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

RELATING TO GOVERNMENTAL EXPENDITURES; CREATING THE LEGISLATIVE GENERAL ACCOUNTING COMMITTEE; PROVIDING FOR A LEGISLATIVE AUDITOR; PROVIDING POWERS AND DUTIES; MAKING AN APPROPRIATION.

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

Section 1. SHORT TITLE.--This act may be cited as the "Legislative General Accounting Act".

Section 2. DEFINITIONS.--As used in the Legislative General Accounting Act:

A. "agency" means any department, institution, instrumentality, board, bureau, court, commission, district or committee of the government of the state, including district courts, magistrate courts, district attorneys, charitable institutions and other private nonprofit organizations or associations that directly or indirectly receive appropriations made by the legislature or that directly or indirectly receive other public funds; every political subdivision of the state, created under either general or special act, that receives or expends public money from whatever source derived, including counties, county institutions, boards, bureaus or commissions; municipalities; drainage, conservancy, irrigation or other special districts; school districts; and every office, officer or contractor or association of any of the above;

B. "committee" means the general accounting committee; and

C. "special audits" mean the audits and studies of agencies and state-funded programs that the committee directs the legislative auditor to undertake and includes:

(1) financial-compliance special audits, being a review of an agency's financial affairs and transactions to determine whether the agency has expended money in conformance with the legislature's purpose in appropriating the funds to the agency and in compliance with applicable laws and rules;

(2) economy and efficiency special audits, being a review of an agency's programs, activities and functions to determine whether the agency is managing and using its resources economically and efficiently;

(3) effectiveness special audits, being a review of an agency's programs, activities and functions to determine whether the desired results or benefits established by the legislature are being achieved and whether alternatives exist that may yield desired results at a lower cost; and

(4) performance special audits, being economy and efficiency special audits or effectiveness special audits.

Section 3. COMMITTEE--CREATION--COMPOSITION--VACANCIES--SUBCOMMITTEES--SALARIES.--

A. The "general accounting committee" is created as a continuing joint committee of the legislature. The committee shall consist of eight members and shall be comprised of the senate majority leader and one other member of the senate appointed by him, the senate minority leader and one other member of the senate appointed by him, the majority leader of the house of representatives and one other member of the house appointed by him and the minority leader of the house of representatives and one other member of the house appointed by him. The senate majority leader, the senate minority leader, the house majority leader and the house minority leader may appoint other members of their respective bodies to serve on the committee in their stead. Members of the committee shall serve two-year terms. In odd-numbered years the senate majority leader shall serve as chairman of the committee and the house majority leader shall serve as vice chairman; in even-numbered years the house majority leader shall serve as chairman of the committee and the senate majority leader shall serve as vice chairman. All actions of the committee shall require the affirmative vote of a majority of the full committee membership.

B. The term of any member shall terminate when the member ceases to be a member of the legislature. Vacancies on the committee shall be filled for the unexpired term in the same manner as the original appointments.

C. The chairman, with the consent of a majority of the committee, may appoint subcommittees consisting of three or more members, with representation from each party. Subcommittees shall perform duties and exercise powers specified by the committee.

D. The members of the committee shall receive per diem and mileage as provided for members of other joint legislative interim committees.

Section 4. COMMITTEE PURPOSE--DUTIES AND RESPONSIBILITIES--POWERS.--

A. The purpose of the committee is to provide the legislature and the public with independent special audits and reports on the manner in which agencies discharge their financial, management and program responsibilities. The objective of the special audits is to furnish information and recommendations on the following areas:

(1) ways agencies can improve their service to the citizens of New Mexico;

(2) whether agencies are complying with laws and rules, including appropriations;

(3) the economy, efficiency and effectiveness of agency operations; and

(4) whether agencies are effectively accomplishing legislatively mandated duties.

B. In order to benefit the legislature and the long-range needs of the entire state, the special audits shall be competent, objective fair and nonpartisan.

C. The committee shall determine what special audits are required and shall direct the legislative auditor to undertake them. The committee shall select topics that have potential for constructive impact by considering the significance of and the degree of state control over proposed areas for audit. It shall receive and review staff reports submitted by the legislative auditor. The committee shall act on staff reports and, in its report, recommend such legislative or administrative measures it deems appropriate. The committee shall report to each session of the legislature on its activities and on the implementation of its recommendations.

Section 5. LEGISLATIVE AUDITOR--POSITION ESTABLISHED--APPOINTMENT--TERM--DUTIES--QUALIFICATIONS--REMOVAL.--

A. The position of "legislative auditor" is established. The legislative auditor shall be appointed by the committee. His term of office shall be for six years. He shall serve as executive secretary to the committee and shall receive a salary to be set by the committee. The committee shall not decrease his salary during his term in office. He shall be a certified public accountant, a registered public accountant or a certified internal auditor with demonstrated competence in the fields of governmental accounting, governmental auditing and performance auditing.

B. The legislative auditor may be removed from office before the completion of his term by a two-thirds' vote of the elected members of both houses of the legislature.

Section 6. STAFF.--The legislative auditor shall employ such technical and clerical assistance as may be necessary to carry out the provisions of the Legislative General Accounting Act. Employees of the committee shall be employed without regard to party affiliation and solely on the ground of fitness to perform the duties of the position for which they are hired.

Section 7. SPECIAL AUDITS--AUTHORIZATION BY COMMITTEE--AUDITING STANDARDS--COORDINATING SPECIAL AUDITS WITH STATE AUDITOR.--

A. All special audits conducted by the legislative auditor, his staff or contract auditors contracted by the legislative auditor shall require prior authorization by the committee.

B. Special audits shall be conducted in accordance with generally accepted auditing standards promulgated by the American institute of certified public accountants or in accordance with standards for audit of governmental organizations, programs, activities and functions, published by the general accounting office of the United States and as revised from time to time.

C. The legislative auditor shall plan and coordinate financial-compliance special audits with the state auditor to prevent unnecessary duplication of audit efforts. The state auditor shall furnish the legislative auditor with one copy of each agency's annual audit report.

Section 8. REQUESTS FOR SPECIAL AUDITS BY GOVERNOR OR LEGISLATORS.--The committee may direct a special audit of an agency when so requested in writing by the governor or any member or committee of the legislature. A written request shall specify the justification for and objectives of the audit. In directing the legislative auditor to conduct a requested special audit, the committee may modify the objectives of the audit to be performed.

Section 9. PRELIMINARY AND FINAL STAFF REPORTS OF AUDITS--AGENCY RESPONSES--COMMITTEE REPORTS--AGENCY REPORTS.--

A. The legislative auditor shall prepare a complete written staff report upon the completion of each special audit. Each staff report shall describe the scope, purpose and methodology of the special audit. It shall clearly cite any findings of noncompliance with state law or good management or accounting practices; uneconomical or inefficient operations; and ineffective programs, activities and functions and contain recommendations for appropriate remedial legislative or administrative measures. The report shall also cite findings of positive conditions or practices and contain the written response of the audited agency if one is submitted.

B. The legislative auditor shall distribute copies of a preliminary draft of the staff report to the audited agency. Within twenty days after receipt of the report, the audited agency may submit a written response to the legislative auditor. If the legislative auditor is satisfied from data or documents at hand or by additional research that there are errors in the preliminary draft, he shall correct those errors.

C. The legislative auditor shall prepare a final staff report after allowing the audited agency opportunity to review and respond to the preliminary draft of the report. Copies of the final staff report shall be provided to the committee and to the audited agency.

D. The committee shall review the final staff report and may confer with representatives of the audited agency. The committee shall then adopt a committee report that includes the written responses of the audited agency, if any. The committee report shall become a public record ten days after adoption, at which time copies shall be provided to:

(1) the head of the audited agency;

(2) the secretary of finance and administration;

(3) the director of the legislative finance committee;

(4) the director of the legislative council service; and

(5) the state auditor.

E. If the committee report makes findings and recommendations, within one hundred eighty days of the receipt of it, the head of the audited agency shall submit a written agency report to the chairman of the committee and the legislative auditor. The agency report shall describe the remedial action taken in response to the findings and recommendations of the committee report.

Section 10. AGENCY ASSISTANCE TO THE COMMITTEE AND THE LEGISLATIVE AUDITOR.--All officers and employees of audited agencies shall provide such assistance, data, information and records as may be requested by the committee or the legislative auditor to enable them to conduct and consummate any special audit.

Section 11. CRIMINAL VIOLATIONS.--Immediately upon discovery of any apparent violation of a criminal statute in connection with the financial affairs or operations of an agency, the legislative auditor shall report the violation to the attorney general and furnish him with all data and information in his possession relative to the violation, unless this is a duplication of a report made by the state auditor.

Section 12. OATHS--SUBPOENAS.--

A. Oaths may be administered by the legislative auditor when necessary for a special audit.

B. When necessary for a special audit, the committee may apply to the district court of Santa Fe county for issuance of a subpoena to compel the attendance of witnesses and the production of books and records. Process under this section shall be served by any sheriff or deputy or by any member of the New Mexico state police without cost. Witnesses not then employed by an agency who are subpoenaed to appear shall receive the same compensation, to be paid by the committee, as that provided for witnesses subpoenaed before the district court.

C. Any person subpoenaed under this section who fails to appear, refuses to testify or fails to produce the required books or records is guilty of a misdemeanor and shall be punished by a fine of not less than five hundred dollars ($500) nor more than one thousand dollars ($1,000).

Section 13. PUBLIC DEPOSITORIES.--The legislative auditor may:

A. require depositories of public money to furnish reconciliation sheets for the purpose of checking the deposits of public funds;

B. inspect the books and records of any depository concerning public funds; and

C. examine employees of a depository under oath concerning the correctness of the reconciliation or any entry upon the books or records of the depository relating to public funds.

Section 14. RULES.--The committee shall promulgate reasonable rules necessary to carry out the provisions of the Legislative General Accounting Act, including rules required for conducting special audits in accordance with generally accepted auditing standards and in accordance with the standards for audit of governmental organizations, programs, activities and functions. The rules shall become effective upon filing in accordance with the State Rules Act.

Section 15. AUDITING COSTS.--The cost of all special audits shall be borne by the committee, unless the agency agrees to assume the cost.

Section 16. APPROPRIATION.--Eight hundred thousand dollars ($800,000) is appropriated from the general fund to the legislative council service for expenditure in fiscal year 2000 to pay the expenses of establishing the general accounting committee and legislative auditor. Money from the appropriation may be transferred to the legislative auditor when appropriate. Any unexpended or unencumbered balance remaining at the end of fiscal year 2000 shall revert to the general fund.

Section 17. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 1999.