SANTA FE (KRQE) - The State Auditor has launched a special audit to investigate whether a powerful state agency that handles billions of dollars produced a fake financial audit, which is against state law.
The New Mexico Finance Authority, which is a public agency that works like a bank, helps pay for local projects and equipment around the state, such as water tanks, school upgrades, the Spaceport, the Rail Runner and the Big-I construction.
In order to find funding for the projects, the NMFA relies on financial audits that reflect the state's credit to attract Wall Street investors to buy bonds.
But State Auditor Hector Balderas said a fake audit was produced for the budget year that ended June 2011.
"The full faith and credit of the state government is at risk," said Balderas. "We could be downgraded. We could be the laughing stock on Wall Street."
Balderas said the fake report has been produced to investors and creditors. Balderas also said tens of millions of dollars are unaccounted for.
"i need to make sure that this bad actor who we cannot locate didn't actually embezzle funds as it seems he was trying to stall both auditors and managers from coming in and verifying those funds," said Balderas.
Balderas and officials from the NMFA blame a former NMFA employee for the error. The employee quit in June before the problem was discovered, then vanished, according to Balderas.
Officials at the NMFA said in a press release the employee told senior management an audit was conducted by auditing firm Clifton Gunderson LLP. But Balderas confirmed this did not occur. Balderas said his office looked into the matter after not receiving the annual NMFA audit, which was due earlier this year.
Another auditor has been hired to complete the report, according to NMFA CEO Richard May.
"This matter is deeply concerning, but it will have no effect on NMFA's ability to meet its financial obligations. NMFA remains financially strong and has ample resources to meet all scheduled bond payments and other expenses," said May in a press release.
May declined to answer any other questions.
Balderas blames the NMFA and its board members for not catching the problem sooner.
"We're concerned the oversight board did not scrutinize when they were hiring an audit firm or trusting too much a state employee's representations," said Balderas.
Balderas said he has contacted the FBI to investigate and to locate the employee.
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