For the fourth consecutive year, the city of Española’s audit came with a disclaimer from its auditor saying it could not form an opinion on the city’s financial status because the city had not maintained “sufficient internal controls in the areas of cash control, procurement, disbursements and capital assets.”
Nevertheless, the city did make progress in its 2007 audit. Findings were down nearly 50 percent, from 33 in 2006 to 17 in 2007. In 2005 the city was cited 74 times for poor financial practices.
The city has been playing a game of catch up the last two years. It filed late audits for 2006 and 2005. The 2007 audit also missed its December 1, 2007, deadline. It was not submitted to the State Auditor until March 17, 2008, according to state documents.
Precision Accounting LLC, an Albuquerque-based auditing firm, was hired to get this year’s audit turned in on time. Problems arose when the city’s Public Housing Authority did not have all the necessary documents available on time, City Manager Veronica Albin said. The Authority and the city will conduct separate audits for Fiscal Year 2008, she said.
The 2007 fiscal year ran from July 1, 2006 to June 30, 2007, making it the first complete fiscal year after Mayor Joseph Maestas’ slate swept to office in March 2006. Despite being late, Maestas said getting up to date with the audits is a great accomplishment.
“When I became mayor we were three fiscal years behind on our audit,” he said.
Since the last two audits, there were many findings that were not repeated this year, he said. Some of last year’s findings included failure to perform reconciliations on petty cash funds and lack of a centralized grants process. The city’s correction of those findings reflects the administration’s focus on greater financial oversight, Maestas said.
However, according to the audit, all 17 citations were repeat offenses, most of which the city failed to correct.
Despite that fact, Maestas said the audit should not jeopardize any funding that the city would receive from state appropriations. However, it may come into play should the city seek any type of bonding. He said it could affect the terms of a bond, such as interest rates and incidental fees. But until the city applies for a bond it would not be aware of how the most recent audit has affected its financial rating, he said.
Findings included there being no segregation of duties among Municipal Court cashiers, lack of a centralized procurement process, failure to log police citations clearly, budget overspending and various issues of missing or incomplete paperwork, according to the audit.
According to audit documents the Municipal Court’s cashier system leaves it vulnerable to misappropriation of revenue. It is the third consecutive year the finding was made, which states that there needs to be a separation of duties between cashiers. Former court clerk Ana Vivar who was investigated in 2007 for allegedly stealing money from the court. No charges have been brought in this case.
However, Salazar said the finding is not a fair and accurate account of the court.
“All checks and balances have been put into place to make sure that we reconcile and balance daily,” he said. “When the embezzlement was discovered it was not because of an audit.”
Salazar said the court’s system, which has been in place for at least two years, is working and the fact that they caught the embezzlement on their own is proof.
In May 2007 the city began utilizing a procurement officer to correct last year’s finding that a procurement process was not being used, Albin said.
But it was too late to make a difference in the most recent audit, because it was done just before the end of the fiscal year, she said.
The city’s Public Safety department also tried to correct last year’s finding that citations were not logged clearly by implementing a new procedure, which included logging citations with a detailed report, according to audit documents. However starting the program Feb. 26, 2007, was not enough time to count for correcting the problem all together, according to the audit. .
The amount the city was over budget was not available, Finance Director Josie Lujan said. But the audit included payments the city made in July and August 2007, when the budget was only meant to go through June 30, 2007, which contributed to the finding, she said.
Many findings were connected to a lack of supporting documents in various areas of city procedure.
There were no supporting documents for 155 of 497 sampled financial transactions nor for two of 30 sampled cash disbursements. Audit documents did not indicate what type of documents were missing, and since it was a random sample Lujan said there is no way to track what was missing.
Findings also noted accounts that were not listed on the city’s ledger resulting in an understatement of the city’s cash. Lujan said all the accounts stemmed from Valley National Bank and all were for amounts less than $100.
One of the accounts was filed under the city of Española but actually belonged to a local senior citizen group, she said. Another of the accounts had around $30 and was from a police and fire fund drive. The money in the accounts, which the city was unaware of, are being transferred into a general account, Lujan said.
In addition I-9-supporting documentation, which prove employment eligibility, were missing from three personnel files out of the 40 sampled, according to the audit. Last year’s audit found six employees were missing the documentation, while two were missing the forms all together. Lujan said proper documentation have been added to the files that were missing them.
Of the 17 findings, 11 stemmed from city procedures and six from the housing authority, according to the audit.
According to the audit, Epañola Public Housing Authority findings included not providing the necessary documentation for eligibility requirements for the Section 8 voucher program, such as income examinations and calculation of rent payments. Twelve of a sampled 30 Section 8 tenants did not have a file or were missing all documentation.
Discrepancies were found in the Housing Authority’s Housing Assistance Payment program, for example program payments were not in line with amounts stated in contracts. The Authority was also cited for not maintaining an inventory of capital assets or supplies.