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The Office of the State Auditor's Risk Assessment Report of the Public Regulation Commission

The Office of the State Auditor's Risk Assessment Report of the Public Regulation Commission

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Published by Shaunz Griswold

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Published by: Shaunz Griswold on Oct 15, 2011
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10/15/2011

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S
TATE OF
N
EW
M
EXICO
 O
FFICE OF THE
S
TATE
A
UDITOR
 R
ISK
A
SSESSMENT
R
EPORT
 N
EW
M
EXICO
P
UBLIC
R
EGULATION
C
OMMISSION
 
Hector H. BalderasState AuditorOctober 12, 2011
 
 
OSA
PRC Risk Assessment 2
TABLE OF CONTENTSI.
 
EXECUTIVE SUMMARY
………………………………………………………...
.3II.
 
BACKGROUND
……………………………………………………………………
.5A. Context and Procedural History
……………………………………………….
.5III.
 
RISK ANALYSIS OF WRIGHT EXPRESS GAS CARD PURCHASES
………
.8A.
 
Summary of Exhibits…………….…………………………………………….
.8B.
 
OSA
Procedures and Results………………………………………………….
..8C.
 
Agency-
wide Analysis Required……………………………………………….12
 IV.
 
RISK ASSESSMENT
OF PER DIEM AND MILEAGE……………………….
..13A.
 
OSA Procedures and Results
…………………………………………………..13
 B.
 
Agency-
wide Analysis Required……………………………………………….15
 V.
 
REFERRAL OF THE RISK ASSESSMENT REPORT
………………………...16
 VI.
 
EXHIBITS
………………………………………………………………………….
.17A.
 
2011 Monthly Calendar of Commissioner Block’s Gas Card Usage……….1
8B.
 
Vehicle Gas Cards Used
………………………………………………………..2
4C.
 
Questionable Gas Card Transactions
…………………………………………2
5
 
 
OSA
PRC Risk Assessment 3
I.
 
EXECUTIVE SUMMARY
On September 20, 2011, the Special Counsel for the House Rules ImpeachmentInvestigation Subcommittee (Subcommittee), Robert J. Gorence, requested the assistance of theOffice of the State Auditor (OSA) in providing the Subcommittee copies of documents the OSAreceived from the Public Regulation Commission (PRC) related to the potential misappropriationof state resources by the now former Commissioner Jerome J. Block. On September 21, 2011,the OSA pro
vided certain documents in response to Mr. Gorence’s request, and notified him that
the OSA planned to provide the Subcommittee with an official analysis of documents andinformation related to the allegations against Commissioner Block. The OSA also informed Mr.Gorence that the State Auditor hoped an analysis conducted by OSA auditors would assist theSubcommittee with its mission. Accordingly, this Risk Assessment Report was originallyprepared as a courtesy to the Subcommittee. The assessments contained in this report are notpart of a formal audit engagement of the PRC. Therefore, the OSA is not required to release thisreport pursuant to Section 12-6-5 NMSA 1978. The report focuses solely on the transactionsinvolving Commissioner Block and not the PRC as whole which will be addressed in a specialexamination conducted by independent public accountants (IPA)
under the OSA’s
direction. However, given the risks identified by the report related to gas and travel charges, andthe concern that others m
ay have assisted or illegally profited from Commissioner Block’s
actions, the OSA will refer this report to the Attorney General (AGO), the Tax FraudInvestigations Division of the Taxation and Revenue Department (TRD Tax and Fraud), thePRC, the Legislative Finance Committee (LFC) and the Department of Finance andAdministration (DFA).As part of the risk assessment, the OSA requested and reviewed the Wright Express(WEX) Gas Card Usage Reports for Commissioner Block from the beginning of his term inoffice, January 1, 2009, through July 31, 2011. The time period under review was based on the
 beginning of Commissioner Block’s term
through August 2, 2011, the date the PRC notified theOSA of potential fraudulent use of state-issued gas cards by Commissioner Block. Upon initialreview of WEX gas card reports, the OSA noted a high percentage of questionable and frequentgas charges; however, the lack of records (vehicle logs, etc.) made it more difficult to pinpointinappropriate use. Therefore, the OSA analyzed the reasonableness of the charges. Based on
OSA’s review of the WEX Gas Card Usage Report for Commissioner Block, the OSA identified
193 of the total 288 gas card charges as questionable gas charges. The 193 questionable gas cardcharges, for a total 2,463 gallons at a net cost of $8,189, are fully detailed in EXHIBIT C in this
Risk Assessment Report. During our review we also noted Commissioner Block’s pin number 
was used in making gas card charges on 18 different WEX gas cards. Of those 18 cards, 17 wereassigned to vehicles designated for use by specific PRC divisions or employees. The true extentof this risk needs to be further tested agency-wide. The OSA also requested and reviewed theofficial records of the PRC meeting minutes in order to compare
Commissioner Block’s
physicalattendance to gas card charges made with his pin number.
Based on OSA’s review, there appear 
to be a number of instances in which the gas card pin number assigned to Commissioner Block 

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