New Mexico Administrative Code › Title 5 - POST-SECONDARY EDUCATION › Chapter 3 - POST-SECONDARY EDUCATION INSTITUTION FINANCES › Part 11 - FISCAL OVERSIGHT › Section 5.3.11.9 - EVALUATION OF FISCAL HEALTH

Current through Register Vol. 35, No. 13, July 16, 2024
The 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.