State Auditor Releases Financial Audit Of Bernalillo County

Nov 26, 2013

Credit Hector Balderas

  Today, State Auditor Hector Balderas announced the results of Bernalillo County’s fiscal year 2013 financial audit which found the Bernalillo County Treasurer’s Office broke state law, County investment policy and County ethics requirements related to the management of County investments.  The audit findings reveal significant violations and deficiencies in the County Treasurer’s handling of millions of dollars in securities purchases and management of investment liquidity.  Additionally, auditors found the County Treasurer failed to comply with state law and County investment policy when holding and documenting meetings of the County Investment Committee.  The audit also highlights other violations of County policies, including a former Investment Officer’s improper receipt of a $2,500 campaign contribution.

“These audit findings show that public officials who are entrusted with taxpayer funds violated their fiduciary duties imposed by state law and County policies,” Balderas said.  “The County and appropriate oversight agencies must review the auditors’ recommendations and take immediate corrective action to restore public confidence in the Treasurer’s Office.”

The County’s fiscal year 2013 financial audit was performed by the Office of the State Auditor in a joint venture with the County’s independent auditor, Moss Adams LLP.  Highlights of the audit include:

·         The County Treasurer’s Office failed to retain original documents for approximately $56 million in securities purchases;


·         For all the security purchases tested by auditors in an amount over $127 million, there was no documentation that the Treasurer was involved in obtaining and evaluating the minimum number of investment bids as required by County investment policy;


·         In violation of state law, the County Treasurer deposited over $2.4 million in certificates of deposits in banks with branch offices outside of New Mexico;


·         The County Treasurer’s Office violated County investment policy related to a nearly $13 million decrease in the fair value of County investments.  Auditors found the County Treasurer’s Office lacked internal controls over cash flow projections and in managing investment liquidity, which places the County at-risk for meeting its day-to-day operation requirements;


·         A candidate for County Treasurer, who at the time was also the Investment Officer of the County Treasurer’s Office who had authority over the investment of public money, accepted a $2,500 campaign contribution from a “prohibited source” in violation of the County’s Code of Ethics;


·         The County Treasurer’s Office failed to maintain proper documentation of minutes of the Investment Committee.  In certain cases, the Treasurer’s Office could not locate original versions of Investment Committee meeting minutes or provided auditors differing sets of written minutes for the same Investment Committee meeting.  In addition to the lack of evidence that the Investment Committee meetings complied with public notice requirements, auditors found these deficiencies violated the Open Meetings Act; and

·         A high-level County Treasurer’s Office employee improperly approved their own pay raise, which was an increase from $27.3832 per hour to $31.4909 per hour (total increase of $4.1077 per hour).  The same employee approved the same pay increase for another high-level Treasurer’s Office employee, and auditors found both pay increases were processed without proper documentation or support for the increases.

As a result of these troubling findings, Balderas has already designated the Bernalillo County Treasurer’s Office for a special audit.  The special audit will take into account significant risks to County funds and require auditors to look more extensively at the Treasurer’s Office’s investment transactions over a number of fiscal years.  An independent audit firm to be selected by the County and approved by the State Auditor will perform the special audit, which will make further recommendations to improve the County Treasurer’s internal controls and management related to investment transactions.

Balderas said he will update the County in the coming days regarding the required scope of the special audit now that the financial audit findings have been publicly released.  He also stated that he will refer the financial audit findings to government oversight agencies, including the Securities Division of the Regulation and Licensing Department and the Attorney General’s Office.

The entire fiscal year 2013 Bernalillo County financial audit report can be accessed on the Office of the State Auditor’s website, at