Is the state getting what it pays for? Now, it is hard to tell. But Senator Sander Rue’s bill would change that.
His bill requires there to be an independent audit to assess if all the conditions of a large contract with the state are met when the contract is finished. Currently, there are no such end-of-contract audit requirements.
“This is common sense stuff. This bill will ensure that the state of New Mexico receives what it paid for and pays only what it owes,” Senator Rue said. “With an independent audit at the end of a contract, we can learn if the conditions of the contract were met by all parties, if the payments are appropriate and if rules and laws were followed. This is critical to know, especially since the state purchases over five billion dollars worth of goods and services each year.”
Senator Rue also pointed out the audit would serve as a deterrent to potential wrongdoing if everyone involved knew there was to be an audit at the end. “An independent audit would help identify any excessive or illegal payments and it would provide a sound basis for remedial action it the contract is breeched,” Senator Rue said. “Plus, it should increase the level of management oversight during the terms of the contract.”
The bill will require that at the end of a state contract of $10 million or more, an independent audit would be required. This new requirement would apply to new contracts entered into beginning July 1, 2017.
The costs of the audit would be covered by the contractor and could range from $10,000 to $20,000 depending on the complexities of the contract.
According to Bill Analysis: Senate Bill 107 amends Section 13-1-160 NMSA 1978, the procurement code, to require closeout audits of state agency contracts of $10 million or more. The audit will occur at the termination of the contracts, it would entail a review of the books and records of the contractor and the state agency for the purpose of ensuring that the terms of the contracts were met, that the payments for performance were appropriate, and that applicable laws and rules were complied with.
Furthermore, consistent with the Section 12-6-3 NMSA 1978 Audit Act, the audit would be performed by the state auditor, personnel of the state auditor's office designated by the state auditor, or independent auditors approved by the state auditor, and would be conducted in accordance with generally accepted auditing standards and the Audit Rule.
The reasonable costs of the audit would be paid by the audited contractor.