Las Cruces internal audit office reports 75% of annual plan in process; ethics survey shows 75% positive responses

Viola Perea, the City Auditor for Las Cruces, presented the office’s FY25 annual internal audit report to the City Council at the Aug. 25 work session, summarizing completed audits, work in progress and performance measures.

Perea said, “Internal audit is a program in the line of business of the office of the City Manager, and the City Auditor manages the program and reports directly to the City Manager,” and described the office’s mission to provide compliance and assurance services for the council, city manager and departments.

What the audit office reported - Published reports: Internal Audit completed and published four scheduled internal audit reports in FY25 (citywide travel; a contract compliance audit for the Rincon Hills Park contract; utilities customer deposits and refunds; and the utilities cost allocation plan). - Draft reports: Nine additional audits were in draft form and undergoing review or exit conferences; these include sponsorship of non-city events, employee benefits and payroll corrections, utilities bill-pay assistance, a citywide P-Card audit (resulting in eight focused reports), citywide leases, a temporary employment agency contract audit, overtime, parks and recreation inventory, and the Amador Hospitality Lease Agreement. - Planned and follow-up work: Planning-level audits include ARPA-funded nonprofit contract compliance (nine contracts), risk management (vehicle and sidewalk accidents and drug testing issues), and business licenses (which will tie into a future lodgers tax audit). Five follow-up audits begun in FY25 are in planning, covering project development and management, utilities payment and treasury memos, juvenile citation program, Fair Labor Standards Act payroll and training, and municipal court indigent defense services. - Staffing and metrics: Internal Audit has five positions (city auditor, two senior internal auditors, two internal auditors); one position is vacant and posted. The office’s performance measures reported ~75% of the annual plan completed or in process (target 80%) and 75% of 203 employee respondents agreed or strongly agreed they work in an ethical environment (target 75%).

Oversight and external audit Perea described the city’s Oversight Committee for Internal Audit (five members, three residents with staggered three-year terms and two nonvoting ex officio members: the mayor or mayor pro tem and one councilor). She also said the city contracts with the OIR Group for external police-audit services; that contract began in March 2021 and expires in March 2026, and staff are reviewing the scope in preparation for an RFP.

Council questions and next steps Council asked for more detail on the planned business-license audit’s scope; Perea said the audit will assess existence (whether policies and controls ensure businesses hold valid licenses), fee collection and late fees, codes enforcement for expired or nonrenewed licenses, and identification of hotel/motel and short-term rental businesses to inform lodgers tax compliance work. The internal audit office said it expects to fill a vacant auditor position within weeks and will continue publishing reports after management exit conferences and oversight-committee review.

Ending Perea closed by introducing audit staff in the room and offering to answer follow-up questions; councilors thanked the auditor for the report and asked staff to continue the planned audit work.