July 16, 2024
SANTA FE – The Office of the State Auditor (OSA) today announces the publication and implementation of the 2024 Audit Rule amendment.
“We made needed adjustments to the Audit Rule to clarify requirements and begin an overdue cleanup of a long and confusing rule,” State Auditor Joseph Maestas said. “Additionally, after thoughtful consideration, we have decided to listen to the entities the OSA audits and the independent public accountants (IPAs) that carry out most of the audits who provided compelling arguments against my proposed reduction of the Auditor Rotation Rule. Consequently, I have opted to keep it at eight years, to more closely align with the State Procurement Code.”
The OSA’s Notice of Proposed Rulemaking, or NOPR, contemplated shortening the period of time that a single auditor could provide audit or engagement services to the same client from eight years to six with an appropriate transition period. In addition to written comments submitted by interested parties to the OSA during the rulemaking process, the OSA also held a hearing on March 14, 2023, at which some stakeholders provided feedback on the proposed change that favored keeping an eight-year audit firm rotation.
“I hope this adequately serves as a serious demonstration of my openness to engage with and work with the accounting industry,” Maestas said. “Especially going forward, I believe the relationship between this office and the state’s IPAs is necessary to advocate for legislative efforts to combat the ongoing contraction of the accounting industry, among other issues”.
“This experience has led me conclude that we need to have a more frequent dialogue, not just to talk about the Audit Rule but also broader issues, such as addressing the crisis in our accounting industry, looking at other challenges, and promoting a singular, consolidated audit of all state agencies,” Maestas said. “There are numerous issues that this office is going to advocate for and champion, but we are appealing to the industry to engage with us to discuss these and other issues affecting the industry and the state of New Mexico. We hope to begin with formalizing this relationship through the New Mexico Society of CPAs.”
The 2024 Audit Rule amendment also eliminated unnecessary language from the Rule; clarified certain confidentiality requirements; amended language around reporting requirements for apparent violations of criminal statutes in connection with financial affairs; and further updated and clarified rules around agency-initiated external audits.
The published rule amendment can be found here. The full rulemaking record will be posted on the OSA website.
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