DALLAS — Standard & Poor’s on Wednesday placed the New Mexico Finance Authority’s AAA rating on watch list for a possible downgrade in the wake of disclosures that the authority’s most recent audit was phony.

“While the rating on the bonds reflects multiple credit factors, the potential lack of oversight or fraud regarding the authority’s financial position could result in a lower rating,” said Standard & Poor’s analyst James Breeding. The NMFA’s AA-rated subordinate-lien bonds are also on watch list for downgrade.

The action follows Moody’s Investors Service’s July 13 announcement that the NMFA’s Aa1 senior rating and Aa2 subordinate-lien rating were on negative outlooks for possible downgrade.

NMFA officials said last week that they learned from New Mexico state auditor Hector Balderas that a fiscal 2011-12 audit attributed to the accounting firm Clifton Gunderson LLP had not been conducted. Former NMFA controller Greg Campbell vouched for the audit that Clifton Gunderson said it never conducted, according to reports.

A forged cover letter purporting to be from the auditing firm appeared on the NMFA’s website and in its investment materials, officials said. However, the auditor received about $130,000 from the authority for the 2011 audit it never completed, according to the Albuquerque Journal.

“We provided a lot of faith in this individual,” NMFA chief executive Richard May told the Journal, referring to the ex-controller. “Looking back, clearly that was a mistake.”

In an investigation that is expected to cost $740,000, the accounting firm KPMG is conducting a forensic accounting investigation with a goal of completing the audit. The law firm of Steptoe & Johnson is investigating any illegalities and will make recommendations to the NMFA, officials said.

“In addition to communicating with rating agencies, investors and public officials, we have, in accordance with New Mexico law, notified the appropriate law enforcement authorities,” May said in a prepared statement. “This matter is deeply concerning but it will have no effect on NMFA’s ability to meet its financial obligations.”

New Mexico has been hit by several financial scandals, including a federal investigation of Democratic former Gov. Bill Richardson’s transportation bond program.

Current Gov. Susana Martinez, a Republican, has issued no official statement regarding the scandal, but the Journal reported that she was skeptical about the investigation.

The state auditor and Division of Regulation and Licensing also have said they are investigating how the fake audit developed.

“We expect to resolve the CreditWatch placement within 90 days,” Breeding wrote. “Should a restatement of the fiscal 2011 audit show a considerable change to loan payment receipts or reserve levels available to cure defaults or delinquencies, we will raise or lower the ratings accordingly.” 

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