Serving Clovis, Portales and the Surrounding Communities
TEXICO -- The Albuquerque firm that was hired to audit the books of the city of Texico has taken issue with the city in a 50-page report issued in July and reported to New Mexico State Auditor Brian Colon.
Rice and Associates, a certified public accountant firm, listed about 40 instances of issues with an audit of Texico’s books.
Some of the issues have been resolved, some have been given a target date for resolution.
What does the report from Rice and Associates mean to the city?
“We are still financially solvent,” City Clerk Carolyn Johnson said.
Johnson said there are a few things to correct “and we’re working on that.”
“It’s just a process,” Johnson said.
The report outlines that Texico town management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles “generally accepted in the USA.”
Rice and Associates outlined their responsibility is to express opinions on these financial statements based on their audit.
“We conducted our audit in accordance with accounting principles generally accepted in the USA,” they wrote. “And the standards applicable to financial audits contained in Government Auditing Standards.”
Rice and Associates go on to detail the proper way to do a report.
The Rice auditors continue to describe the situation with the audit for Texico writing, “Because of the significance of the matter … we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.”
Rice and Associates wrote that Texico “has omitted management’s discussion and analysis.”
They write the missing information while not part of the basic financial statements is required by the Governmental Accounting Standards Board who consider it to be an essential part of the financial reporting.
The Rice report goes on to note the accounting firm identified certain deficiencies in internal control that are considered to be material weaknesses and significant deficiencies.
Some of the findings: Budget overruns, late audit reports, bank reconciliations not complete, payroll liabilities and transactions made by third parties not recorded on books of record.
There were also incomplete employee files, board meeting minutes not approved, incorrect senior citizens federal tax identification number, allowance for doubtful accounts, expenditures paid out of wrong fund and no support for insurance billing.
The report contained pages where the problem was identified as was the cause, effect, recommendation and Texico’s response.
For instance, one “material weakness” was the city could not provide a complete capital asset listing and depreciation schedule for the fiscal year ending June 30, 2020.
Rice and Associates in their report wrote this was caused by city management relying on auditors to prepare this schedule and therefore city management is not complying with “generally accepted accounting principles.”
Texico took action on this by paying an accountant in 2019 to make a capital asset list that should be done by the end of this month.
A matter that was listed by Rice and Associates as a “significant deficiency” are budget overruns.
Texico’s general fund was overspent by $54,291, with a $99,318 overrun on the streets fund, $310 on the corrections fund, $30,504 on the Ute Fund and $1,255 in the cemetery fund.
State law requires all funds to be spent within the established guidelines set for budgets.
Rice and Associates recommended the city should review its budget quarterly and request all budget adjustments at that time to ensure budget overruns do not occur.
In the report it was noted the city clerk brought matters into compliance by the end of July this year.