The forensic audit at TMS
In December, when the Taos Municipal Schools District board of education hired the Jaramillo Accounting Group to conduct a forensic audit regarding allegations of fraud, waste and abuse involving several district employees, Superintendent Valerie Trujillo indicated that she had notified the Office of the State Auditor of the pending audit.
New Mexico State Auditor Joseph Maestas plays an important oversight role in such investigations. Should any irregularities be identified and brought to the auditor’s attention, he will ultimately decide whether any of the findings should be referred for prosecution.
Maestas said a forensic audit falls under the umbrella of special audits, which are “not completely uncommon,” and estimated that the Office of the State Auditor reviews about two-to-three special audits for school districts around New Mexico each year. In the case of Taos Municipal Schools, he said “it’s more of an investigation kind of engagement.”
“A special audit can be initiated in several ways,” Maestas explained. “There’s already an independent public accounting firm that’s already engaged by a public entity, and [if] they discover certain areas of concern, especially if there’s possible criminal activity, they have to notify us.”
Then, the Office of the State Auditor must determine whether or not an additional accounting firm must be employed, depending on the capability of the firm conducting the annual financial audit and special audit simultaneously. Whichever firm is employed must be approved by the Office of the State Auditor.
While the length of an audit can be estimated by the accounting firm conducting it, there are many variables to factor in, including the availability of necessary information and the scope of the investigation. In the case of Taos Municipal Schools, the Jaramillo Accounting Firm estimated the audit will be completed by May.
Maestas pointed to a similar case to the one ongoing at Taos Municipal Schools. In 2018, the Jaramillo Accounting Firm conducted a forensic audit for the Carlsbad School District, which reported missing funds over a six-year period between July 1, 2012 and June 30, 2018. At the end of the audit, it was found that a teacher in charge of yearbook funds embezzled around $120,000.
The report noted that this time period does not accurately reflect the amount of missing funds, as the teacher in question had been employed before the six-year period began. The report made a further note that the total amount of lost funds could have been around $300,000, if they investigated the first eight years of her employment (2005 through 2012).
According to Maestas, if criminal activity is discovered, the Office of the State Auditor is obligated to inform the “jurisdictional prosecuting authority in the area,” which, in Taos, would likely be Marcus Montoya, district attorney for New Mexico’s 8th Judicial District.
As for the audit currently being conducted at Taos Municipal Schools, Maestas said he was unable to comment except to say that the Office of the State Auditor had received a contract and will be conducting a review.
Several staff members at the district have been placed on suspension in relation to the investigation, however the Taos News has been unable to learn more details or confirm the identities of those on suspension. The district denied multiple Inspection of Public Records Act requests regarding the employees, telling the newspaper that the information it had requested is not to be disclosed to any entity outside of independent auditors, auditing teams or forensic accounting teams.