ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I

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1 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I COMPREHENSIVE FINANCIAL ANNUAL REPORT AND SUPPLEMENTAL INFORMATION YEAR ENDED JUNE 30, 2016 WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

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3 INTRODUCTORY SECTION i P age

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5 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I TABLE OF CONTENTS Year Ended June 30, 2016 INTRODUCTORY SECTION Page Title Page Table of Contents iii Official Roster 1 FINANCIAL SECTION Independent Auditors' Report 5 Management s Discussion and Analysis 8 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position 13 Statement of Activities 14 Fund Financial Statements: Balance Sheet Governmental Funds 15 Reconciliation of the Balance Sheet All Governmental Funds to the Statement of Net Position 16 Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds 17 Reconciliation of the Statement of Revenue, Expenditures, and Changes In Fund Balance All Governmental Funds to the Statement of Activities 18 Major Funds: Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Budgetary Basis): General Fund 19 Notes to the Financial Statements 21 OTHER SUPPLEMENTAL INFORMATION Schedule of Vendor Information 41 GOVERNMENTAL REPORTING SECTION Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance With Government Auditing Standards 47 Summary Schedule of Prior Year Audit Findings 49 Schedule of Findings and Responses 51 REQUIRED DISCLOSURE 55 iii P age

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7 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I OFFICIAL ROSTER June 30, 2016 District Attorneys Rick Tedrow District Attorney John Beckstead Senior Trial Attorney Dustin O'Brien Chief Deputy District Attorney Trevor Maveal Senior Trial Attorney R. Brent Capshaw Chief Deputy District Attorney Keith Mandelski Senior Trial Attorney David Cowen Deputy District Attorney Karen Etcitty Trial Attorney Michael Sanchez Deputy District Attorney Even Cochnar Trial Attorney Marcus Blais Deputy District Attorney Brian Decker Trial Attorney Ronald Brambl, Jr. Deputy District Attorney Kurtis Donisthorpe Assistant Trial Attorney Chris Spinner Senior Trial Attorney Ashley Londy Assistant Trial Attorney Joseph Petrelli Senior Trial Attorney Jacob Maule Assistant Trial Attorney Administration Lori Holesinger HR Administrator Orlinda Ashley Legal Assistant Supervisor Amy Haun Financial Manager/CFO Tom Brown Lead Investigator Rachon Amick Financial Specialist Supervisor Brittany Hill Victim-Witness Administrator LaVergne Kovacs Special Program Director Darla Evans IT Administrator 1 P age

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9 FINANCIAL SECTION FISCAL YEAR 2016 JULY 1, 2015 THROUGH JUNE 30, P age

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11 INDEPENDENT AUDITORS' REPORT Tim Keller, State Auditor, and Rick Tedrow State of New Mexico of Eleventh Judicial District Attorney, Division I Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the major fund, the aggregate remaining fund information, and the budgetary comparisons for the general fund of State of New Mexico, Eleventh Judicial District Attorney, Division I (the District Attorney), as of and for the year ended June 30, 2016, and the related notes to the financial statements which collectively comprise the District Attorney s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District Attorney s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the major fund, and the aggregate remaining fund information of State of New Mexico, Eleventh Judicial District Attorney, Division I, as of June 30, 2016, and the respective changes in financial position thereof and the respective budgetary comparisons for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the financial statements of the District Attorney are intended to present the respective financial position, and the changes in respective financial position, of only that portion of the governmental activities, each major fund, the aggregate remaining fund information, and the budgetary comparisons for the general fund and major special revenue fund of the State of New Mexico that is attributable to the transactions of the Eleventh Judicial District Attorney, Division I. They do not purport to and do not, present fairly the financial position of the State of New Mexico, as of June 30, 2016, and the changes in its financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. 5 P age 4801 N Butler Ave. Ste 8101 Telephone (505) Farmington, NM afs@afsolutions-cpa.com Fax (505)

12 Tim Keller, State Auditor, and Rick Tedrow State of New Mexico of Eleventh Judicial District Attorney, Division I Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 8-10 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Eleventh Judicial District Attorney, Division I s basic financial statements, and the budgetary comparisons. The other schedules required by NMAC are presented for purposes of additional analysis and are not a required part of the basic financial statements. The other schedules required by NMAC are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with the auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures and other schedules required by NMAC are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The schedule of vendor information, which is required by the State Auditor Rule has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2016 on our consideration of the Eleventh Judicial District Attorney's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Eleventh Judicial District Attorney, Division I s internal control over financial reporting and compliance. Farmington, NM November 18, P age 4801 N Butler Ave. Ste 8101 Telephone (505) Farmington, NM afs@afsolutions-cpa.com Fax (505)

13 MANAGEMENT S DISCUSSION AND ANALYSIS 7 P age

14 OVERVIEW OF THE FINANCIAL STATEMENTS STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2016 The financial statements consist of the following: government-wide financial statements, governmental funds statements and a reconciling statement for all. S Schedule of Expenditures of Federal Awards (SEFA) is not required therefore; a schedule of federal revenue & expenditures is included as item E of the Notes section. Basic Financial Statements (Statement of Net Assets and Statement of Activities) Basic financial statements report information about the Eleventh Judicial District Attorney, Division I, as a whole; using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government assets, deferred outflows, liabilities and deferred inflows. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The basic financial statements report the Eleventh Judicial District Attorney, Division I s net position and how it has changed. Fund Financial Statements (Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance) The fund financial statements provide more detailed information about the Eleventh Judicial District Attorney, Division 1 s significant funds. Funds are accounting devices that the Eleventh Judicial District Attorney, Division I uses to keep track of specific sources of funding and spending for particular purposes. The Eleventh Judicial District Attorney, Division I operates on State General Fund appropriations, federal grant awards, and local government revenues. Income sources or programs are tracked using department codes. Analysis of Financial Position (Statement of Net Position) Total Assets: Cash of $637,786 on deposit with the State Treasurer, cash on hand of $250, net receivables of $67,913 and capital assets of $139,389. Total assets are $845,338. Total Liabilities: Net Position: Result of Operations: Total Revenues: Total Expense: Net Accounts Payable $69,711, accrued payroll $216,282, and accrued compensated absences $177,466. Total liabilities are $463,459. Total net position is $381,879. Including $139,389 invested in capital assets, and the remainder is unrestricted. (Statement of Activities) Consists of $3,612,700 general revenue and $254,849 grant revenue. Total revenues are $3,867,549 for operational purposes. State General Fund appropriations and Federal awards provide the majority of the revenue. Consists of $4,248,800 mainly for operational, employee salaries and benefits and operating costs. 8 P age

15 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2016 Analysis of District Attorney's Overall Financial Position and Result Operations (Condensed) Assets: Current and other assets $ 705, ,244 Capital assets 139, ,421 Total assets 845,338 1,118,665 Liabilities 463, ,455 Net position: Invested in capital assets 139, ,421 Unrestricted 242, ,789 Total net position 381, ,210 Total Net Position and Liabilities $ 845,338 1,118,665 Revenue: Program revenue 259, ,213 Appropriations (net of reversion) 3,607,700 3,464,741 Total revenues 3,867,549 3,703,954 Expenses: Personnel services 3,828,319 3,817,109 Contractual services 65,250 25,009 Other costs 267, ,162 Total expenses 4,161,536 4,058,280 Unadjusted (Decrease) in net assets (293,987) (354,326) 9 P age

16 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I Management s Discussion and Analysis (UNAUDITED) For The Year Ended June 30, 2016 Total assets decreased in 2016 as we disposed of unusable assets and the use fund balance for operational expenses during the year was necessary. Total liabilities are higher in 2016 as accounts payable, accrued payroll (90/10 split) and accrued compensated absences all went up mostly due to timing. Program revenue is slightly higher due to an increase in federal grant funding, and appropriations increased. Total expenses increased due to a slight increase in personnel services, a special prosecution contract and the purchase of necessary equipment and assets. Analysis of Significant Changes in Individual Funds No significant changes in funds occurred. Analysis of Significant Budget Variances No significant budget variances occurred. Significant Capital Asset and Long-Term Debt Activity Capital assets decreased even though two vehicles were purchased due to a mass disposal of unusable assets and depreciation. No long-term debt is reported because accrued compensated absences are all reported as due within one (short-term) for which the Eleventh Judicial District Attorney, Division I will pay out when vacation is taken or employees are terminated. General Fund Budgetary Highlights The State of New Mexico, Office of the District Attorney, Eleventh Judicial District, Division I intends to continue to submit budget requests to the legislature for increased General Fund, and will continue to seek out sources of federal funds or other grants and MOUs. The State Legislature makes annual appropriations to the State of New Mexico, Office of the District Attorney, Eleventh Judicial District Division I. Amendments to the budget require approval by the Budget Division of the Department of Finance and Administration (DFA). Over the course of the year, the State of New Mexico, Office of the District Attorney, Eleventh Judicial District Division I revised its budget. These budget amendments fall into two categories: Reallocation of appropriations to prevent budget overruns. Increases to revenue for grant increases or new funds. Currently Known Facts Expected to Have a Significant Effect on the Agency Financials At the time of this report there are no known facts, decisions, or conditions that are expected to have an effect on the financial position or results of operations. Fiscal Year 2017 budget reductions are concerning and we are hopeful that no further budget reductions are necessary for the state to balance the budget. Agency Contact Information Eleventh Judicial District Attorney, Division I 335 South Miller Avenue Farmington, NM Amy Haun, CFO X P age

17 BASIC FINANCIAL STATEMENTS 11 P age

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19 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I STATEMENT OF NET POSITION June 30, 2016 Governmental Activities Assets Investment in the state treasurer general fund investment pool $ 637,786 Petty Cash 250 Other Receivables 7 Due from federal government 15,188 Due from other state agencies 52,718 Non-current: Depreciable capital assets, net 139,389 Total assets $ 845,338 Liabilities Accounts payable $ 69,681 Due to other funds 30 Accrued salaries and wages 216,282 Accrued compensated absenses 177,466 Total liabilities 463,459 Net Position Net investment in capital assets 139,389 Unrestricted 242,490 Total net position $ 381,879 Total liabilities and fund balance $ 845,338 The notes to the financial statements are an integral part of this statement. 13 P a g e

20 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I STATEMENT OF ACTIVITIES Year Ended June 30, 2016 Net (Expense) Revenue and Program Revenues Changes in Net Position Charges for Operating Grants Capital Grants Governmental Functions/Programs Expenses Services and Contributions and Contibutions Activities Primary government: Governmental activities: Judicial government: Personnel services and benefits $ 3,828,319 $ - $ 244,585 $ - $ (3,583,734) Contractual services 65, (65,250) Operating costs 267,967-10,264 - (257,703) Depreciation expense 87, (87,344) Total governmental activities $ 4,248,880 $ - $ 254,849 $ - $ (3,994,031) General revenue: State appropriations - regular $ 3,607,700 Gain (loss) on sale of capital assets - Miscellaneous income 5,000 Total general revenues $ 3,612,700 Change in net position (381,331) Net position - beginning 763,210 Net position - ending $ 381, P a g e The notes to the financial statements are an integral part of this statement.

21 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I GOVERNMENTAL FUNDS Balance Sheet June 30, 2016 Assets Current assets: General Fund #165 Investment in the state treasurer pool $ 637,786 Petty Cash 250 Other Receivable 7 Due from federal government 15,188 Due from other state agencies 52,718 Total assets $ 705,949 Liabilities and Fund Balance Current liabilities: Accounts payable $ 69,681 Accrued payroll 216,282 Due to other state agencies 30 Total liabilities 285,993 Fund balance: Assigned 189,910 Unassigned 230,046 Total fund balance 419,956 Total liabilities and fund balance $ 705,949 The notes to the financial statements are an integral part of this statement. 15 P a g e

22 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I RECONCILIATION OF THE BALANCE SHEET-ALL GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2016 Amounts reported for governemental activities in the statement of Net Position are different because: Net position - total governmental funds $ 419,956 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital assets 769,438 Accumulated depreciation (630,049) Long-term liabililities, are not due and payable in the current period and therefore are not reported in the funds. Accrued vacation payable (177,466) Net position of governmental activities $ 381, P a g e The notes to the financial statements are an integral part of this statement.

23 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I GOVERNMENTAL FUNDS Statement of Revenues, Expenditures, and Changes in Fund Balance Year Ended June 30, 2016 General Fund #165 Revenues: Federal grants $ 254,849 Miscellaneous 5,000 Total revenues 259,849 Expenditures: Current: Judicial government: Personnel services and benefits 3,820,222 Contractual services 65,250 Operating costs 267,967 Capital outlay 52,312 Total expenditures 4,205,751 Deficiency of revenues over expenditures (3,945,902) Other financing sources: State appropriations - regular 3,607,700 Net change in fund balance (338,202) Fund balance at beginning of the year 758,158 Fund balance at end of the year $ 419,956 The notes to the financial statements are an integral part of this statement. 17 P a g e

24 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year Ended June 30, 2016 Amounts reported for governemental activities in the statement of activities are different because: Net change in fund balance - total governmental funds $ (338,202) Govermental funds report capital outlays as expenditures. However, in the statement of activites the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital oulays in the current year Capital outlay 59,173 Depreciation (94,205) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences at: June 30, 2016 (177,466) June 30, ,369 Loss on asset disposal - Change in net position of governmental activities $ (381,331) 18 P a g e The notes to the financial statements are an integral part of this statement.

25 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I GENERAL FUND Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2016 Variance with Final Budget Budgeted Amounts Actual Amounts Positive Original Final (Budgetary Basis) (Negative) Revenues: Federal grants $ 218,100 $ 276,236 $ 254,849 $ (21,387) Miscellaneous - 5,000 5,000 - Total revenues 218, , ,849 (21,387) Expenditures: Current: Personnel services and benefits 3,998,500 3,968,554 3,820, ,332 Contractual services 76,100 65,500 65, Operating costs 213, , ,967 49,515 Total general government 4,288,400 4,351,536 4,153, ,097 Capital outlay: Equipment ,312 (52,312) Total expenditures 4,288,400 4,351,536 4,205, ,785 over expenditures (4,070,300) (4,070,300) (3,945,902) 124,398 Other financing sources: State appropriations - regular 3,629,400 3,607,700 3,607,700 - Net change in fund balance (440,900) (462,600) (338,202) 124,398 Beginning cash balance budgeted 440, ,600 - (462,600) Fund balance at beginning of the year , ,158 Fund balance at end of the year $ - $ - 419,956 $ 419,956 RECONCILIATION TO GAAP BASIS: Change in deferred revenue - Fund balance at end of the year (GAAP basis) $ 419,956 The notes to the financial statements are an integral part of this statement. 19 P a g e

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27 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE PAGE I. SUMMARY OF ALL SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity Blended Component Units 2. Discretely Presented Component Units B. Government-Wide and Fund Financial Statements 23 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Major Funds 27 D. Assets, Liabilities, and Net Position or Equity 27 II. III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary Information 31 B. Budgetary Violations 32 C. Deficit Fund Equity 32 DETAILED NOTES ON ALL FUNDS A. Cash and Temporary Investments 32 B. Receivables 34 C. Capital Assets 34 D. Compensated Absences 34 E. Federal Revenue & Expenditures 35 F. Federal Receivables 35 G. Reversions 35 H. Fund Balances 35 I. Lease Commitments 36 IV. OTHER INFORMATION 36 STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I 21 P age

28 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 I. SUMMARY OF ALL SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The District Attorney is an elective office established by the constitution of the State of New Mexico, Article VI, Section 24. The State of New Mexico, Eleventh Judicial District Attorney (the District Attorney) operates under Section through NMSA 1978 as amended. The District Attorney is elected to a four year term. On July 1, 1984, the State of New Mexico appropriated money from the General Fund to run the office Division I & Division II as separate legal entities. The District Attorney office covers McKinley and San Juan Counties and operates from two separate offices located in Farmington and Gallup as the office of Division I and II. These financial statements include the operations of the Eleventh Judicial District Attorney, Division I (Farmington, NM & San Juan County), a department of the State of New Mexico, the primary government. The District Attorney s primary responsibility is to prosecute and defend the state of New Mexico in all courts of record, in all criminal and civil cases in which the state or any county in the district may be a party. When requested by the Board of County Commissioners (the Board), the District Attorney must represent the counties in the district, and advise all county and state officers. The District Attorney is required to represent the counties in the district before the Supreme Court or Court of Appeals in all civil cases (except those brought in the name of the state) concerning the counties. When the Board is sitting as a Board of Equalization, the District Attorney may also appear before the Board, without a request. Section 36-1A-1 through 16-1A-15 (the District Attorney Personnel and Compensation Act) established for all district attorneys a uniform, equitable, and binding system of personnel administration. The District Attorney is included in the State of New Mexico Comprehensive Annual Financial Report, but is legally separate and fiscally independent of other state agencies, and has decision-making authority. The Eleventh Judicial District Attorney is a part of the judicial branch of the State of New Mexico and these financial statements include all funds and activities over which the District Attorney has oversight responsibility. Oversight responsibility includes such aspects as designation of management, the ability to significantly influence operations, and accountability for fiscal matters. Based upon the application of these criteria, no component units or fiduciary units were included in the financial statements. The Eleventh Judicial District Attorney, Division I, is not included in any other government reporting entity as described in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards. Generally Accepted Accounting Principles (GAAP) requires that financial statements present the District Attorney (primary government) and its component units. The District Attorney has no component units that are required to be presented in accordance with Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity and GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units, an amendment of GASB Statement No Blended Component Units The District Attorney does not have any component units reported as blended component units. 2. Discretely Presented Component Units The District Attorney does not have any component units reported as discretely presented component units. The summary of significant accounting policies of the District Attorney is presented to assist in the understanding of the District Attorney s financial statements. The financial statements and notes are the representation of District Attorney s management who is responsible for their integrity and objectivity. The financial statements of the District Attorney conform to GAAP as applied to governmental units. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government s accounting policies are described below. STATE OF NEW MEXICO 22 P age ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I

29 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the District Attorney. For the most part, the effect of inter-fund activity has been removed from these statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation During fiscal year 2016, the District Attorney adopted the following GASB Statements: GASB 72, Fair Value Measurement and Application, This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. GASB 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, this Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans and Statement 68 for pension plans and pensions that are within their respective scopes. GASB 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify in the context of the current governmental financial reporting environment the hierarchy of generally accepted accounting principles (GAAP). The GAAP hierarchy consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. This Statement will be effective for the year ended June 30, STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I 23 P age

30 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (cont d) GASB 79, Certain External Investment Pools and Pool Participants, this Statement addresses accounting and financial reporting for certain external investment pools and pool participants. Specifically, it establishes criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. An external investment pool qualifies for that reporting if it meets all of the applicable criteria established in this Statement. The specific criteria address (1) how the external investment pool transacts with participants; (2) requirements for portfolio maturity, quality, diversification, and liquidity; and (3) calculation and requirements of a shadow price. Significant noncompliance prevents the external investment pool from measuring all of its investments at amortized cost for financial reporting purposes. Professional judgment is required to determine if instances of noncompliance with the criteria established by this Statement during the reporting period, individually or in the aggregate, were significant. If an external investment pool does not meet the criteria established by this Statement, that pool should apply the provisions in paragraph 16 of Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as amended. If an external investment pool meets the criteria in this Statement and measures all of its investments at amortized cost, the pool s participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. If an external investment pool does not meet the criteria in this Statement, the pool s participants should measure their investments in that pool at fair value, as provided in paragraph 11 of Statement 31, as amended. This Statement establishes additional note disclosure requirements for qualifying external investment pools that measure all of their investments at amortized cost for financial reporting purposes and for governments that participate in those pools. Those disclosures for both the qualifying external investment pools and their participants include information about any limitations or restrictions on participant withdrawals. The requirements of this Statement are effective for reporting periods beginning after June 15, 2015 (FYE June 30, 2016), except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective for reporting periods beginning after December 15, 2015 (FYE June 30, 2017). Earlier application is encouraged. Other accounting standards that the District Attorney is currently reviewing for applicability and potential impact on the financial statements include: GASB 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. This Statement will be effective for the year ended June 30, GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, this Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. This Statement will be effective for the year ended June 30, STATE OF NEW MEXICO 24 P age ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I

31 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (cont d) GASB 77, Tax Abatement Disclosures, financial statements prepared by state and local governments in conformity with generally accepted accounting principles provide citizens and taxpayers, legislative and oversight bodies, municipal bond analysts, and others with information they need to evaluate the financial health of governments, make decisions, and assess accountability. This information is intended, among other things, to assist these users of financial statements in assessing (1) whether a government s current-year revenues were sufficient to pay for current-year services (known as inter-period equity), (2) whether a government complied with finance-related legal and contractual obligations, (3) where a government s financial resources come from and how it uses them, and (4) a government s financial position and economic condition and how they have changed over time. Financial statement users need information about certain limitations on a government s ability to raise resources. This includes limitations on revenue-raising capacity resulting from government programs that use tax abatements to induce behavior by individuals and entities that is beneficial to the government or its citizens. Tax abatements are widely used by state and local governments, particularly to encourage economic development. For financial reporting purposes, this Statement defines a tax abatement as resulting from an agreement between a government and an individual or entity in which the government promises to forgo tax revenues and the individual or entity promises to subsequently take a specific action that contributes to economic development or otherwise benefits the government or its citizens. Although many governments offer tax abatements and provide information to the public about them, they do not always provide the information necessary to assess how tax abatements affect their financial position and results of operations, including their ability to raise resources in the future. This Statement requires disclosure of tax abatement information about (1) a reporting government s own tax abatement agreements and (2) those that are entered into by other governments and that reduce the reporting government s tax revenues. This Statement requires governments that enter into tax abatement agreements to disclose the following information about the agreements: Brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by tax abatement recipients The gross dollar amount of taxes abated during the period Commitments made by a government, other than to abate taxes, as part of a tax abatement agreement. Governments should organize those disclosures by major tax abatement program and may disclose information for individual tax abatement agreements within those programs. Tax abatement agreements of other governments should be organized by the government that entered into the tax abatement agreement and the specific tax being abated. Governments may disclose information for individual tax abatement agreements of other governments within the specific tax being abated. For those tax abatement agreements, a reporting government should disclose: The names of the governments that entered into the agreements The specific taxes being abated The gross dollar amount of taxes abated during the period. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2015 (FYE June 30, 2017). Earlier application is encouraged. STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I 25 P age

32 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (cont d) GASB 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, the objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such pensions. Prior to the issuance of this Statement, the requirements of Statement 68 applied to the financial statements of all state and local governmental employers whose employees are provided with pensions through pension plans that are administered through trusts that meet the criteria in paragraph 4 of that Statement. This Statement amends the scope and applicability of Statement 68 to exclude pensions provided to employees of state or local governmental employers through a cost-sharing multiple-employer defined benefit pension plan that (1) is not a state or local governmental pension plan, (2) is used to provide defined benefit pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers, and (3) has no predominant state or local governmental employer (either individually or collectively with other state or local governmental employers that provide pensions through the pension plan). This Statement establishes requirements for recognition and measurement of pension expense, expenditures, and liabilities; note disclosures; and required supplementary information for pensions that have the characteristics described above. The requirements of this Statement are effective for reporting periods beginning after December 15, 2015 (FYE June 30, 2017). Earlier application is encouraged. GASB 80, Blending Requirements for Certain Component Units an amendment of GASB Statement No. 14, the objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. This Statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-forprofit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units. The requirements of this Statement are effective for reporting periods beginning after June 15, 2016 (FYE June 30, 2017). Earlier application is encouraged. GASB 81, Irrevocable Split-Interest Agreements, The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. Split-interest agreements are a type of giving agreement used by donors to provide resources to two or more beneficiaries, including governments. Split-interest agreements can be created through trusts or other legally enforceable agreements with characteristics that are equivalent to split-interest agreements in which a donor transfers resources to an intermediary to hold and administer for the benefit of a government and at least one other beneficiary. Examples of these types of agreements include charitable lead trusts, charitable remainder trusts, and life-interests in real estate. This Statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this Statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This Statement requires that a government recognize revenue when the resources become applicable to the reporting period. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016 (FYE June 30, 2018), and should be applied retroactively. Earlier application is encouraged. STATE OF NEW MEXICO 26 P age ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I

33 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (cont d) GASB 82, Pension Issues an amendment of GASB Statements No. 67, No. 68, and No. 73, the objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The requirements of this Statement are effective for reporting periods beginning after June 15, 2016 (FYE June 30, 2017), except for the requirements of this Statement for the selection of assumptions in a circumstance in which an employer s pension liability is measured as of a date other than the employer s most recent fiscal year-end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017 (FYE June 30, 2018). Earlier application is encouraged. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. All other revenue items are considered to be measurable and available only when the cash is received by the District Attorney. The accounts of the Eleventh Judicial District Attorney are organized on a fund basis, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise assets, liabilities, fund equity, revenues and expenditures. Governmental resources are allocated to and accounted for in individual funds based upon the purpose for which spending activities are controlled. The government reports the following major governmental fund: General Fund The general fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. D. Assets, Liabilities, and Net Position or Equity 1. Investment with the state treasurer The government s cash and cash equivalents are considered to be demand deposits with the State Treasurer. 2. Receivables and payables Intergovernmental receivable consists of amounts due from various New Mexico State Agencies. STATE OF NEW MEXICO ELEVENTH JUDICIAL DISTRICT ATTORNEY, DIVISION I 27 P age