TITLE 2 PUBLIC
FINANCE
CHAPTER 2 AUDITS
OF GOVERNMENTAL ENTITIES
PART 3 BUDGET
CERTIFICATION OF LOCAL PUBLIC BODIES
2.2.3.1 ISSUING
AGENCY: State of New Mexico Department
of Finance and Administration, Local Government Division.
[2.2.3.1 NMAC - N,
6/1/2008]
2.2.3.2 SCOPE: All local public bodies required to obtain
budget approval from the local government division.
[2.2.3.2 NMAC - N,
6/1/2008]
2.2.3.3 STATUTORY
AUTHORITY: Sections 6-6-1
through 6-6-19 NMSA 1978 and Section 9-6-5E NMSA 1978.
[2.2.3.3 NMAC - N,
6/1/2008]
2.2.3.4 DURATION: Permanent
[2.2.3.4 NMAC - N,
6/1/2008]
2.2.3.5 EFFECTIVE
DATE: June 1, 2008 unless a
later date is cited at the end of a section.
[2.2.3.5 NMAC - N,
6/1/2008]
2.2.3.6 OBJECTIVE: 2.2.3 NMAC codifies required budgetary and
financial reporting by local public bodies to the local government division
supported by timely audits as of the previous fiscal year submitted to the
state auditor’s office and the local government division. The intended result
is to promote submission of budgets and reports to the local government
division by local public bodies with documentation that provides assurance that
the financial statements and position of the local public body have been
audited in accordance with requirements of the New Mexico state auditor found
in 2.2.2.1 through 2.2.2.14 NMAC, the requirements for contracting and conducting
audits of agencies, (“the audit rule”). The purpose of coordinating the
submission of audits timely from the previous fiscal year with the budget
certification process is two-fold: 1) to allow for corroboration of items in
the previous fiscal year audit with the budget and financial reports submitted
to the local government division, and 2) to require correspondence and other
documentation that can be maintained in a record for reference by government
officials and the public.
[2.2.3.6 NMAC - N,
6/1/2008]
2.2.3.7 DEFINITIONS:
A. “Account” means a double entry bookkeeping of assets,
liabilities, income and expenses with debit and credit entries on ledger pages
or other media which are posted to record a change(s) in value.
B. “Conditional budget certification” means the
certification of the budget of a local public body but with specified
conditions requiring compliance by the local public body in order to receive budget
certification and means that the local public body is operating without final budget
certification, as defined by Subsection F of 2.2.3.7 NMAC.
C. “Deficit” means any fund where its budget or financial
reports reflect more expenditures than revenues and cash balances available to
legally pay for them.
D. ”Emergency” means a natural or man made event that poses
an immediate danger or threat to public health, welfare and safety.
E. “Extenuating circumstances” means documented situations,
conditions or events that hinder or delay a local public body from complying
with the local government division’s requirements and timelines for submitting
budgets, financial reports and audits.
F. “Final budget certification” means budget approval by a
local government division official in accordance with Section 6-6-2 NMSA 1978.
G. “Fund” means a group of related accounts that are self
balancing within their group as defined by the government accounting standards
board (GASB). A fund is not an account.
H. “Local government division” is the division of the state
of New Mexico department of finance and administration with budgetary and
fiscal oversight responsibilities and authority over local public bodies.
I. “Local government division official” means any employee
or public officer of the local government division of the New Mexico department
of finance and administration.
J. “Local public body" means
every political subdivision of the state which expends public money from
whatever source derived, including but not limited to any county, incorporated
municipality, or special district, land grants registered with the New Mexico secretary
of state’s office. Also under the definition are mutual domestic water
associations, soil and water conservation districts, water and sanitation
districts, watersheds, draws, medical clinics, hospitals, hospital districts,
regional transportation districts, flood control authorities, natural gas
associations, public improvement districts, and regional housing authority
districts if required by the audit rule.
[2.2.3.7 NMAC - N,
6/1/2008]
2.2.3.8 UNTIMELY ANNUAL AUDITS AND
BUDGET CERTIFICATION:
A. Pursuant to Section 6-6-2 NMSA 1978, budgets shall be
submitted by the local public body to the local government division. Receipt of
the most current audit(s) that were required to be conducted and submitted for
review per the New Mexico state auditor’s required report due dates for the previous
fiscal year(s) shall be confirmed by the local government division. The local
government division, by letter to the local public body, shall inform the
governing body of the local public body and other state public officers,
elected and appointed, of the need for corrective action, in accordance with Subsection
E of 2.2.3.8 NMAC by the local public body when previous fiscal year audit(s)
have not been submitted. During the corrective action process, the local
government division may grant conditional budget certification to the local
public body.
B. The local government division shall identify and report
to state public officers a list of local public bodies that have failed to
contract with an independent public auditor for its annual audit. The identification
shall include reasons why the local public body has failed to obtain an audit
contract. The identification shall also report on whether or not a line item of
the amount in the preliminary and final executed budgets has been included for
the cost of the annual audit of the local public body.
C. When the cause of the delay is due to the independent
public auditor’s inability to complete the audit, the local public body will
communicate this in writing to the local government division and to the state auditor.
D. When the cause of the delay is due to the inability of
the local public body to make progress payments on the contract between the
local public body and the independent public auditor, the local public body
shall communicate this by letter to the local government division and to the
state auditor. The local public body shall explain why progress payments have
not been made, when they will be made and whether a shortage of funds exists.
E. Any necessary corrective action shall begin with a
meeting and continue with follow up meetings if needed, between officials of
the local public body and representatives of the local government division and
the state auditor’s office to consider any extenuating circumstances. The
meeting(s) shall address the extenuating circumstances, including but not
limited to, the documented reason(s) why the required annual audit has not been
conducted or completed. A plan for
corrective actions shall be developed and agreed to in writing by officials of
the local public body, the local government division and the state auditor’s
office, and signed by all the parties. The local public body will report
monthly to the local government division and to the state auditor’s office on
the progress of the corrective action plan, until the required annual audit is
completed and the local public body receives budget certification or conditional
budget certification if there are other issues or deficits in the budget which
may necessitate conditional budget certification.
F. The local public body shall communicate in writing to
the local government division and to the state auditor when it has completed
its required audit(s) and the local government division shall certify the local
public body’s interim and final budgets upon confirmation by the state
auditor’s office that the required audit has been submitted to the state
auditor’s office for review and publication, unless there are other issues or
deficits in the budget which may necessitate conditional budget certification.
[2.2.3.8 NMAC - N,
6/1/2008]
2.2.3.9 NON-COMPLIANCE BY LOCAL
PUBLIC BODIES: If the local public body does not comply with this rule to
bring its annual audit(s) into compliance with the audit rule as it pertains to
timeliness of submission, the local public body may only receive conditional budget
certification and final budget certification shall be withheld until the
corrective action plan process set forth in Subsection E of 2.2.3.8 NMAC has
been completed to the satisfaction of the local government division unless
there are other issues which may necessitate conditional budget certification.
In addition, the local government division may provide information regarding
audits not in compliance with the audit rule as it pertains to timeliness of
submission, to any funding entity, including but not limited to the legislature
or the community development block grant council. The local government division
will take measures to ensure that enforcement of the rule does not hinder the
delivery of financial resources in emergency situations, conditions or events.
[2.2.3.9 NMAC - N,
6/1/2008]
HISTORY OF 2.2.3 NMAC:
[Reserved]