44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO PUBLIC MONEY; TRANSFERRING FROM THE FINANCIAL CONTROL DIVISION TO STATE AGENCIES THE RESPONSIBILITY FOR DETERMINING THE LEGALITY AND AUTHORITY FOR THEIR EXPENDITURES; ELIMINATING CONTROLS OF THE FINANCIAL CONTROL DIVISION; PROVIDING FOR AN ANNUAL COMPREHENSIVE AUDIT OF THE STATE FINANCIAL REPORT; REQUIRING STATE AGENCIES TO COMPILE THEIR OWN FINANCIAL STATEMENTS; REQUIRING INDEPENDENT AUDITORS FOR STATE AGENCIES TO CONTRACT WITH THE STATE AUDITOR.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 6-5-2 NMSA 1978 (being Laws 1957, Chapter 252, Section 2, as amended) is amended to read:

"6-5-2. FINANCIAL CONTROL DIVISION--CENTRAL SYSTEM OF STATE ACCOUNTS--ACCOUNTING SYSTEMS--FORMS.--The financial control division of the [state] department of finance and administration shall maintain a central system of state accounts and shall [devise, formulate, approve and control] set standards for the accounting methods and procedures of all state agencies. The division [shall] may prescribe procedures, policies and forms for use by state agencies in connection with fiscal matters and may require reports from state agencies as may be necessary to carry out its duties and functions. Procedures and policies issued by the division are exempt from the uniform standards of style and format promulgated by the state commission of public records."

Section 2. Section 6-5-3 NMSA 1978 (being Laws 1957, Chapter 252, Section 3, as amended) is amended to read:

"6-5-3. LEGALITY AND AUTHORITY FOR PROPOSED EXPENDITURES DETERMINED BY [FINANCIAL CONTROL DIVISION] STATE AGENCY--ENCUMBERING FUNDS.--Before any vouchers or purchase orders are issued or contracts are entered into involving the expenditure of public funds by [any] a state agency, and before any vouchers, purchase orders or contracts are submitted to the department of finance and administration for processing, the authority for [such] the proposed expenditure shall be determined by the [financial control division. After the authority for such expenditure is determined, the appropriate fund shall be shown by the division to be encumbered to the extent of such proposed expenditure] state agency. The financial control division shall perform, on a statistical or stratified basis, internal pre-audit and post-audit procedures to monitor and enforce compliance with the provisions of this section."

Section 3. Section 6-5-4 NMSA 1978 (being Laws 1957, Chapter 252, Section 4, as amended) is amended to read:

"6-5-4. REPORTS TO LEGISLATURE.--The financial control division shall [report to the legislature at the commencement of each regular session a full and detailed statement of the revenue and expenditures for the preceding two years and a tabular statement showing separately the whole amount of each appropriation of money made by law for the two years preceding, the amount paid under the same and the balance unexpended] compile a comprehensive annual financial report. To assist in the compilation of the report, each state agency shall compile, in accordance with generally accepted accounting principles, its financial statements on a schedule established by the division."

Section 4. Section 6-5-6 NMSA 1978 (being Laws 1957, Chapter 252, Section 7, as amended) is amended to read:

"6-5-6. DETERMINATIONS TO BE MADE PRIOR TO ISSUANCE OF WARRANTS.--

A. No warrant upon the state treasury for the disbursement of funds shall be issued except upon the determination [of the financial control division] by the state agency making payment that the amount of the expenditure:

[A.] (1) does not exceed the appropriation made to the agency;

[B.] (2) does not exceed the periodic allotment made to the agency or the unencumbered balance of funds at its disposal unless the warrant includes federal funds that will be receipted based upon established warrant-clearing patterns; and

[C.] (3) is for a purpose included within the appropriation or otherwise authorized by law.

B. The financial control division shall perform, on a statistical or stratified basis, internal pre-audit and post-audit procedures to monitor and enforce compliance with the provisions of this section."

Section 5. Section 6-5-7 NMSA 1978 (being Laws 1957, Chapter 252, Section 8, as amended) is amended to read:

"6-5-7. WARRANT TO SHOW FUND FROM WHICH PAYMENT IS MADE--SETTLEMENT OF CLAIMS AGAINST STATE--ACCOUNT BETWEEN STATE AND TREASURY.--[Every warrant issued shall contain therein] The financial control division shall maintain records that show the particular fund appropriated by law out of which [the same] it is to be paid. The financial control division shall settle all claims against the state payable by law out of the treasury and [shall] keep an account between the state and the treasurer."

Section 6. Section 6-5-8 NMSA 1978 (being Laws 1963, Chapter 47, Section 1, as amended) is amended to read:

"6-5-8. VOUCHERS.--Every claim for payment of public money shall be made upon a public voucher. All public vouchers shall be in the form and contain the information required by the secretary of finance and administration. All purchase vouchers for goods and services, other than personal, shall be accompanied by supporting [invoices. Vouchers for the reimbursement of public officers and employees must have receipts attached for all money claimed, except that travel advance or reimbursement vouchers for claims of mileage and per diem at standard rates need not be accompanied by receipts] documentation as required by the financial control division. All vouchers [must] shall be certified as true and correct by the officer or employee designated to approve payments of claims against state agencies and local public bodies, including public schools. The secretary of finance and administration may require that payroll, travel advance, reimbursement, refund or other vouchers be sworn to by the certifying officer or payee. Certification may be in writing or done electronically."

Section 7. Section 6-10-2 NMSA 1978 (being Laws 1923, Chapter 76, Section 1) is amended to read:

"6-10-2. PUBLIC MONEY--CASH BOOKS--DAILY BALANCE--PUBLIC RECORD.--It [shall be] is the duty of every public official or agency of this state who receives or disburses public [monies to keep in his office] money to maintain a cash [book wherein shall be] record in which is entered daily, in detail, all items of receipts and disbursements of public [monies] money and which shall be balanced daily so as to show the balance of public [monies] money on hand at the close of each day's business. [and such] The cash [book shall be] record is a public record and [shall be] is open to public inspection."

Section 8. Section 6-10-4 NMSA 1978 (being Laws 1963, Chapter 35, Section 1, as amended) is amended to read:

"6-10-4. PAYMENT OF OBLIGATIONS OF PRIOR YEARS FROM CURRENT GENERAL FUND.--[General fund] Appropriations made for a specific fiscal year may not be used for paying obligations of any prior fiscal year except upon approval of the department of finance and administration. As a condition to [such] the approval, the department [of finance and administration] shall certify that there existed in the affected agency's budget at the end of the fiscal year sufficient funds, including uncollected earned revenue, to pay the obligation had the bill been presented prior to the end of that fiscal year. The department of finance and administration shall make quarterly reports to the legislative finance committee concerning all such authorizations of payment."

Section 9. Section 6-10-46 NMSA 1978 (being Laws 1923, Chapter 76, Section 24, as amended) is amended to read:

"6-10-46. DISBURSEMENT OF STATE FUNDS--VOUCHERS AND WARRANTS.--All payments and disbursements of public funds of the state [of New Mexico] shall be made upon warrants drawn by the secretary of finance and administration upon the treasury of the state [of New Mexico] based upon itemized vouchers [as provided by law] in a form approved by the secretary of finance and administration."

Section 10. Section 8-6-7 NMSA 1978 (being Laws 1987, Chapter 183, Section 1, as amended) is amended to read:

"8-6-7. WRONGFUL DRAWING OR PAYMENT OF WARRANT BY SECRETARY OR TREASURER--PENALTY.--

A. If the secretary of finance and administration draws any warrant on the state treasurer when he knows or, with the use of available accounting information, should reasonably know there is an insufficient unexpended and unencumbered balance available for the purpose for which the warrant is drawn, he shall be in violation of this section unless the warrant includes federal funds that will be receipted based on established warrant clearing patterns.

B. If the state treasurer pays any warrant when he knows or, with the use of available accounting information, should reasonably know there are insufficient funds available in the treasury for the purpose to pay the warrant, he shall be in violation of this section unless the warrant includes federal funds that will be receipted based upon established warrant-clearing patterns.

C. A violation of this section [shall be] is punishable by a fine of not more than one thousand dollars ($1,000) or by imprisonment for not more than one year or by both such fine and imprisonment in the discretion of the judge."

Section 11. Section 12-6-3 NMSA 1978 (being Laws 1969, Chapter 68, Section 3) is amended to read:

"12-6-3. ANNUAL AND SPECIAL AUDITS.--

A. The financial affairs of every agency and a comprehensive annual financial report of the state shall be thoroughly examined and audited each year by the state auditor, personnel of his office designated by him or by independent auditors [approved by him] with whom he has contracted. The audits shall be conducted in accordance with generally accepted auditing standards.

B. In addition to the annual audit, the state auditor may cause the financial affairs and transactions of an agency to be audited in whole or in part."