Published 10/23/08
Rio Arriba County’s fiscal year 2006 audit revealed several deficiencies in the County’s financial management, one serious enough for the State Auditor to “qualify” his opinion of the County’s audit.
The County’s 2006 audit, like all the County’s audits since 2003, was submitted late to the state. County Comptroller Mary Louise Martinez said the County has changed auditing firms several times since then. The County contracted with the Accounting and Consulting Group LLP, of Albuquerque, for $75,000 per year to complete the fiscal year 2006, 2007 and 2008 audits.
The Group found the County was unable to provide a list of its capital assets and depreciation schedule. Martinez said a turnover of staff was to blame for an incomplete inventory, but the County did have a comprehensive list of everything purchased in the last four years and that just had to be reconciled with older lists. She said a complete list including a depreciation schedule was ready for the 2007 audit.
“The rest of the findings related more to internal control weaknesses,” State Auditor Hector Balderas said. “This is the one that was really serious.”
Balderas said a failure to have adequate documentation regarding capital assets could materially affect the County’s financial statements. He said that finding caused his office to issue a “qualified” opinion, which indicates there is missing information and the County failed to meet Generally Accepted Accounting Principles. The opinion was made to help the County improve its reporting in the future but won’t financially impact the County or result in any penalties.
The 2007 audit was submitted to the state auditor Aug. 20, nine months after it was due. Balderas said his office is finalizing its second review of the document before releasing it to the public. Martinez said the fiscal year 2008 audit is nearly complete. This audit is due Nov. 15.
Besides submitting the report late, the Group found several other deficiencies in the 2006 audit, which was recently released to the public and which covers the County’s financial operations from July 1, 2005, to June 30, 2006.
The Group also looked at 27 County purchases during fiscal year 2006 and found that in two instances they were not authorized, and direct payment vouchers were used instead of purchase orders. The audit did not identify the two incidents. County policy states direct payment vouchers can only be used for emergencies, and the two expenditures in question were related to office expenses. The Group recommended the County take action to make sure County employees follow the policy and use purchase orders.
“That is something that has reoccurred,” Martinez said. “It has to be curbed somehow.”
Balderas said similar deficiencies are relatively common.
Record-keeping practices led the Group to note two more deficiencies: two of 30 sampled employees’ personnel files did not contain authorization for a one-time, $500 pay adjustment, and the Group was unable to trace 30 of 30 individual receipts back to the general ledger, which was just a matter of the County’s bookkeeping not being in the auditor’s preferred style.
Martinez said the first was a clerical error that has been addressed, and the second occurred because the County Treasurer’s office would send the Finance Department daily totals of expenditures rather than individual receipts. She said the County could trace the receipts back to the daily totals, just not in the way the Group preferred. The audit states the Finance Department is now receiving more detailed reports from the Treasurer’s Office, and receipts are posted individually.
The Group also found the County had paid one of 10 credit card invoices late, leading to an extra $25 charge, and requests former County Emergency Manager Dwayne Merritt made to the Department of Homeland Security were also found to lack proper documentation. The SUN reported in last week’s issue that Merritt resigned from the County last month after questions were raised about this issue. He denied this was the reason why he quit.
Finally, the Group stated the County’s budgeted expenditures exceeded the budgeted fund balances in three categories, including the Lodger’s Tax by $245, the Senior Program by $74,655 and the Fire and Rescue Fund by $4,309. Martinez said the County always had enough money to fund the programs, and it was a new rule by the State Auditor in how to prepare budgets that was responsible for the discrepancies.
Group Managing Partner Ray Roberts said the 2007 audit shows many of the same deficiencies as the previous year’s because of the tardiness of the 2006 audit. He also said the 2008 audit should be done by the end of October.
The County Commission accepted the audit at its Sept. 25 meeting with little comment.