N.M. Admin. Code § 2.2.2.7

Current through Register Vol. 35, No. 21, November 5, 2024

Section 2.2.2.7 - DEFINITIONS

In addition to the definitions in the Audit Act, Section 12-6-2 NMSA 1978, the following definitions will apply to all financial examinations performed under this rule:

A.Definitions beginning with the letter "A":

(1)"AAG GAS" means AICPA Audit and Accounting Guide - Government auditing standards and Single Audits (latest edition).

(2)"AAG SLV" means AICPA Audit and Accounting Guide - State and Local Governments (latest edition).

(3)"Abuse" includes, but is not limited to, behavior that is deficient or improper when compared with behavior that a prudent person would consider reasonable and necessary business practice given the facts and circumstances but excludes fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements. Abuse also includes misuse of authority or position for personal interests or for the benefit of another or those of an immediate or close family member or business associate.

(4)"ACFR" means the state of New Mexico's annual comprehensive financial report.

(5)"Attestation engagement" means an engagement to issue, or where an IPA issues, an examination, a review, AUP report, or report on subject matter, or an assertion about subject matter that is the responsibility of an agency or local public body, including engagements performed pursuant to AICPA and GAGAS attestation standards and all engagements pursuant to Subsection A of Section 12-6-3 NMSA 1978.

(6)"Audit" means an examination of the financial affairs or performance of an agency or local public body pursuant to the authority of the Audit Act, 12-6-1, et seq., NMSA 1978.

(7)"Audit documentation" means the record of procedures performed, relevant evidence obtained, and conclusions reached (terms such as working papers or workpapers are also sometimes used).

(8)"Auditor" means designated independent public accountants, including auditors of the OSA, performing audit or attestation work as defined in the Audit Act and the Public Accountancy Act.

(9)"AICPA" means American institute of certified public accountants.

(10)"AU-C" means U.S. auditing standards-AICPA (Clarified).

(11)"AUP" means agreed upon procedures.

B.Definitions beginning with the letter "B": [RESERVED]

C.Definitions beginning with the letter "C":

(1)"Component unit" means a legally separate entity required to be reported in the financial statements of an agency or LPB due to the entity's close financial relationship with the primary agency or LPB.

(2)"CPE" means continuing professional education.

D.Definitions beginning with the letter "D": "DFA" means the New Mexico department of finance and administration.

E.Definitions beginning with the letter "E": ERB means the New Mexico education retirement board.

F.Definitions beginning with the letter "F":

(1)"FCD" means financial control division of DFA.

(2)"FDS" means financial data schedule.

(3)"Fraud" means obtaining something of value through willful misrepresentations. This includes, but is not limited to, fraudulent financial reporting, misappropriation of assets, corruption, and use of public funds for activities prohibited by the constitution or laws of the state of New Mexico. Fraudulent financial reporting means intentional misstatements or omissions of amounts or disclosures in the financial statements to deceive financial statement users, which may include intentional alteration of accounting records, misrepresentation of transactions, or intentional misapplication of accounting principles. Misappropriation of assets means theft of an agency's or LPB's assets, including theft of property, embezzlement of receipts, or fraudulent payments. Corruption means bribery and other illegal acts.

G.Definitions beginning with the letter "G":

(1)"GAAP" means generally accepted accounting principles that are accepted in the United States of America.

(2)"GAAS" means generally accepted auditing standards, which are systematic guidelines used by auditors when conducting audits of an entity's financial records in the United States of America.

(3)"GAGAS" means generally accepted government auditing standards, or the most recent revision of the yellow book issued by the comptroller general of the United States.

(4)"GASB" means governmental accounting standards board.

(5)"GSD" means the New Mexico general services department.

H.Definitions beginning with the letter "H":

(1)"HED" means the New Mexico higher education department.

(2)"HSD" means the New Mexico human services department.

(3)"HUD" means the United States department of housing and urban development.

I.Definitions beginning with the letter "I":

(1)"Independence" means both:

(a) independence of mind: The state of mind that permits the conduct of an engagement without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism; and

(b) independence in appearance: The absence of circumstances that would cause a reasonable and informed third party to reasonably conclude that the integrity, objectivity, or professional skepticism of an audit organization or member of the engagement team had been compromised.

(2)"IPA" means an independent public accountant designated by the state auditor to perform financial audits, special audits, attestation engagements, performance audits, and forensic accounting engagements for the examination of the financial affairs of agencies and local public bodies.

J.Definitions beginning with the letter "J": [RESERVED]

K.Definitions beginning with the letter "K": [RESERVED]

L.Definitions beginning with the letter "L":

(1)"LGD" means the local government division of DFA.

(2)"LPB" means local public body as defined in the Audit Act, Section 12-6-2 NMSA 1978.

M.Definitions beginning with the letter "M": [RESERVED]

N.Definitions beginning with the letter "N":

(1)"NMAC" means New Mexico administrative code.

(2)"NMSA" means New Mexico statutes annotated.

(3)"Non-attestation engagement" means any engagement that is not an attestation engagement, including, but not limited to, services performed in accordance with the statement on standards for consulting services or the statement on standards for forensic services, or any other engagement that is not under Section 12-6-3 NMSA 1978, including certain agency-initiated or other engagements in which the IPA's role is to perform an engagement, assist the client or testify as an expert witness in accounting, auditing, taxation, or other matters, given certain stipulated facts.

O.Definitions beginning with the letter "O": "Office" or "OSA" means the office of the state auditor of New Mexico.

P.Definitions beginning with the letter "P":

(1)"PED" means the New Mexico public education department.

(2)"PERA" means the New Mexico public employee retirement association.

(3)"Primary government" means the primary agency or primary local public body that a component unit is attached to due to their financial relationship.

Q.Definitions beginning with the letter "Q": [RESERVED]

R.Definitions beginning with the letter "R":

(1)"REC" means regional education cooperative.

(2)"Report" means a document issued as a result of an annual financial and compliance audit, special audit, attestation engagement, performance audit, forensic accounting engagement, or AUP engagement regardless of whether the document is on the contractor's letterhead or signed by the contractor.

(3)"RSI" means required supplementary information.

S.Definitions beginning with the letter "S":

(1)"SHARE" means statewide human resources accounting and management reporting system.

(2)"SOC" means system organization controls, which is an audit review in connection with system-level controls of a service organization or entity-level controls of other organizations.

(3)"SOC-1" means an audit that provides an opinion regarding the controls as the service organization that are likely to be relevant to user entities' internal control over financial reporting.

(4)"SOC-2" means an audit that provides an opinion about controls at the service organization related to security, availability, processing integrity, confidentiality, or privacy to support users' evaluations of their own system of internal control.

(5)"SOC-3" means an audit to provide an opinion about the effectiveness of controls at the service organization relevant to security, availability, processing integrity, confidentiality, or privacy.

(6)"Special audit" means a limited-scope audit of an agency's or local public body's financial affairs and transactions, in whole or in part, including both attest engagements and non-attest engagements, performance audits, forensic accounting engagements, and any other engagement that is not part of the annual financial statement and compliance audit, depending on designation or scope.

(7)"Special investigation" or "special examination" means a limited-scope investigation into or examination of an agency's or local public body's financial records and other information designed to investigate allegations of waste, fraud, abuse, theft, non-compliance, or misappropriation of funds, or to quantify the extent of such losses.

(8)"State auditor" may refer to either the elected state auditor of the state of New Mexico, or personnel of the office designated by the state auditor.

T.Definitions beginning with the letter "T": "Tier" is established based on the amount of each LPB's annual revenue, pursuant to Section 12-6-3 NMSA 1978.

U.Definitions beginning with the letter "U":

(1)"Uniform guidance" means Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

(2)"U.S. GAO" means the United States government accountability office.

V.Definitions beginning with the letter "V": [RESERVED]

W.Definitions beginning with the letter "W": "Waste" includes, but is not limited to, the act of using or expending resources carelessly, extravagantly, or to no purpose. Importantly, waste can include activities that do not include abuse. Rather waste relates primarily to mismanagement, inappropriate actions, and inadequate oversight. Waste does not necessarily involve fraud or illegal acts. However, waste may be an indication of internal control weakness, non-compliance, fraud, or illegal acts.

X.Definitions beginning with the letter "X": [RESERVED]

Y.Definitions beginning with the letter "Y": [RESERVED]

Z.Definitions beginning with the letter "Z": [RESERVED]

N.M. Admin. Code § 2.2.2.7

2.2.2.7 NMAC - Rp, 2.2.2.7 NMAC, 2-28-14, Adopted by New Mexico Register, Volume XXVI, Issue 05, March 16, 2015, eff. 3/16/2015, Adopted by New Mexico Register, Volume XXVII, Issue 05, March 15, 2016, eff. 3/15/2016, Adopted by New Mexico Register, Volume XXVIII, Issue 05, March 14, 2017, eff. 3/14/2017, Adopted by New Mexico Register, Volume XXIX, Issue 04, February 27, 2018, eff. 2/27/2018, Amended by New Mexico Register, Volume XXX, Issue 05, March 12, 2019, eff. 3/12/2019, Adopted by New Mexico Register, Volume XXXI, Issue 05, March 10, 2020, eff. 3/10/2020, Adopted by New Mexico Register, Volume XXXII, Issue 06, March 23, 2021, eff. 3/23/2021, Adopted by New Mexico Register, Volume XXXIII, Issue 06, March 22, 2022, eff. 3/22/2022, Adopted by New Mexico Register, Volume XXXIV, Issue 06, March 28, 2023, eff. 3/28/2023, Amended by New Mexico Register, Volume XXXV, Issue 13, July 16, 2024, eff. 7/16/2024