N.M. Admin. Code § 5.3.11.9
Current through Register Vol. 35, No. 21, November 5, 2024
Section 5.3.11.9 - EVALUATION OF FISCAL HEALTHThe department shall evaluate the reports submitted pursuant to 5.3.11.8 NMAC, in order to ensure accountability, detect potential problems of finance, and to evaluate fiscal health of institutions. In its evaluation, the department will assess potential risk factors exhibited by institutions that have predictive value to identify problems of finance related to fiscal solvency or fiscal control concerns of the institution. The department shall make careful consideration of the severity, frequency, and the potential impact to the institution's financial stability when evaluating the risk factors. The department shall also consider whether the institution has already remedied the risk factor(s) or the likelihood that the institution can quickly redress the risk factor(s) to mitigate financial impact to the institution.
A. The department may determine that potential problems of finance exist within an institution, if the institution exhibits one or more of the following risk factors: (1) financial ratios analysis which may highlight liquidity or solvency issues (examples include, but are not limited to unrestricted instruction and general fund balance as a percentage of total expenditures or financial responsibility composite scores);(2) weak unrestricted cash position;(3) negative year-end fund balance;(4) inability to pay vendor invoices promptly;(5) delays in making pension retirement contributions;(6) failure to make scheduled payroll payments;(7) non-payment of debt principal or interest payment;(8) requests for advanced state funding or emergency loans;(9) failure to complete an annual financial audit;(10) late submission of annual financial audit as determined by OSA;(11) annual financial audit with a disclaimer, adverse, or modified audit opinion, as determined by an IPA;(12) repeat audit findings classified as material weaknesses or significant deficiencies, as determined by an IPA;(13) a finding of fraud, waste, or abuse by OSA in a special audit or investigation;(14) an allegation of fraud or other crimes that relate to financial control of the institution, made by a law enforcement agency;(15) designation by accrediting agency of "show cause" or "probation" status;(16) determinations by the accrediting agency or IPA that indicate concerns with board fiscal governance and control;(17) lack of financial systems or resources to support strong internal control (examples include, but are not limited to inadequate staffing resources or lack of accounting infrastructure);(18) significant negative variance between budget and actual spending, as determined by an IPA;(19) material control weaknesses, material legal non-compliance or discussion and analysis comments by institutional management in the annual financial audit, which could indicate a significant effect to the financial condition of the institution in the current and future years, as determined by an IPA;(20) failure to obtain proper capital projects approval required by law or regulation from the department or the state board of finance, as determined by the department;(21) failure to comply with any law or regulation related to capital projects, as determined by the department;(22) failure to comply with any law, regulation, or restriction related to bonds or tax levies, as determined by the department;(23) failure to comply with the department's standard reporting requirements; or(24) any other occurrence that indicates a lack of financial stability or lack of strong internal control.B. If in its evaluation of the institution's fiscal health, the department determines that an institution exhibits one or more of the risk factors specified in Paragraphs (1) through (24) of Subsection A of 5.3.11.9 NMAC, the department may assign the institution to participate in the enhanced fiscal oversight program.N.M. Admin. Code § 5.3.11.9
Adopted by New Mexico Register, Volume XXIX, Issue 23, December 11, 2018, eff. 12/11/2018