New Mexico Administrative Code
Title 12 - TRADE, COMMERCE AND BANKING
Chapter 26 - CEMETERIES
Part 8 - CERTIFIED AUDIT
Section 12.26.8.8 - CERTIFIED AUDIT
Current through Register Vol. 35, No. 6, March 26, 2024
For the purposes of Section 58-17-13(A) of the Act, a "certified audit" shall consist of the following procedures.
A. Obtain the entire population of contracts used in the cemetery operation representing all sales occurring in a specific year.
B. Determine that there are no missing contracts. Verify that the first contract in the current year is the next contract after the last contract of the previous year.
C. Depending on the volume of business transacted, choose two or more months, at random, in order to reduce the "test size" of the examination.
D. Review all of the contracts in each sample, and tally all sales of endowed care properties. Calculate the proper amount to be placed in trust in accordance with the Act.
E. Obtain cemetery deposit records and compare the recording of deposits to the result of the calculation performed under paragraph 8.1.4 of this section [now Subsection D of 12.26.8.8 NMAC].
F. Obtain bank trust account statements and review the deposits.
G. Ensure that the deposits are sufficient in amount. Note: Section 58-17-6 of the Act allows a cemetery authority to make deposits on installments on a pro-rata basis. Contracts for the sale of numerous goods and services that include the sale of endowed care property are common. Determine what proportion to the total sale the endowed care sale represents. Multiply that factor times the installment payment and then determine the required statutory percentage.
Example:
Total contract sale . . . . . . . . $1,000.00
Endowed care sale (plot) . . . $ 750.00
Endowed care sale = 75% of the total sale.
Installment of $100.00/month for 10 months.
$100.00 x .75 = $75.00
$75.00 x .25 = $18.75 required deposit to trust fund.
Check point: $750.00 x .25 = $187.50
$ 18.75 x 10 installments = $187.50
Review Section 58-17-6 of the Act for compliance.
H. Ensure that the deposits are made on a timely basis. Compare the date of deposit to the date of close of the month in which monies were received. Not more than thirty days should have elapsed.
I. Trace trust account disbursements from the bank to the cemetery's record(s) of expenditures. Acceptable expenditures are those listed under the definition of "endowed care". Note: cemeteries should have accounting controls and procedures to enable an examiner to trace bank disbursements to specific expenditures.
