Santa Fe finance committee hears FY25 audit; auditors flag two material weaknesses and repeated airport finding

The Santa Fe Finance Committee received a presentation of the city's fiscal year 2025 audit on the record by auditors from CRI, who reported an unmodified auditor's opinion on the financial statements but identified two material weaknesses and multiple state-audit-rule findings.

AJ Bowers, a partner with CRI, told the committee the firm issued an unmodified opinion on the FY25 financial statements, the highest standard an auditor can give. "It was a unmodified opinion," Bowers said, and he pointed members to the auditor's reports in the annual comprehensive financial report and the single-audit packet.

Why it matters: an unmodified opinion indicates the statements are fairly presented, but material weaknesses signal internal-control problems that warrant governing-body attention. Committee members pressed staff on remediation steps, timelines and recurring issues tied to the airport program.

Scope, timing and where to find the reports Bowers described the audit as covering the June 30, 2025 financial statements, plus a single audit of three major federal programs: the airport improvement program, the federal transit formula grant and the highway planning and construction program. He explained a federal compliance-supplement delay tied to a federal government shutdown required New Mexico to accept a "dual-cover" submission this cycle: the financial-statement packet was submitted by Jan. 20 and the single-audit packet by Feb. 9. The state released the financial statements on March 3 and the single-audit portion on March 16.

What the auditors found Bowers told the committee auditors reported two material weaknesses and three state-audit-rule findings. He identified the two material weaknesses as: (1) controls over construction-in-progress accounting and (2) general ledger corrections, with the latter repeated from prior years. The single-audit work on the airport improvement program produced a separate material-weakness finding that is a repeat from 2023. Other state-rule findings include a budgetary noncompliance item and cash appropriations recorded in excess of available cash balances, and an other-matter finding for stale-dated checks. Several prior-year findings were marked as corrected in the current cycle.

Counselors' questions and staff's response Councelor Castro asked whether the federal schedule delay was likely to recur; Bowers said such delays are uncommon but can happen and that the state auditor's office had been in communication while the schedules were finalized.

Councelor Lee Garcia pressed staff on the repeated airport finding and on missing historical documentation. He said the persistence of the airport issue raises public concern: "I don't think that... it's good to have material weaknesses," Garcia said, adding a goal of eliminating findings entirely. Committee members and staff acknowledged turnover in the accounting position responsible for capital assets and described recent hiring of an accounting manager whose work the administration said should help bring asset records into alignment with federal funding sources.

On remediation, auditors and staff described a practical path: inventory assets, link purchases to federal funding where possible, and use materiality and depreciation to address older, unidentified items. Bowers said auditors will look for evidence that current and future federal-funded purchases are tracked and documented; for older items without documentation, the city may need to identify them as unknown unless federal grantor records can shed light on the origin.

Next steps and committee action Committee members thanked auditors and staff for completing the audits on the revised schedule and for progress in shrinking the scope of findings. The committee did not take formal action on the audit report at the meeting; members directed staff to continue corrective measures, improve packet transparency and report progress. Chair Par Faulner said packet captions will be revised to make funding sources and reasons for caption changes explicit. The committee set its next meeting for Monday, April 6 and adjourned.

Reporting notes: The presentation was led by AJ Bowers (CRI) with accounting officer Matt Bonifer and city staff participating in questions. The audit materials (annual comprehensive financial report and single-audit report) contain the full schedule of findings and management responses.