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SINGLE AUDIT 

QUALITY CONTROL REVIEW

RECOVERY ACT: QUALITY CONTROL REVIEW 

SINGLE AUDIT OF NEW MEXICO DEPARTMENT 

OF WORKFORCE SOLUTIONS FOR THE YEAR 

ENDED JUNE 30, 2009 

 

02-A12-345-67-890 Office of Inspector General—Office of Audit 

Date Issued: March 21, 2011

Report Number: 18-11-002-03-001
U.S. Department of Labor – Office of Inspector General 

 

U.S. Department of Labor Office of Inspector General 

 Washington, D.C. 20210 

March 21, 2011 

Assistant Inspector General’s Report 

Donna Trujillo, Chief Financial Officer 

New Mexico Department of Workforce Solutions 

401 Broadway, NE 

Albuquerque, NM 87102 

Dear Ms. Trujillo: 

The purpose of this report is to formally advise you of the results of a Quality Control 

Review (QCR) the U.S. Department of Labor (DOL), Office of Inspector General (OIG) 

conducted of the following audit completed by Meyners + Company, LLC (Firm)1

, under 

the Federal Single Audit Act (Act) and Office of Management and Budget (OMB) 

Circular A-133 (A-133): 

Single Audit of the New Mexico Department of Workforce Solutions 

(NMDWS) For the Year Ended June 30, 2009 

Our review included the following DOL major programs: 

DOL Major Programs Reviewed 

Major Program 

CFDA 

Number 

DOL Major 

Funds 

Reported as 

Expended

Employment Services (ES) Cluster 

17.207 

17.801 

17.804 $7,375,456

Unemployment Insurance 17.225 $388,121,799

Workforce Investment Act (WIA) Cluster 

17.258 

17.259 

17.260 $15,105,719

American Recovery and Reinvestment Act 

(Recovery Act) – WIA Cluster 

17.258 

17.259 

17.260 $1,985,560

Total DOL Major Program Funds Reported as Expended $412,588,534

 

1

 Effective January 1, 2011 Meyners + Company, LLC was purchased by Clifton Gunderson, LLP 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

1
U.S. Department of Labor – Office of Inspector General 

 

Since our review included Recovery Act funds, we are required by the Recovery Act to 

post this report on our website www.oig.dol.gov and link it to the Recovery 

Accountability and Transparency Board’s (Board) website www.recovery.gov. 

The objectives of the QCR were to determine whether (1) the audit was conducted in 

accordance with applicable standards and met the single audit requirements, (2) any 

follow-up work is needed, and (3) there are any issues that may require management’s 

attention. 

The audit work performed by the Firm over compliance with requirements applicable to 

each major program and internal control over compliance in accordance with A-133 was 

acceptable. However, audit work related to the Statement of Expenditures of Federal 

Awards (SEFA) did not meet certain requirements of A-133. The Firm should improve 

its quality control over reviewing single audit reports and provide additional training to 

those responsible for ensuring single audit reports are properly presented. The Firm 

should also report internal control findings to NMDWS related to identification of clusters 

and subrecipients, and work with NMDWS to reissue the single audit reporting package 

to the Federal Audit Clearinghouse. 

A-133, Section 400(a)(5), requires us to advise the auditor, and where appropriate, the 

auditee of any deficiencies found in the audits when the deficiencies require corrective 

action by the auditor. When advised of deficiencies, the auditee shall work with the 

auditor to take corrective action. If corrective action is not taken, we are responsible for 

notifying the auditor, the auditee, and applicable Federal awarding agencies and 

pass-through entities of the facts and make recommendations for follow-up action. 

Major inadequacies shall be referred to appropriate State licensing agencies and 

professional bodies for disciplinary action. 

Details on the results of our review are provided in the Enclosure. 

Sincerely, 

Elliot P. Lewis 

Assistant Inspector General 

 for Audit 

Enclosure 

cc: Ms. Georgie Ortiz, Partner, Clifton Gunderson, LLP. 

 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

2
U.S. Department of Labor – Office of Inspector General 

 

Ms. Judith A. Fisher, Director, Division of Policy, Review, and Resolution 

Employment and Training Administration 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

3
U.S. Department of Labor – Office of Inspector General 

 

Enclosure 

Recovery Act: Quality Control Review 

Single Audit of the New Mexico Department of Workforce Solutions 

for the Year Ended June 30, 2009 

(18-11-002-03-001) 

Introduction

The Single Audit Act of 1984, as amended by the Single Audit Act Amendments of 

1996, created a single organization-wide financial and compliance audit for state and 

local governments, colleges, universities, and not-for-profit organizations that expend 

Federal funds equal to or greater than $300,000 in any fiscal year ($500,000 for fiscal 

years ending after December 31, 2003). 

On March 25, 2010, the Firm issued a single audit report of the NMDWS financial 

statements, Schedule of Expenditures of Federal Awards (SEFA), and reports required 

by Government Auditing Standards (GAS) and A-133 for the year ended June 30, 2009. 

Our review included the following DOL major programs: 

DOL Major Programs Reviewed 

Major Program 

CFDA 

Number 

DOL Major 

Funds 

Reported as 

Expended

ES Cluster 

17.207 

17.801 

17.804 $7,375,456

Unemployment Insurance 17.225 $388,121,799

WIA Cluster 

17.258 

17.259 

17.260 $15,105,719

Recovery Act – WIA Cluster 

17.258 

17.259 

17.260 $1,985,560

Total DOL Major Program Funds Reported as Expended $412,588,534

Since our review included Recovery funds, we are required by the Recovery Act to post 

this report on our website www.oig.dol.gov and link it to the Board’s website 

www.recovery.gov. 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

4
U.S. Department of Labor – Office of Inspector General 

 

Objectives

The objectives of the QCR were to determine whether (1) the audit was conducted in 

accordance with applicable standards and met the single audit requirements, (2) any 

follow-up work is needed, and (3) there are any issues that may require management’s 

attention. To address these objectives, we answered the following question: 

Did the Firm’s single audit comply with applicable standards and single audit 

requirements so that no follow-up work or management’s attention would be 

needed? 

Results

The audit work performed by the Firm over compliance with requirements applicable to 

each major program and internal control over compliance in accordance with A-133 was 

acceptable. However, the audit work performed related to the SEFA did not meet 

certain requirements of A-133. Specifically, the Firm did not report audit findings that 

related to NMDWS not properly identifying in the SEFA DOL programs that comprised 

the ES cluster of programs and the amounts passed through to subrecipients for each 

federal program. 

Additional work is required to bring this audit into compliance with the requirements of 

the Act. Specifically, the Firm should do the following: 

1. Improve its quality control over reviewing single audit reports and provide 

additional training to those responsible for ensuring single audit reports are 

properly presented. 

2. Report internal control findings to NMDWS related to identification of clusters and 

subrecipients. 

3. Work with NMDWS to reissue the single audit reporting package to the Federal 

Audit Clearinghouse. 

A-133, Section 400(a)(5), requires us to advise the auditor, and where appropriate, the 

auditee of any deficiencies found in the audits when the deficiencies require corrective 

action by the auditor. When advised of deficiencies, the auditee shall work with the 

auditor to take corrective action. If corrective action is not taken, we are responsible for 

notifying the auditor, the auditee, and applicable Federal awarding agencies and passthrough entities of the facts and make recommendations for follow-up action. Major 

inadequacies shall be referred to appropriate State licensing agencies and professional 

bodies for disciplinary action. 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

5
U.S. Department of Labor – Office of Inspector General 

 

Did the Firm’s single audit comply with applicable standards and single audit 

requirements so that no follow-up work or management’s attention would be 

needed? 

The Firm’s noncompliance with certain single audit requirements could result in 

users of NMDWS’s SEFA not having reliable information needed to make 

informed decisions. 

The Firm did not report audit findings related to NMDWS not complying with 

reporting requirements to prepare the SEFA in the format required by A-133. 

DOL programs related to ES should have been presented in the SEFA as a cluster, but 

instead the programs were reported individually. 

A-133, Subpart C – Auditee Responsibilities, Section .310 (b), Financial Statements, 

Schedule of Expenditures of Federal Awards, states, in part: 

... At a minimum, the schedule shall 1) List individual Federal programs by 

Federal agency. For Federal programs included in a cluster of programs, 

list individual Federal programs within a cluster of programs. 

The AICPA Audit Guide, Government Auditing Standards, and Circular A-133 Audits 

(Guide) states in Chapter 7.05: 

The SEFA is unlike certain other supplementary information included in 

documents containing audited financial statements in that it serves as the 

primary basis for the auditor’s major program determination ...Therefore, 

appropriate major program determination by the auditor is dependent on 

the accuracy and completeness of the information that makes up the 

SEFA. 

Firm officials told us they were aware of the cluster reporting requirement and had 

audited the three ES programs as major programs. They attributed the reporting error to 

a grantee editing problem that was not caught by the Firm’s quality control process. Our 

review of the 2007 and 2008 single audit reports found that NMDWS had the same 

reporting error. Therefore, we believe the reporting error with the ES cluster is the result 

of a systemic problem within NMDWS as well as a weakness in the Firm’s quality 

control process. 

When Federal programs are not properly presented as a cluster, auditors might not 

identify and audit all major program expenditures. In addition, this does not provide for a 

uniform audit report presentation, which may prevent users from effectively using the 

data contained in the audit report. 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

6
U.S. Department of Labor – Office of Inspector General 

 

Amounts paid to subrecipients from each federal program were not identified in the 

SEFA.

A-133, Subpart C – Financial statements, Section .310(b)(5), states, in part: 

... At a minimum, the schedule should: ... For federal awards received as 

a pass-through entity, identify, to the extent practical, the total amount 

provided to subrecipients from each federal program. 

The Firm stated it did not believe it was practical to provide subrecipient information in 

the SEFA. It further noted that amounts reported as subrecipient expenditures in the 

footnote to the SEFA would not tie to the amount of program expenditures in the SEFA 

and would be confusing to the State auditor review team. 

By NMDWS not providing required subrecipient information, users of the SEFA would 

not have sufficient information to judge how NMDWS accomplished its mission of 

providing training to unemployed or underemployed New Mexicans. This lack of 

subrecipient information could also result in the auditor not including the OMB 

compliance requirement for NMDWS to monitor WIA funds passed through to 

subrecipients as part of its compliance audit plan. Finally, the use of Recovery Act funds 

would not have the required transparency for those funds. 

Recommendations 

We recommend the Firm: 

1. Provide additional training in relevant A-133 and Guide requirements and overall 

report quality control processes to Firm supervisory and management personnel 

responsible for audits related to entities required to report under the Act. 

2. Follow GAS 5.26 through 5.31 related to subsequent discovery of facts existing at 

the date of the auditor’s report to ensure users of NMDWS’s single audit reporting 

package are aware of the reporting errors. This would include reporting the 

appropriate findings noted in this report. 

3. Submit a revised reporting package to the Federal Audit Clearinghouse. 

We appreciate the cooperation and courtesies that Firm personnel extended to the 

Office of Inspector General. 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

7
U.S. Department of Labor – Office of Inspector General 

 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

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Firm’s Response 

The firm agreed with the recommendations and provided its plans to address each of 

them. 
U.S. Department of Labor – Office of Inspector General 

 

PAGE INTENTIONALLY LEFT BLANK

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

9
U.S. Department of Labor – Office of Inspector General 

 

Appendices 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

10
U.S. Department of Labor – Office of Inspector General 

 

 Single Audit QCR 

 PAGE INTENTIONALLY LEFT BLANK 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

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U.S. Department of Labor – Office of Inspector General 

 

Appendix A 

Background 

The Single Audit Act of 1984 established consistent and uniform entity-wide audit 

requirements for state and local governments receiving Federal financial assistance. 

The single audit is the primary mechanism used by Federal agencies to ensure 

accountability for Federal awards. Audits performed under the Act are intended to 

satisfy all Federal agencies providing assistance to the entity. The act was amended in 

1996 by Public Law 104-156, raising the threshold for single audit to $300,000 in 

Federal assistance. The June 27, 2003, revision to A-133 raised this threshold to 

$500,000 for fiscal years ending after December 31, 2003.

QCRs are performed to provide evidence of the reliability of single audits to the auditors 

of Federal agency financial statements, such as those required by the Chief Financial 

Officers Act, those responsible for the programs, and others. We performed a QCR of 

the single audit of the NMDWS financial statements, SEFA, and reports required by 

GAS and A-133 for the year ended June 30, 2009, performed by the Firm. 

The legislature of the State of New Mexico passed legislation to improve the 

effectiveness of the workforce service and delivery system. The bill combined all 

functions and staff of the Governor’s Office of Workforce Training & Development with 

all functions and staff of the New Mexico Department of Labor and created a new 

government agency called NMDWS. All Office of Workforce Training & Development 

and New Mexico Department of Labor employees began working for this new 

department effective July 1, 2007. 

NMDWS’s mission is to enhance productivity and competitiveness of New Mexico 

business and industry by improving the quality and availability of the New Mexico 

workforce. To accomplish this, NMDWS uses a system that offers universal access to 

lifelong learning based on relevant local and regional labor market needs, via 

integrated, customer-focused accountable service partnerships; and promotes 

charitable and educational services by providing special services to disadvantaged, 

untrained, displaced, and under-trained workers within the State of New Mexico. 

For the year ended June 30, 2009, the NMDWS reported expenditures of about 

$415.9 million in total Federal awards and $415.8 million in DOL awards, of which $2.0 

million was reported as attributable to the Recovery Act 

The Recovery Act was signed into law on February 17, 2009. The stated purposes of 

the Recovery Act are to: 

 

• preserve and create jobs and promote economic recovery; 

• assist those most impacted by the recession; 

• provide investments needed to increase economic efficiency by spurring 

technological advances in science and health; 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

12
U.S. Department of Labor – Office of Inspector General 

 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

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• invest in transportation, environmental protection, and other infrastructure that 

will provide long-term economic benefits; and 

• stabilize state and local government budgets, in order to minimize and avoid 

reductions in essential services and counterproductive state and local tax 

increases. 

The Recovery Act requires agencies to implement an unprecedented level of 

transparency and accountability to ensure the public can see where and how their tax 

dollars are being spent. The Board was established by the Recovery Act, Congress, 

and the OMB to oversee and monitor implementation of the Recovery Act through 

periodic reporting on the use and expenditure of funds. We are required by the 

Recovery Act, Title XV Accountability and Transparency, Subtitle A – Transparency and 

Oversight Requirements, Section 1514 Inspector General Reviews, to post this report 

on our website www.oig.dol.gov and link it to the Board’s website www.recovery.gov. 
U.S. Department of Labor – Office of Inspector General 

 

Appendix B 

Objectives, Scope, Methodology, and Criteria 

Objectives 

Our objectives were to determine whether: 

1. The audit was conducted in accordance with applicable standards and met the 

single audit requirements; 

2. any follow-up work is needed; and 

3. there are any issues that may require management’s attention. 

To answer those objectives we asked the following question: 

Did the Firm’s single audit comply with applicable standards and single audit 

requirements so that no follow-up work or management’s attention would be 

needed? 

Scope 

We performed a QCR of the Firm’s single audit of the NMDWS Financial Statements, 

SEFA, and reports required by GAS and A-133 for Year Ended June 30, 2009. As part 

of the QCR, we included review of the single audit reports issued by NMDWS and the 

Firm for the years ended June 30, 2007 and 2008. We performed our work at the offices 

of the Firm at 500 Marquette, Suite 800, Albuquerque, New Mexico. 

Our review included the following DOL major programs: 

DOL Major Programs Reviewed 

Major Program 

CFDA 

Number 

DOL Major 

Funds 

Reported as 

Expended

ES Cluster 

17.207 

17.801 

17.804 $7,375,456

Unemployment Insurance 17.225 $388,121,799

WIA Cluster 

17.258 

17.259 

17.260 $15,105,719

Recovery Act – WIA Cluster 

17.258 

17.259 

17.260 $1,985,560

Total DOL Major Program Funds Reported as Expended

$412,588,534

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

14
U.S. Department of Labor – Office of Inspector General 

 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

15

Methodology 

Using the President’s Council on Integrity and Efficiency Uniform QCR Guide for A-133 

Audits, we reviewed audit documentation and held discussions with the Firm’s partners 

and auditors to accomplish the required steps. The Guide was developed to test for 

compliance with GAS general and fieldwork standards and A-133 requirements. 

Specifically, we reviewed: 

• Auditor Qualifications 

• Independence 

• Due Professional Care 

• Quality Control 

• Planning and Supervision 

• Management Representations 

• Litigation, Claims and Assessments 

• Possible Fraud or Illegal Acts 

• Determination of Major Programs 

• Schedule of Expenditures of Federal Awards 

• Audit Follow up 

• Reporting 

• Internal Control Over Major Programs 

• Data-Collection Form 

We also reviewed the Firm’s peer review applicable to the period of the audit, as well as 

the single audit reports issued by NMDWS and the Firm for the years ended June 30, 

2007 and 2008 to identify systemic issues. 

Criteria 

A-133 

AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits 

GAS, July 2007 Revision 

Guidance on Generally Accepted Government Auditing Standards Requirements for 

Continuing Professional Education 

Recovery Act 

Single Audit Act of 1984 

Single Audit Act Amendments of 1996 
U.S. Department of Labor – Office of Inspector General 

 

 Appendix C 

Acronyms and Abbreviations 

A-133 Office of Management and Budget Circular A-133 

Act Federal Single Audit Act 

AICPA American Institute of Certified Public Accountants 

Board Recovery Accountability and Transparency Board 

Guide American Institute of Certified Public Accountants Audit Guide, 

GAS, and A-133 Audits 

CFDA Catalog of Federal Domestic Assistance 

DOL Department of Labor 

ES Employment Services 

Firm Meyners + Company, LLC 

GAS Government Auditing Standards 

OIG Office of Inspector General 

OMB Office of Management and Budget 

QCR Quality Control Review 

Recovery Act American Recovery and Reinvestment Act 

SEFA Schedule of Expenditures of Federal Awards 

NMDWS New Mexico Department of Workforce Solutions 

WIA Workforce Investment Act 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

16
U.S. Department of Labor – Office of Inspector General 

 

 Single Audit QCR 

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New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

17
U.S. Department of Labor – Office of Inspector General 

 

Appendix D 

Independent Public Accountant Response to Draft Report 

 Single Audit QCR 

New Mexico Dept. of Workforce Solutions 

Report Number: 18-11-002-03-001 

18