New Mexico HB 493: PUBLIC FINANCE ACCOUNTABILITY ACT

Bill Text

HAFC/HB 493/a
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AN ACT
RELATING TO PUBLIC FINANCE; ENACTING THE PUBLIC FINANCE
ACCOUNTABILITY ACT; ESTABLISHING FUNDING CRITERIA AND GRANT
MANAGEMENT AND OVERSIGHT REQUIREMENTS; ENUMERATING DUTIES OF
THE DEPARTMENT OF FINANCE AND ADMINISTRATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. SHORT TITLE.--This act may be cited as the
"Public Finance Accountability Act".
SECTION 2. DEFINITIONS.--As used in the Public Finance
Accountability Act:
A. "annual audit" means the annual audit or
examination of the financial affairs of a grantee by an
independent auditor required by the Audit Act;
B. "department" means the department of finance
and administration;
C. "grant" means a non-exchange transaction
whereby a state agency makes a capital outlay appropriation
or other special purpose appropriation available to a
grantee;
D. "grant agreement" means a written agreement
pursuant to which a state agency grants a capital outlay
appropriation or other special purpose appropriation to a
grantee;
E. "grantee" means an entity to which a state

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agency grants a capital outlay appropriation or other special
purpose appropriation;
F. "independent auditor" means a certified public
accountant or chartered accountant who has been approved by
the state auditor to examine financial records and
transactions of a grantee to impartially and objectively
determine compliance with generally accepted accounting
principles and state laws and rules; and
G. "state agency" means any department,
institution, board, bureau, commission, district or committee
of state government.
SECTION 3. FUNDING CRITERIA.--
A. The department shall establish the following
funding criteria for a grantee to be eligible for a capital
outlay appropriation or other special purpose appropriation
to political subdivisions of the state:
(1) a grantee shall have completed an annual
audit for one of the past two fiscal years, and the most
recently completed annual audit shall be a public record
pursuant to the Audit Act;
(2) if a grantee's most recently completed
annual audit documents material weaknesses or significant
deficiencies:
(a) the grantee shall prepare an
actionable plan to address the material weaknesses and

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significant deficiencies;
(b) the state agency making the grant
shall provide support to the grantee to prepare and implement
the grantee's plan to adequately address the material
weaknesses and significant deficiencies; or
(c) if the grantee's prior year audit
findings have repeated material weaknesses and significant
deficiencies for more than two consecutive fiscal years from
the fiscal year the grant is being considered, the state
agency making the grant shall have determined that another
appropriate entity is able and willing to act as fiscal agent
for the grant;
(3) if the grantee's most recently completed
annual audit of public record is not from either of the two
immediate past fiscal years, the state agency making the
grant shall have determined that another appropriate entity
is able and willing to act as fiscal agent for the grant;
(4) in the case of a grantee that is not
required to have annual audits conducted pursuant to the
Audit Act:
(a) the grantee shall have demonstrated
to the satisfaction of the state agency making the grant that
it has adequate accounting methods and procedures to manage
and expend grant funds in accordance with applicable law and
account for and safeguard grant funds and assets acquired by

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grant funds;
(b) if necessary, the state agency
shall have determined that it can impose and has the
resources to implement special grant conditions that will
adequately address any relevant deficiencies in the grantee's
accounting methods and procedures; or
(c) if necessary, the state agency may
have determined that another appropriate entity is able and
willing to act as fiscal agent for the grant; and
(5) the grantee shall be in compliance with
any financial reporting requirements, including those
enumerated in the Audit Act, and shall have a budget for the
current fiscal year approved by any applicable governing body
or oversight agency.
B. If a grantee is not in agreement with the
department's or state agency's decision to require a fiscal
agent for a grant, the grantee may file a written appeal with
the department or state agency within one week of the
department's or state agency's decision to require a fiscal
agent; provided that once a written appeal is filed with the
department or state agency, the chief financial officer of
the department or state agency shall review and discuss the
appeal with the grantee and then prepare a written set of
findings upholding or ove