Financial Reporting Requirements for Acequias

Overview of Financial Reporting & Audits for Acequia

Background

1. Acequias have a long history of record-keeping.  Acequia officials, mayordomos and commissioners, have been entrusted to keep records on the quotas (or assessments) collected and the labor (peones) contributed for work requirements. 
2. Acequias are political subdivisions of the state and have been eligible to receive funds from various state and federal programs including Capital Outlay funds from the State Legislature.   Many acequias have successfully implemented projects and effectively kept financial records for their projects.
3. The State of NM has long had laws and regulations that require local governments to comply with certain financial reporting requirements and to comply with the audit rule.  However, these policies were not strictly enforced with regard to acequias.
4. State government is becoming more careful about the expenditure of public taxpayer dollars and improving accountability in the reporting of public funds.  Changes in the economy have resulted in a decline in funds available for public projects.  Public entities, including acequias, are being called upon to carefully report on the expenditure of public funds.
5. In May 2013, Governor Susana Martinez issued and Executive Order that requires that entities receiving Capital Outlay must be in compliance with the Audit Rule (State Auditor’s Office) and budget/reporting requirements (Department of Finance and Administration).   
6. Like other local governmental entities, acequias are required to submit reports the Office of the State Auditor and the Department of Finance and Administration.   This will primarily affect acequias who are seeking Capital Outlay.  The new Infrastructure Capital Improvement Plan (ICIP) forms and the new Capital Outlay Request Forms both have questions to determine if the applicant is in compliance with reporting requirements to the OSA and DFA.

Acequias Financial Recordkeeping and Management

1. The reporting requirements for the OSA and DFA will be more manageable for acequias who already have a good system for bookkeeping and financial management. 

• Segregation of Duties:   Different individuals should approve expenditures, sign checks, and reconcile bank statement. 
• General Ledger:  Timely, accurate entries.  Backup documentation.
• Budget:  Budget should be approved prior to start of fiscal year by resolution.  The budget and budget resolution should be approved in an open meeting.
• Budget v. Actual Reports:  Add up expenditures by budget category and report them against your original budget.
• Reconciliation:  Each transaction from the ledger is “reconciled” with the transaction on the bank statement.  The balance from the ledger should match the balance on the bank statement for the same time period.  Reconciliation should be done by someone other than the person who signs checks.

2. The acequia should assign the bookkeeping and financial management duties to individuals who are skilled and willing to spend the necessary time on this very important responsibility.  An acequia commission may delegate this to the Treasurer or to another person who is committed.
3. Each acequia needs a basic filing system to manage vital documents and financial records.  When a new officer is elected, these files should be turned over to the new person responsible for recordkeeping. 
4. Acequias should have continuity between commissioners and the individuals responsible for financial management.  The acequia should have one post office box that does not change from one year to the next as commissioners may change.  The acequia should have a bank account and the statements for that account should be mailed to the official address of the acequia.

The table below lists requirements of the Office of the State Auditor (OSA) and the Department of Finance and Administration (DFA). Following the table are some forms and examples available to download.

FORM FOR DETERMINING TYPE OF REPORTING REQUIREMENTS AND INDEPENDENT PUBLIC ACCOUNTANT (IPA) SERVICES NEEDED

OSA 2013 AGREED UPON PROCEDURES

OSA 2013 Certification Form for Tier 1 and Tier 2

DFA Budget and Reporting Requirements

OSA Audit Rule Compliane General Information