The finding by an independent public accountant, who issued a disclaimer of opinion after reviewing the financial records of the Martin Luther King Jr. State Commission, will stand – and will not be amended.
State Auditor Wayne Johnson, in a letter dated Aug. 16, informed New Mexico Attorney General Hector Balderas that three certified public accountants within the Auditor’s Office reviewed the documentation, “and all three independently came to the conclusion that the IPA was correct in issuing a Disclaimer of Opinion on the FY2014 audits.”
An auditor disclaims an opinion when there is not enough audit evidence on which to base an opinion, “and concludes that the possible effects of undetected misstatements on the financial statements could be both material and pervasive,” according to the Office of the State Auditor’s website.
Johnson said his office was unable to locate payroll records or bank statements needed in the documents obtained from the commission or the independent public accountant.
In addition to the disclaimer for the 2014 audit, Johnson said there “does not appear to be sufficient information in these files to complete the missing FY2015, 2016 and 2017 audits for the Commission.”
For that to happen, he said, the Auditor’s Office may need to use the subpoena process, conduct witness interviews, and seek missing financial documentation through SHARE, the state’s financial and human resources database system.
All agencies, with the exception of the New Mexico State Fair, use SHARE to account for and track financial transactions. SHARE is overseen by the state Department of Finance Administration.
In January 2016, investigators from the Attorney General’s Office served search warrants on the offices of the MLK State Commission. The AG’s Office at the time reported seizing computers, bank statements, paycheck and payroll reports, travel and employee records, and other financial documents.
In January 2018, the MLK Commission’s former executive director, former financial auditor and the head of a nonprofit educational program that distributed funds on behalf of the commission, were indicted on charges of embezzlement, fraud, larceny, conspiracy and racketeering.
Johnson noted that “the unavailability of credible responses from former personnel who are currently being prosecuted by your (AG) office may continue to be an impediment to the conduct of the Commission’s remaining past due audits.”
In response to Johnson’s letter, Balderas said in an email statement to the Journal that “the State Auditor should not blame law enforcement that is prosecuting corruption for his inability to contact Department of Finance Administration and opine on financial activity.”
In previously exchanged correspondences between Johnson and Balderas, the attorney general expressed concern that the state auditor had failed to use digital copies of papers, as well as digital images of desktop files, that were readily available and provided to the new executive director of the MLK State Commission as far back as September 2016, as well as in the possession of the independent public auditor.
By not using those electronic files to complete the audits, Balderas said, Johnson was in violation of a number of statutory requirements, as well as accounting and financial reporting standards.