AUDIT PROCESS 1. Submission of firm profiles 2. Develop the list of approved audit firms 3. State Auditor s Office will select which audits we will perform 4. Finalize Audit Rule, Audit Rule trainings & update financial compliance audit contracts 5. Send notification letters to Agencies/IPAs 6. Agencies must submit draft contract by due date listed in Audit Rule 7. IPAs conduct financial audits 8. Progress payments 9. Delivery and review of audit reports 10. Report release and final payments CONTRACTING 101 Agency selects IPA Agency submits draft contract to OSA through OSA Connect OSA reviews draft contract OSA sends a letter of approval to Agency If OSA rejects contract, Agency can correct technical errors and resubmit, or request reconsideration Agency obtains necessary signatures and third party approvals (PED, HED, DFA) Agency sends PDF version of final agreement with all signatures to OSA 5

6 SELECTING AN AUDITOR Agency must receive written notification from the State Auditor before beginning the selection process (sent 2/27) You can request an exception BEFORE you start the RFP process You can perform interim work before this time Available at Audit Rule List of approved audit firms Past contract information SELECTING AN AUDITOR FOR HIGHER ED Use OSA Connect to prepare draft contract Submit Contract to HED for review and approval HED issues each Institution an IPA Contract approval letter Institutions submit draft IPA Contract to the OSA via the OSA Connect website OSA reviews and approves draft IPA Contract based upon review and communicates approval via letter Institution obtains required contract signatures and submits final contract to OSA by CONTRACTING IS STILL ON OSA CONNECT APP.ORG Don t forget to update the contact persons for your agency. Contact Frank Valdez (Frank.Valdez@osa.state.nm.us) for assistance. Make sure to review ALL information for your agency, even if it is pre filled in OSA Connect. Tier System don t forget to go to Agency Profile and confirm the tier for your agency for this fiscal year. 6

7 WHERE TO FIND CONTRACTING INSTRUCTIONS AUDIT AND AUP CONTRACTS Fewer audit contract forms: State Agencies with DFA Approval Statewide CAFR PERA and ERB Higher Education All Others Scope of work section refers to Audit Rule. Deadline section refers to Audit Rule. If you want to have the exact deadline stated in your contract, use Other. CONTRACTS and OSA CONNECT Intellisense will auto-fill the name of your audit firm after you start typing. AUP contracts include the procedures as an exhibit (same as last year). 7

8 PLEASE READ YOUR CONTRACT! Late notification required as soon as IPA becomes aware that the audit may be late. Subcontracting requires State Auditor approval Conflict of interest Contractor and Agency both certify that you are complying with Governmental Conduct Act. Pay Equity Reporting are you (IPA) required to do it and are you? Applies to companies with 10 or more New Mexico employees OR 8 or more employees in the same job classification. OSA CONNECT COMMON QUESTIONS & ERRORS Issues with the multi year proposal this information is very important to get right. OSA CONNECT COMMON ERRORS Don t forget to press submit. Saving and printing are not the same as submitting contracts to OSA. 8

9 AMENDMENTS TO CONTRACTS Contracts expire one year after the latest signature (or DFA approval for state agencies requiring DFA approval). After that you need to submit a NEW CONTRACT, you can no longer amend. Amendments are subject to review by the OSA. Increases in price must be justified by an increase in scope. Amendments to change the tier (up or down) of an AUP need to include the procedures for the new tier. Change from audit to AUP or vice versa requires new contract. Consider price changes in all amendments. AMENDMENTS TO CONTRACTS The OSA has several forms of amendment pick the one most appropriate for your situation KEY AUDIT RULE CHANGES AUDIT RULE

10 KEY AUDIT RULE CHANGES G Rotation rule remove expired exception language for multi year proposals H Expanded the referrals section to include "risk advisories", explaining where they are posted and the requirement for the IPA to consider in performing the annual financial and compliance audit. New requirement that the IPA provide a response to the "risk advisory" at least 14 days prior to the draft report. KEY AUDIT RULE CHANGES L Requirements of the summary of prior years findings only finding number, title, and status (resolved, repeated or repeated and modified) L Corrective plan of action for federal findings must be in a separate document from auditor's findings and must be on the audited agency's letterhead. TOP TEN FINDINGS 1. Lack of policies, procedures and internal controls 2. State Law compliance (Anti donation, open meetings) 3. Budgetary compliance 4. Financial reporting 5. Cash & investments (Stale checks, no reconciliation) 6. Payroll & related liabilities (W/H, pay rates, I 9) 7. Grant compliance 8. Capital assets (No inventory) 9. Improper Procurement 10. Revenue & receivables (Deposit 24 Hr., Cut off) 10

11 KEY AUDIT RULE CHANGES M Exit conference requirements for what must be available at exit conference scaled back from full report to draft including the following: independent auditor's report, basic financial statements, findings, schedule of prior year findings, internal control report, and single audit compliance report W Capital asset inventory eliminated the requirement to keep old assets capitalized under historical thresholds (under $5,000) on inventory listing. KEY AUDIT RULE CHANGES Z and DD GASB Schedules 68 and 75 schedules of employer allocation of PERA, ERB, and RHCA new requirement that IPA give in relation to opinion on supplementary information schedules included in schedule of employer allocations report, new required note disclosures for plans BB Tax abatement disclosure requirements modified to align with GASB 77 by allowing aggregation and the use of a quantitative threshold for determining individual disclosure. KEY AUDIT RULE CHANGES CC New standards updated for new standards effective for FY 18 GASB 75 PEB is the most significant F Indigent care reporting requirements for Hospitals clarified requirements to present schedules in audit report as supplementary information and to submit electronic version of schedules to OSA. 11

12 KEY AUDIT RULE CHANGES M.4 Once the audit report is released to the agency by the State Auditor and five days have passed or unless waived, the audit report shall be presented by the IPA to a quorum of the governing authority at an open meeting. KEY AUDIT RULE CHANGES G Schedule of asset management costsinvesting agencies (STO, PERA, ERB, and SIC) A Fraud, waste and abuse reported to OSAnew requirement that agencies respond to OSA SID fact finding inquiries within 21 calendar days of receipt. IPAs required to test compliance and report noncompliance as a finding. ENHANCED ACCOUNTABILITY LATE AUDIT LIST 12

13 ENHANCED ACCOUNTABILITY LATE AUDIT LIST CONT. ENHANCED ACCOUNTABILITY ADVERSE or DISCLAIMED OPIONIONS LIST PAST RULES CAUSING PROBLEMS Cash vs Accrual D.1 The financial statements presented in audit report shall be prepared from the agency s books of record D.2 The financial statements are the responsibility of the agency L IPA shall maintain independence in accordance with governmental auditing standards. 13

14 PAST RULES CAUSING PROBLEMS Late Reports A.5 As soon as the auditor is aware that the audit will be late, a letter must notify the State Auditor with a copy to the oversight agency (DFA, PED, LGD). Letter shall contain specific explanation regarding why the report will be late. Must be signed by the IPA and a representative of the agency. COMBATING WASTE, FRAUD & ABUSE AUDIT RULE 2018 FRAUD AUDIT RULE NMAC A.1 FINANCIAL REPORTING Intentional misstatements or omissions of amounts or disclosures. MISUSE OF PUBLIC FUNDS PROHIBITED BY LAW MISAPPROPRIATION EMBEZZLEMENT CORRUPTION (bribery and other illegal acts) etc. 14

15 WASTE AND ABUSE AUDIT RULE MAY IMPACT THE ACHIEVEMENT OF DEFINED OBJECTIVES NMAC A.2 and GAO G federal internal control standards paragraph 8.02 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. WHAT WE SEE AND WHAT WE DO About 300 tips per year Time theft, ethics, procurement, embezzlement, misuse of resources Log, prioritize, assign and discuss Fact finding Review laws, policies, public information, media Determine course of action Special audit/ risk review Forward to internal audit/inspector general Forward to other oversight body Forward to management/governing body Refer to IPA for financial audit Close NOTIFICATION OF CRIMINAL VIOLATIONS NMSA 1978, (Criminal violations) An agency or independent auditor shall report a violation of a criminal statute in connection with financial affairs immediately to the state auditor. NMAC N.2 (Audit Rule) Must be in writing Include an estimate of dollar amount involved Detailed description of the violation, including names of persons involved and any action taken or planned 15

16 OSA REFERRALS TO IPAS Purpose Alert IPA to issues potentially affecting planning and risk assessment, or non compliance with state law Responsibilities of IPA Consider issues and perform procedures as necessary Consider confidentiality of referral Respond in writing prior to audit submission Responsibilities of Agency Cooperate with IPA to ensure timely and adequate response SPECIAL ENGAGEMENTS NMSA 1978, (C) states, 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. NMAC (Special Audits, Attestation Engagements, Performance Audits and Forensic Audits) OSA designated Agency initiated SPECIAL ENGAGEMENTS NMAC B.9 (Required Reporting). Reports must state the applicable standards and findings should include condition, criteria, cause, effect, recommendation, and management response with corrective action plan. NMAC C (Agency initiated). With exception of agencies authorized by statute to conduct performance and forensic audits, contracts relating to financial fraud, waste or abuse must be approved by the OSA. 16

17 SPECIAL INVESTIGATIONS DIVISION FY18 UPDATES FROM FISCAL YEAR 2017 AND EARLIER La Promesa Charter School Southwest Secondary/Primary Learning Centers Office of the Superintendent of Insurance City of Jal Dora Consolidated Schools Developmental Disabilities Planning Council Northern New Mexico College Hanover Mutual Domestic Water Utility Authority Procurement Study SPECIAL INVESTIGATIONS DIVISION FY18 OTHER CASES IN THE LAST YEAR: Town of Silver City Albuquerque Public Schools University of New Mexico City of Las Vegas Otis Mutual Domestic Water Utility Authority Martin Luther King Commission THANK YOU! Website: Fraud Hotline: OSA FRAUD Main Phone:

18 Government Finance Experts Conference May 21, 22, 23, 2018 Sandia Resort & Casino Albuquerque 18