Belen receives unmodified audit report

BELEN—While the city of Belen received an unmodified audit — the best an entity can receive — from it’s auditing company, Southwest Accounting Solutions, for fiscal year 2017-18, it was advised it needs to do better with the city’s financial management.

Robert Peixotto, managing member of SAS, presented the audit to the city council and mayor at a recent meeting, which was approved unanimously.

The city had 12 findings, including PERA reporting and contribution remittances, lack of budgetary controls, cash reporting, compliance with the anti-donation clause regarding in-kind services, a deficiency in the enterprise fund balance, expenditures without proper documentation, procurement of services, capital asset inventory, utility customer accounts and a “significant deficiency” of its “tone at the top.”

The audit reveals that from 2008 to 2016, the city had PERA reports that were not completed correctly and has not reconciled to correct them. The city also didn’t take timely action to correct this finding in the last fiscal year.

The audit also found the city’s designated cash appropriations exceeded available balances in the park capital projects, GRT revenue bonds and road infrastructure improvement funds.

The auditing firm found the city violated the state’s anti-donation clause several times, including paying $45 for an individual who is not a city employee to attend a conference, paying compensation to the Belen MainStreet Partnership $10,000 to cover salaries, and adjusting 37 customer accounts for water leaks on the customer’s side of the water meter totaling $6,532.

“We noted a customer account was credited on Feb. 28, 2018, in the amount of $14,975.87 for a correction and this customer’s account was credited again on March 3, 2018, for $14,975,” the audit reads. “We noted the customer stopped paying their utility bill after the second credit was applied to their account and this credit was not corrected until August of 2018.

“We noted it is an unwritten policy to give customers credit to their accounts in the event of a water leak and one instance where a customer was credited $1,800.68.”

Also, Skydive New Mexico has not made lease payments to the city since 2009, which should be about $525 per year.

Other anti-donation violations had to do with former police chief Scott Conner, including using a city vehicle for personal education, giving employees additional time off without accounting for the leave, gave a box of bullets to each officer as a Christmas gift and used his personal vending machine on city property without permission.

Regarding the procurement of services finding, the audit states “the city scored a bid for hauling services from Waste Management in the amount of 437 points and scored a bid from AC Disposal in the amount of 423 points, yet awarded the contract to AC Disposal.”

The city also approved an amendment to the contract with AC Disposal for $12,200 without city council approval.

The “tone at the top” finding was given when the auditor noticed the city appeared to lack proper oversight of employees.

“… the governing body, managers and other employees had knowledge of various issues in the city,” including: employees taking time off without running this leave through payroll, an employee using a city vehicles for personal use and there was no action taken to correct this abuse and an employee putting a personal vending machine on city property without an agreement or proper permission and there was no action taken.

The auditing firm noted that various employees “appeared to fear communicating with upper management, the city council and us due to having a fear of losing their jobs or being disciplined for sharing information.”

The auditors noted that the city’s management and governing body knew of other allegations and issues but had not addressed or investigated until they were brought up by them.

Peixotto said while the city has an unmodified audit, he did find some concerning issues, including that the city has insufficient cash in its general fund.

“There is not sufficient cash in the general fund as of 6/30/2018,” Peixotto said. “Some of this has to do with getting grant reimbursements, but nontheless, we want to see at least three months of available cash for operations.”

He said it would sustain the city operations in case an emergency happens. Three months of the city’s operations would be about $1.6 million of the city’s budget of nearly $6.7 million. The city had about $589,000 at the end of the last fiscal year, which was all restricted, meaning it was allocated for certain purposes.

“If the city runs low on cash, it could be devastating. It’s not something you want to happen,” he said. “You have zero in unrestricted cash. The consequences could be detrimental and could result in layoffs from the city.”

Peixotto said the city is carrying less than a month of operating cash, which he described as “living paycheck to paycheck. I’m here telling you you have a problem. How you want to solve it, it’s up to you. I’m not here to solve it.”

He also said the city has a problem in its enterprise funds —wastewater, water and solid waste — saying there was a net loss of $244,000.

“If you look, you can see the depreciation expense on some of these is substantial,” the auditor said.

He said the city isn’t in horrible shape, but asked the city to keep an eye on these funds and make sure the number is above zero.

“We want to make sure people are paying for services and are not being subsidized to the best of these enterprise funds abilities,” he said.

The audit is available for public view at saonm.org.