FY2019 Audit Report (Public Regulation Commission 43000
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ANNUAL FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR’S REPORT June 30, 2019 (THIS PAGE INTENTIONALLY LEFT BLANK) STATE OF NEW MEXICO PUBLIC REGULATION COMMISSION Table of Contents As of June 30, 2019 INTRODUCTORY SECTION Official Roster ............................................................................................................................... 1 FINANCIAL SECTION Independent Auditors Report ...................................................................................................... 2 Management Discussion and Analysis ........................................................................................ 5 Basic Financial Statements Government-Wide Statement of Net Position .......................................................................... 13 Government-Wide Statement of Activities ............................................................................... 14 Balance Sheet – Governmental Funds ....................................................................................... 16 Reconciliation of The Balance Sheet to The Statement of Net Position Governmental Funds ........................................................................................ 18 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds ................................................................................... 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................ 21 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Budgetary Basis) – General Fund 55000 ............................................... 22 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Budgetary Basis) – Pipeline Safety Fund 37700 .................................... 23 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Budgetary Basis) – Fire Protection Grant Fund 56900 .......................... 24 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Budgetary Basis) – Fire Protection Fund 57800 .................................... 25 Notes to the Financial Statements ............................................................................................ 26 Supplementary Information Combining Balance Sheet – Nonmajor Funds ........................................................................... 46 Combining Statement of Revenue, Expenditures and Changes in Fund Balance – Nonmajor Funds ........................................................................ 48 Schedule of Operating Transfers ............................................................................................... 50 Schedule of Joint Powers Agreements ...................................................................................... 51 Schedule of Expenditures of Federal Awards ............................................................................ 52 i STATE OF NEW MEXICO PUBLIC REGULATION COMMISSION Table of Contents As of June 30, 2019 OTHER REPORTS Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................... 53 Independent Auditors' Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ...................................................................................... 55 Schedule of Findings and Questioned Costs .............................................................................. 58 Summary Schedule of Prior Year Audit Findings ....................................................................... 59 Exit Conference .......................................................................................................................... 70 Corrective Action Plan ............................................................................................................... 71 ii STATE OF NEW MEXICO PUBLIC REGULATION COMMISSION Official Roster As of June 30, 2019 Commissioners Theresa Becenti-Aguilar Chair Cynthia B. Hall Vice-Chair Jefferson L. Byrd Commissioner Stephen Fischmann Commissioner Valerie Espinoza Commissioner Administrative Officials Jason N. Montoya Interim Chief of Staff Jim Williamson Director, Administrative Services Division/CFO Don Shainin State Fire Marshal Milo Chavez Acting Director, Utility & Consumer Relations Vacant Director, Transportation 1 Serving clients since 1972 David G. Zlotnick Asa Laws Richard D. Sandoval INDEPENDENT AUDITORS REPORT Public Regulation Commissioners State of New Mexico Public Regulation Commission and Mr. Brian S Colón, New Mexico State Auditor Santa Fe, New Mexico Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information, and the budgetary comparisons for the gerneal fund and major special revenue funds of the State of New Mexico Public Regulation Commission (Commission), as of and for the year ended June 30, 2019, and the related notes to the financial statements which collectively comprise the Commission’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the 2 1 Calle Medico . Santa Fe, New Mexico 87505 . telephone (505) 982-3894 . fax (505) 982-3818 . www. zlscpa.com circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information and the budgetary comparisons for the general fund and major special revenue funds of the Commission, as of June 30, 2019, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note A1, the financial statements of the Commission are intended to present the financial position and changes in financial position, of only that portion of the governmental activities, each major fund, and the aggregate remaining fund information of the State of New Mexico that is attributable to the transactions of the Commission. They do not purport to, and do not, present fairly the financial position of the State of New Mexico as of June 30, 2019, and the changes in financial position, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 5-12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required