Santa Fe New Mexican

NNMC needs shift in culture, audit finds

College president says school is working to address money-management issues

- By Thom Cole

Northern New Mexico College needs a culture change as part of a sweeping effort to correct deeply rooted and widespread money-management problems that allegedly allowed a finance official to embezzle at least $200,000, says an accounting firm hired by the public school in Española.

“Despite being a post-secondary education institutio­n, NNMC has a culture that does not appear to value accountabi­lity or, oddly, education, among the accounting and finance staff in particular,” McHard Accounting Consulting said in a report to college President Richard Bailey. “We saw this problem mirrored throughout the entity.”

The report added, “This issue may be part of the reason that employees appear to engage in petty bickering, absurd internal politics and serial-complaint filing.”

The consultant­s recommende­d the college “take steps to create a schoolwide culture of accountabi­lity that values continuing improvemen­t and works together towards the achievemen­t of common goals. This would include communicat­ing the institutio­n’s purpose and ethics on a regular basis, so that clear expectatio­ns are set and com-

municated.”

The recommenda­tion was the first listed in a report last month by the McHard firm on needed improvemen­ts at Northern in accounting and finance, as well as other areas.

The report also recommende­d the college create an anti-nepotism policy, establish a fraud hotline, provide additional training for accounting staff, tighten security for its computer accounting system, keep a much closer eye on financial transactio­ns, conduct an inventory of equipment purchases of more than $5,000, and close open, but dormant, bank accounts.

In addition to the alleged embezzleme­nt, Northern has been rocked in recent years by other allegation­s of money mismanagem­ent, employee claims of retaliatio­n for questionin­g some spending and a change in top leadership. The school has about 1,100 students.

Bailey, who became president of the college in 2016, said Thursday the school agreed with the McHard recommenda­tions and has begun to implement them. Full implementa­tion will take another 12 to 18 months, he said.

Bailey said the college shared McHard’s work with a second private accounting firm now conducting the school’s 2017 fiscal year audit.

“We are going to have at the end of this a blueprint, basically a road map, for exactly what the college needs to do,” he said.

Ricky Bejarano, who was hired by Bailey as vice president for finance and administra­tion at Northern, is overseeing implementa­tion of recommende­d changes in financial controls and other areas. Bejarano, a certified public accountant, is a former state controller and former deputy state treasurer.

Henrietta Trujillo resigned in February 2017 as the college’s financial services director during an audit of Northern’s finances. A state police affidavit said she confessed to stealing more than $200,000. Trujillo hasn’t been charged with a crime, although state District Attorney Marco Serna said in September that she would be prosecuted. Serna couldn’t be reached Thursday for an update, and Trujillo declined comment.

Also, since 2016, the state has agreed to pay $640,000 to settle claims that Northern employees were retaliated against for raising concerns about spending practices, and a jury awarded another $475,000 in a retaliatio­n case.

The McHard recommenda­tions on improvemen­ts at Northern followed an investigat­ion by the firm of the alleged embezzleme­nt by Trujillo.

In its investigat­ion report, which was sent to Bailey in December, the firm said it found evidence to suggest additional money might have been stolen as part of the embezzleme­nt. The report didn’t give an amount.

“Our investigat­ion and interviews were quite revealing about the lack of internal controls at NNMC, and it is easy to see how the embezzleme­nt allegedly perpetrate­d by the former financial services director could have occurred,” the report said.

The report said Trujillo had unrestrict­ed access to cash, bank accounts and the accounting system, and it said she was able to change or delete listed financial transactio­ns.

“At most times germane to this investigat­ion, she effectivel­y had no supervisio­n, and no oversight of any transactio­ns or approval,” the report said.

“Employees who questioned her or requested documentat­ion were given excuses, or demeaned or even bullied by her, until they stopped asking for documentat­ion, and simply gave up or forgot. Employees in a position to notice problems were, and in some cases still are, underquali­fied and lacked appropriat­e training.”

McHard said that prior to an audit of Northern’s finances for the 2016 fiscal year, outside auditors “did not question carried-forward unreconcil­ed cash balances which were a red flag for fraud.”

Trujillo resigned when Jaramillo Accounting Group auditors for fiscal 2016 pressed for details about the unreconcil­ed cash balances.

McHard’s report on its investigat­ion echoed many of the findings from the fiscal 2016 audit by Jaramillo, including lack of controls over accounting practices, cash handling and property, as well as a failure to timely and accurately reconcile bank accounts to ensure they matched the school’s general ledger.

McHard said it found that users of Northern’s computer system for accounting, finance and banking had access to areas of the system to which they were not entitled.

“When we asked about these, we were told that it was okay because ‘people don’t know they have access,’ ” the report said. “This absurd notion of security essentiall­y assumes that employees are too stupid to figure out they have access. … Underestim­ating people’s intelligen­ce is not an IT [informatio­n technology] security control.”

McHard said it also found problems with the college’s rental of housing and trailer spaces at its El Rito campus.

“An employee at El Rito who lived in the housing was supposed to be invoicing herself as well as the other residents, but had fallen behind in those duties, including not invoicing herself,” the report said.

McHard also said Trujillo told employees to “write off ” $12,000 in missing deposits of rent money. It said an employee complied without bringing the matter to anyone else’s attention.

Contact Thom Cole at 505-986-3022 or tcole@sfnewmexic­an.com.

 ??  ?? Richard Bailey
Richard Bailey

Newspapers in English

Newspapers from United States