NEW YORK (Reuters) - New Mexico, which recently revealed a double-counting of more than $750 million in assets, said on Tuesday it is developing a legal framework for creating a “single comprehensive state audit” of its finances.
In an emailed statement, Julia Ruetten, a spokeswoman for the Department of Finance and Administration, said the department has identified “structural financial reporting issues” contained within New Mexico’s official Comprehensive Annual Financial Reports, also known as CAFRs.
New Mexico has hired independent auditors to review its CAFRs.
The latest audit results come just ahead of the state’s plans to market roughly $383 million in bonds on July 18, according Thomson Reuters data.
New Mexico’s upcoming bond sales will put money toward capital projects and refunding, among other uses. Moody’s rated the state’s General Obligation bonds Aa1 in June, while S&P Global Ratings lowered its rating on the state’s GO debt to AA in November 2016.
New Mexico’s energy and natural resources are among the state’s primary economic drivers. It currently is undergoing a “slow but steady recovery,” according to an April 2017 report by Moody’s Analytics on the state.
New Mexico has challenges in producing the CAFR, said Moody’s Investors Service credit analyst Kenneth Kurtz.
“The state has real problems in consolidating its various departmental audits because of weaknesses in its financial systems,” he said on Tuesday.
Different departments use different financial systems, some of which are not integrated, Kurtz said.
The double-counting resulted from tradition and a “historical lack” of centralized oversight of state financial reporting, State Auditor Timothy Keller said in an interview with Reuters on Monday.
Keller did not think there would be a budgetary impact of the double-counting “at all.” The assets were not being used, he said.
The double-counting of assets, which in fiscal 2016 amounted to $765 million, were listed by the state and higher education institutions on their budget sheets in both 2015 and 2016, Justine Freeman, a spokesperson for Keller, confirmed in an email on Tuesday.
Keller added that Governor Susana Martinez decided the assets would be removed from state university balance sheets.
“We’re hopeful that there’s not a material impact on the universities, but that will really be up to rating agencies and their respective accounting firms that make that decision,” Keller said.
The governor’s office did not respond to phone or email queries from Reuters.
Reporting by Stephanie Kelly; Editing by Daniel Bases and Diane Craft