State finance authority audit faked, officials say
Posted at: 07/12/2012 3:33 PM
| Updated at: 07/13/2012 7:53 AM
By: Gadi Schwartz, 4 On Your Side
ALBUQUERQUE, N.M. (AP) - State auditor Hector Balderas says the state's lending arm faked its audit for 2011.
Balderas's office says the New Mexico Finance Authority, which makes billions of dollars in loans to help public entities finance capital equipment and infrastructure projects, says he discovered the fake audit after the office failed to submit its annual review as required by law.
The finance authority acts like a bank for government projects loaning out millions of dollars in the form of bonds. The NMFA's credit rating is currently among the highest, based in part on the fictitious audit.
Balderas said he is very concerned that the fraud could have long term effects on the credit rating in New Mexico.
"It also it makes it high risk and an easy target for embezzlement," Balderas added.
The NMFA director Richard May said a review points to a former comptroller who resigned in June and could not elaborate on why the employee would have created the fictitious audit or what figures he used in the report.
According to Balderas, the audit appeared to have been compiled and signed by an accountant with the firm Clifton Gunderson but the signature was a fraud and the firm denied ever conducting an audit.
Under state law the NMFA is required to conduct yearly audits of their finances and assets which may total as high as $1.8 billion.
When asked by KOB whether an exit interview regarding the audit was conducted and whether he had signed off on the forgery, May declined to comment.
It is also unclear whether an audit committee ever reviewed the fake audit. "Clearly the board of Finance was not doing a good job scrutinizing the audit report," said Balderas. "[They] could have seen large deviation with millions of dollars very quickly."
In a press release sent by a New York PR firm, May said the forgery will have no effect on NMFA's "ability to meet financial obligations."
"NMFA remains financially strong and has ample resources to meet all scheduled bond payments and other expenses,” May also said.
However, The NMFA was unable to say exactly how much money is currently in their funds and whether any money has been stolen.
The finance authority has hired an accounting firm to conduct a new audit.
They have also retained an international legal firm to conduct an investigation.
Meanwhile, Balderas confirmed the states auditors are also looking into the fraud and are working with federal authorities but so far investigators have been unable to locate the former NMFA employee suspected of perpetrating the forgery.
(KOB.com contributed to this report. Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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