[Final Audit Report on the U.S. Fish and Wildlife Service Federal  Assistance Grants Administered by the State of New Mexico, Department of Game  and Fish from July 1, 2002, through June 30, 2004]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. R-GR-FWS-0001-2005

Title: Final Audit Report on the U.S. Fish and Wildlife Service
       Federal  Assistance Grants Administered by the State of
       New Mexico, Department of Game  and Fish from July 1, 2002,
       through June 30, 2004

  
Date:  September 2, 2005

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AUDIT REPORT

Memorandum

To:  Director, U.S. Fish and Wildlife Service

From:  Andrew Fedak, Director of External Audits

Subject:  Final Audit Report on the U.S. Fish and Wildlife Service Federal 
Assistance Grants Administered by the State of New Mexico, Department of Game 
and Fish from July 1, 2002, through June 30, 2004 (No. R-GR-FWS-0001-2005)

This report presents the results of our audit of costs incurred and claimed by 
the State of New Mexico, Department of Game and Fish (Department), under Federal 
Assistance grants from the U.S. Fish and Wildlife Service (FWS).  The audit 
included total outlays of approximately 
$21 million on FWS grants that were open during the Stateï¿½s fiscal years ended 
June 30, 2003 and 2004 (see Appendix 1).  The audit also covered the 
Departmentï¿½s compliance with applicable laws and regulations and FWS guidelines, 
including those related to the collection and use of hunting and fishing license 
revenue and the reporting of program income.

We found that the Department needs to make improvements in its asset management 
processes.  We also identified overcharges for in-kind contributions, which the 
Department corrected prior to the completion of our audit.

FWS Region 2 provided a response to a draft of this report dated July 25, 2005, 
which included a copy of the Departmentï¿½s July 21, 2005 response to FWS.  FWS 
concurred with audit findings and recommendations.  We summarized the FWS and 
Department responses after the recommendations, and added our comments regarding 
the responses.  The status of the recommendations is summarized in Appendix 3. 

In accordance with the Departmental Manual (361 DM 1), please provide us with 
your written response to the recommendations included in this report by December 
1, 2005.  Your response should include the information requested in Appendix 3.  

If you have any questions regarding this report, please contact me or Mr. Owen 
Nicholson, Audit Team Leader, at (703) 487-5345.

cc:  Regional Director, Region 2, U.S. Fish and Wildlife Service


Introduction

Background

The Pittman-Robertson Wildlife Restoration Act and the Dingell-Johnson Sport 
Fish Restoration Act  (Acts) 1 authorize the U.S. Fish and Wildlife Service 
(FWS) to provide Federal Assistance grants to states to enhance their sport fish 
and wildlife programs.  The Acts provide for FWS to reimburse the states up to 
75 percent of the eligible costs incurred under the grants.  They also specify 
that state hunting and fishing license revenues cannot be used for any purpose 
other than the administration of the stateï¿½s fish and game agencies.

Objective

The objectives of our audit were to determine whether costs incurred and claimed 
under Federal Assistance grants to the State of New Mexico Department of Game 
and Fish (Department) were in accordance with the Acts and related regulations, 
FWS guidelines, and the grant agreements; whether State hunting and fishing 
license revenues were used only for fish and wildlife programs; and whether 
program income was reported and used in accordance with Federal regulations.  

Scope

We conducted our audit at the Departmentï¿½s headquarters in Santa Fe, New Mexico.  
The audit work included total recorded outlays of approximately $21 million on 
41 FWS grants that were open during the Stateï¿½s fiscal years (SFYs) 2003 and 
2004 ended June 30, 2003 and 2004 (see Appendix 1).  As part of our audit, we 
also visited three area offices, two fish hatcheries, a wildlife management 
area, a waterfowl management area, a lake, a warehouse, and a boat access 
facility (see Appendix 2).  This audit supplements, and does not supplant, the 
audits required by the Single Audit Act of 1984, as amended and the Office of 
Management and Budget Circular A-133.  The audit included steps to determine 
whether: 

> The Departmentï¿½s accounting system was adequate to account for grant receipts 
and disbursements. 

> The direct and indirect costs incurred and the in-kind contributions claimed 
by the grantee under Federal Assistance grants were necessary and reasonable, 
allocable, accurate, and eligible for reimbursement.

> The hunting and fishing license certifications were based on official State of 
New Mexico records, and procedures used to prepare those certifications were 
adequate for eliminating duplicate license holders.
> The Department had an adequate system to account for and report license fee 
revenues, and those revenues were used only for the Departmentï¿½s fish and 
wildlife programs.

> Controls over real property and equipment acquired with Federal Assistance 
funds or license revenues were adequate to ensure compliance with program 
requirements.

> The Department complied with selected grant agreement provisions and 
requirements of the Acts.

> The State of New Mexico enacted assent legislation in compliance with the 
Acts.

Methodology

We performed our audit in accordance with the Government Auditing Standards 
issued by the Comptroller General of the United States.  Accordingly, we 
included such tests of records and other auditing procedures that we considered 
necessary under the circumstances.  Our tests included examining the evidence 
supporting selected expenditures charged to the grants by the Department, 
interviewing Department employees to ensure that personnel costs charged to the 
grants were supportable, and determining whether the Department used hunting and 
fishing license revenues only for fish and wildlife program purposes.  To the 
extent possible, we relied on the work of the State of New Mexicoï¿½s Single 
Auditors in order to avoid duplication of audit effort.  We did not evaluate the 
economy, efficiency or effectiveness of the Departmentï¿½s operations.

We reviewed the accounting systems for labor and license fees in order to 
identify the internal controls over transactions recorded in those systems and 
to test the operation and reliability of those controls.  We also reviewed 
transactions related to purchases, other direct costs, drawdowns of 
reimbursements, in-kind contributions, program income, and equipment/assets.  
Based on the results of our initial assessments, we assigned a level of risk to 
these systems and based on the level of risk assigned, we selected a judgmental 
sample of transactions for substantive testing.  We did not project the results 
of the substantive tests to the total population of recorded transactions.

Prior Audit Coverage

On August 1, 2002, we issued advisory report (No. 2002-E-0006), ï¿½Final Advisory 
Report on Costs Claimed by the State of New Mexico, Department of Game and Fish, 
Under Federal Aid Grants from the U.S. Fish and Wildlife Service from July 1, 
1996 to June 30, 1998.ï¿½  In addition, the State Auditor issued single audit 
reports on the Department for SFYs 2003 and 2004.

We followed up on all significant findings to determine whether they had been 
resolved.  We determined that all findings in the Single Audits and the audit of 
Federal Aid Grants had been resolved, but the Departmentï¿½s asset management 
processes still need improvement (see Asset Management).

Results of Audit

We found that:
 
> The Departmentï¿½s accounting system was generally adequate to account for grant 
receipts and disbursements.
> The direct and indirect costs claimed were necessary and reasonable, 
allocable, accurate, and eligible for reimbursement under the Federal Assistance 
grant agreements with FWS.
> Hunting and fishing license certifications were based on official State of New 
Mexico records, and procedures used to prepare those certifications were 
adequate for eliminating duplicate license holders.
> The Department had an adequate system to account for and report license fee 
revenues and disbursements, and the revenues were used only for the Departmentï¿½s 
fish and wildlife programs.
> The State had enacted adequate assent legislation.  

However, we found that the Department needs to improve its asset management 
processes.
We also identified overcharges for in-kind contributions, which the Department 
corrected prior to the completion of our audit.

Asset Management

Using the Departmentï¿½s inventory listing generated from the database for fixed 
assets2 maintained by the Departmentï¿½s Administrative Services Division, we 
inspected property at seven sites3 and the Department headquarters in Santa Fe.  
With the assistance of the staff at each location, we inspected a sample of 
computer-related items, vehicles, and equipment.  We found that some items could 
not be located, not all items were tagged, and the inventory listing contained 
inaccurate and incomplete data.  We also compared real property entries in the 
inventory listing to records maintained by the Wildlife Lands Specialist and 
found some discrepancies.

According to the Code of Federal Regulations (50 CFR ï¿½ 80.19), the State must 
maintain current and complete property records in accordance with requirements 
in the Service Manual and OMB Circular Aï¿½102.  In addition, the Departmentï¿½s 
Fixed Asset Manual requires that each fixed asset be assigned to a specific 
location and responsibility to a specific person, and be tagged at the time it 
is acquired with a unique number.  Information such as tag number, description 
of the item, date of purchase, Federal Assistance number, and assignment 
location is required to be entered in the Departmentï¿½s fixed asset inventory 
database.  Furthermore, a physical inventory of all fixed assets must be 
performed at the end of each fiscal year, and the inventory results must be 
reconciled with the inventory list to assure that fixed assets are adequately 
safeguarded and accurately reported.
 
The inventory records were inaccurate and incomplete because they were not 
updated based on the results of the physical inventories or other records 
maintained for property acquired with Federal Assistance funds or license 
revenues.  

The Department provided a fixed asset inventory listing containing 2,576 items 
valued at $69.4 million including land, capital improvements, computer-related 
items, vehicles, and equipment.  We selected a judgmental sample of 218 items 
valued at $1.7 million from a universe of 1,683 computer-related items, 
vehicles, and equipment valued at $12.6 million.  We inspected the sample items 
to verify the items existed, were properly tagged, and related data in the 
inventory listing was accurate (land and capital improvements were excluded from 
these inspections).

Of the items sampled, we could not find five items valued at $11,611 at the 
location indicated in the inventory listing; 55 items valued at $581,068 were 
not tagged; and the inventory list had incorrect data for 75 items valued at 
$465,190.  This incorrect data included items listed on the inventory that had 
been turned in to the Santa Fe headquarters, items that had been transferred to 
other locations or individuals, and items that had an incorrect Federal 
Assistance number.  

In addition, we compared land data in the fixed asset inventory listing to land 
records maintained by the Departmentï¿½s Wildlife Lands Specialist.  We found 
differences in the acquisition cost and dates acquired, and instances where the 
Federal Assistance number was incorrect or not shown on the inventory listing.

Recommendations

We recommend that FWS ensure that the Department:

1.  Accurately updates the data in the fixed asset inventory database for 
computer-related items, vehicles, and equipment based on the results of a 
current physical inventory.

2.  Reconciles land entries in the fixed asset database with the land records 
maintained by the Wildlife Lands Specialist.

Department Response

The Department concurred with the finding and recommendations, and established 
guidelines and procedures for conducting a physical inventory as well as a plan 
and schedule for implementation.

FWS Response

FWS stated that it concurred with the finding and recommendations, and will 
consider the corrective actions for Asset Management proposed by the Department 
during preparation of the corrective action plan.
OIG Comments

Although FWS concurred with the finding and recommendations, it stated that it 
will consider the Departmentï¿½s proposed actions during preparation of the 
corrective action plan.  Therefore, additional information is needed on the 
actions taken or planned to resolve the finding and implement the 
recommendations. This information should be provided in the corrective action 
plan.

Other Matters ï¿½ In-Kind Contributions

We reviewed supporting documentation for the Departmentï¿½s in-kind contributions 
for the two Aquatic Education grants (F-57-E-14 and 15) and found that some 
volunteer participant time was not adequately supported or was overstated, and 
some contribution amounts were miscalculated.  

We selected a sample of in-kind contributions for review and found some problems 
with the volunteer hours claimed and associated calculations, and support for 
some hours could not be found.  As a result, we reviewed support documentation 
for all in-kind contributions for the two Aquatic Education Program grants and 
found the same discrepancies.  We calculated the supported in-kind contributions 
as follows:


                          Per SF-269                   Per Audit 
Grant No.             In-Kind Contributions      In-Kind Contributions
F-57-E-14                 $44,439                         $28,540

F-57-E-15                 49,282                           39,407

Total                    $93,721                          $67,947


According to the Code of Federal Regulations [43 CFR ï¿½ 12.64 (b)(6)], records 
for third party in-kind contributions must be verifiable from the Stateï¿½s 
records and should be supported, to the extent feasible, by the same methods 
used to support regular personnel costs.

Volunteer instructor hours claimed and the calculations for in-kind 
contributions were not adequately reviewed and verified for accuracy, and 
support for some hours was not properly maintained.

The Department added in-kind contributions for each grant to state outlays to 
calculate the amount of federal share drawn down.  We calculated the difference 
between the federal share supported by state outlays and in-kind contributions 
and the total federal share drawn down.  The $19,330 ($11,924 + $7,406) 
difference is the questioned amount of federal share that results from the 
unsupported in-kind costs for each grant, as shown in the following table:


                       F-57-E-14                           F-57-E-15
           Per SF 269  Per OIG   Difference   Per SF 269   Per OIG  Difference

Direct
Costs      $174,196    $174,196               $172,990   $172,990
Indirect 
Costs       $22,696     $22,696                $22,827     $22,827
In-kind     $44,439     $28,540                $49,282     $39,407

  Total    $241,331    $225,432               $245,099    $235,224

Drawdown 
(75%)      $180,999    $169,075    $11,924    $183,824    $176,418    $7,406


The Department concurred with our finding and offset the $19,330 of questioned 
costs against grant No F-57-E-16 prior to our completing fieldwork.   The 
Department also established procedures to review volunteer instructor hours and 
calculations for in-kind contributions claimed and properly maintain support for 
those hours.  Therefore, no further action is necessary. 

Appendix 1
NEW MEXICO DEPARTMENT GAME AND FISH 
FINANCIAL SUMMARY OF REVIEW COVERAGE
July 1, 2002 through June 30, 2004

Grant
Grant
Total
Number
Amount
Outlays
F-55-DL-17
$447,500

$269,229

F-55-DL-18
580,000

517,331

F-55-DL-19
151,500

0

F-57-E-14
333,507

241,332

F-57-E-15
319,412

245,099

F-61-O-5
81,520

32,760

F-66-M-1
2,032,000

1,935,244

F-66-M-2
2,540,000

2,787,617

F-67-R-1
105,000

83,196

F-67-R-2
95,000

63,964

F-68-R-1
338,000

334,151

F-68-R-2
370,000

356,759

F-69-R-1
400,000

377,734

F-69-R-2
350,000

385,642

F-70-M-1
535,000

507,412

F-70-M-2
669,000

702,340

F-71-B-1
3,000,000

422,709

FW-14-C-61
181,500

198,355

FW-14-C-62
213,100

41,930

FW-14-C-63
189,000

0

FW-17-R-30
464,000

370,904

FW-17-RD-31
457,200

474,436

FW-24-TG-17
519,136

483,289

FW-24-TG-18
537,852

362,672

FW-26-DL-11
593,852

545,179

FW-26-DL-12
749,677

716,000

FW-32-O-3
100,000

32,490

W-93-R-44
3,373,690

2,839,563

W-93-R-45
2,942,000

2,887,018

W-99-D-43
588,347

456,202

W-99-D-44
619,241

671,454

W-120-S-32
319,007

352,465

W-120-S-33
521,779

485,482

W-137-R-3
49,486

15,385

W-137-R-4
32,561

23,419

W-138-R-1
185,475

139,634

W-138-R-2
185,500

188,747

W-139-R-1
158,000

157,040

W-139-R-2
169,000

172,829

W-140-R-1
102,000

41,650

W-140-R-2
30,000

29,155


$25,628,842

$20,947,817



Appendix 2

NEW MEXCIO DEPARTMENT OF GAME AND FISH SITES VISITED

Area Offices
Albuquerque
Las Cruces
Raton

Hatcheries
Lisboa
Red River

Other Sites
Bernardo Waterfowl Management Area 
Colin Neblett Wildlife Management Area
Eagle Nest Lake
Elephant Butte Lake Boat Ramps
Santa Fe Warehouse

Appendix 3

NEW MEXICO DEPARTMENT OF GAME AND FISH STATUS OF AUDIT FINDINGS AND 
RECOMMENDATIONS

Recommendations:  1 and 2

Status:  Management Concurs; Additional Information Needed

Action Required:  Provide a corrective action plan that identifies the actions 
taken or planned to resolve the findings and implement the recommendations, as 
well as the basis for any disagreement with the recommendations.  The plan 
should also include the target date and the official responsible for 
implementation of each recommendation. The unimplemented recommendations 
remaining at the end of 90 days (after December 2, 2005) will be referred to the 
Assistant Secretary for Policy, Management and Budget for resolution and/or 
tracking of implementation.