City audit now five months late
State warns fourth missed deadline could have serious financial consequences
The city of Santa Fe missed a May 15 deadline to submit its annual external audit to the state, the fourth missed deadline since the report’s initial due date in mid-December, the New Mexico State Auditor’s Office said Tuesday.
The comprehensive annual financial report, five months overdue, is now expected by May 24, according to a spokesman for State Auditor Wayne Johnson.
The latest delay comes a week after Johnson expressed concern about the late audit in a letter to Mayor Alan Webber and warned of consequences, including possible bondrating downgrades and disqualification for capital outlay funds.
The two subsequently talked over the phone and agreed on the importance of a speedy resolution, representatives for both men said.
Webber said the newest extension was attributable to a formatting change requested by the Albuquerque accounting firm reviewing the report. The city had provided its material to the firm Friday. “We should be on track for the 24th,” the mayor said.
The late audit puts Santa Fe in the small and shrinking company of local New Mexico governments considered “at-risk” by the state auditor for the lateness of their annual reports. Also on the list are the city of Grants and the 412-person town of Vaughn in Guadalupe County.
The city of Santa Fe and an Albuquerque accounting firm, Clifton-Larson-Allen, had requested three extensions, the most recent of which extended the deadline to Tuesday.
The city’s former finance director attributed the delays to several problems on the city’s side, including missed deadlines by city staff, the implementation of new financial statement software, a new firm conducting the annual audit, and personnel and training issues in the Finance Department.
The state auditor’s deputy chief of staff, Enrique Knell, said Tuesday afternoon that the city had notified the office it was unable to make a final submission that day.
The city is “working closely with their independent auditor,” Knell wrote in an email. “Both parties have told us they are working diligently to produce an accurate financial report. Auditor Johnson looks forward to completing this process with the city.”
Matt Ross, a spokesman for Webber, said in email that the mayor “sees the audit — which he expects to include major findings — as a crucial tool, building on the McHard report and giving him the information he needs to fix the city’s broken finances.” Ross was referring to a fraud assessment conducted last fall that found an uncomfortably high risk of waste and abuse.
“Sometimes a tough audit is the best medicine for the city,” Webber said in an interview Tuesday.
Webber, who has begun regular meetings with department heads about the city’s response to last fall’s McHard report findings, said city management has discussed three possible corrective measures to address problems with internal processes: a forensic audit, a compliance audit and a performance audit.
“Whenever you’re given a review of your performance, the opportunity is there to use that to do better,” he said. “I think even if the medicine doesn’t taste very good, it’s really important to take it, accept it and use it to get better.”