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Editorial: State Must Get to The Bottom of Phony Audit

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You can hardly make it up.

The state agency entrusted with overseeing billions in public dollars for important capital projects is accused of coming up with what essentially is a fake audit.

The New Mexico Finance Authority, which reported $1.8 billion in net assets in 2010 and an annual operating budget of $127.8 million, stands accused of falsifying the status of its 2011 financial reports and providing investors with fraudulent documents.

The office of State Auditor Hector Balderas discovered the alleged fraud when the 2011 audit showed up months after the December due date, and it turned out the authority presented its 2011 books to investors as being audited though they hadn’t been. The authority is required to provide current audited financial statements to investors buying the municipal bonds that provide cash for authority-approved capital projects.

Balderas says he is “extremely concerned that a report was fraudulently created in order to misrepresent the authority’s financial condition to agencies, investors and the public.” The authority has hired auditor KPMG to determine if any cash was stolen. Gov. Susana Martinez said this week through a spokesman she is “calling on NMFA to work closely with the state auditor and law enforcement to ensure that no stone is left unturned in determining what happened and in preparing a special audit that accurately reflects the financial position of the Finance Authority.”

The authority is pinning the problem on its former financial controller, who left the agency last month.

Whether the problem amounts to simple backdating to cover disorganization and laziness or was in fact a sloppy way to try to cover up theft needs to be sorted out, and the sooner the better.

New Mexico has yet to perfect a system to prevent government fraud. Unfortunately, in recent years it has had a lot of practice at rooting it out.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.

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