2019 New Mexico Statutes
Chapter 12 - Miscellaneous Public Affairs Matters
Article 6 - Audit Act
Section 12-6-14 - Contract audits.

A. The state auditor shall notify each agency designated for audit by an independent auditor, and the agency shall enter into a contract with an independent auditor of its choice in accordance with procedures prescribed by rules of the state auditor; provided, however, that a state-chartered charter school subject to oversight by the public education department or an agency subject to oversight by the higher education department shall receive approval from its oversight agency prior to submitting a recommendation for an independent auditor of its choice. The state auditor may select the auditor for an agency that has not submitted a recommendation within sixty days of notification by the state auditor to contract for the year being audited, and the agency being audited shall pay the cost of the audit. Each contract for auditing entered into between an agency and an independent auditor shall be approved in writing by the state auditor. Payment of public funds may not be made to an independent auditor unless a contract is entered into and approved as provided in this section.

B. The state auditor or personnel of the state auditor's office designated by the state auditor shall examine all reports of audits of agencies made pursuant to contract. Based upon demonstration of work in progress, the state auditor may authorize progress payments to the independent auditor by the agency being audited under contract. Final payment for services rendered by an independent auditor shall not be made until a determination and written finding that the audit has been made in a competent manner in accordance with the provisions of the contract and applicable rules by the state auditor.

History: 1953 Comp., § 4-31-14, enacted by Laws 1969, ch. 68, § 14; 2003, ch. 273, § 20; 2011, ch. 87, § 1.

Compiler's notes. — During calendar years 1992 and 1993 the District Court for the First Judicial District entered three orders in Vigil v. King, SF 92-1487(C), prescribing the procedure to be followed for selecting independent auditors for state agencies and local public bodies. In summary, the court orders provide:

If a state agency or local public body is notified that it has been designated for audit to be conducted by an independent auditor, the state agency or local public body shall select and submit the name of an independent auditor to the state auditor. The state auditor may, within five days after receipt of the state agency's or local public body's selection, disapprove of the choice of the agency or local public body. A disapproval must be in writing and set forth the reason(s) for disapproval. A disapproval is subject to judicial review;

If the state auditor finds that a state agency or local public body audit is not being conducted in accordance with generally accepted auditing standards or pursuant to the auditing contract between the parties, the state auditor may either complete the audit or contract with another independent auditor to complete the audit. If the state auditor contracts with another independent auditor, the contract amount is limited to the remaining amount owed on the original auditor contract;

The state auditor, pursuant to the Procurement Code, may, under conditions specified in the order, contract with independent auditors to assist the state auditor in conducting any special audit pursuant to 12-6-3 NMSA 1978. The state agency being audited is not a party to this contract. The total cost of the contract entered into by the state auditor cannot exceed 25% of the contract amount provided in the agreement between the state auditor and the agency to be audited.

The 2011 amendment, effective June 17, 2011, required charter schools that are subject to oversight by the public education department to obtain approval from the department before the school submits a recommendation for an independent auditor to the state auditor.

The 2003 amendment, effective July 1, 2003, redesignated former Subsections B and D as present Subsections A and B (the former section had no Subsection A or C); in Subsection A, inserted "provided, however, that an agency subject to oversight by the state department of public education or the commission on higher education shall receive approval from its oversight agency prior to submitting a recommendation for an independent auditor of its choice" in the first sentence and added the second sentence.

Use of contract auditors for agency audits. — The state auditor does not have the authority to contract with independent auditors to assist him in doing agency audits. The state auditor may designate an agency for audit by an independent auditor, but the designated agency is then authorized to contract with an independent auditor of its choice. Accordingly, the state auditor's practice of assigning contract auditors "to assist" him in conducting agency audits illegally circumvented the legislature's decision to place the selection of such contract auditors and the contract negotiations with the agencies themselves. 1992 Op. Att'y Gen. No. 92-06 (but see compiler's notes) (decided under prior law).

Selection of independent auditor. — It is a violation of the Procurement Code (13-1-23 NMSA 1978 et seq. [now 13-1-28 NMSA 1978 et seq.]) for the state auditor to direct an agency to enter into a contract with an independent auditor selected by him and paid for by the agency. 1992 Op. Att'y Gen. No. 92-06 (but see compiler's notes) (decided under prior law).