No one at City Hall could have reasonably expected a positive outcome for the audit that was five months late. But the public's first look at the tardy audit is blistering, even considering the public relations work the city has done to warn that the results wouldn't be pretty.

The financial review found egregious levels of financial tracking weakness across wide parts of city government during year ending June 30, 2017.

Most seriously, according to State Auditor Wayne Johnson, the city can't effectively track costs for construction projects. That work is done manually and every project in the city flows through a single person—an unsustainable practice, auditors said. The financial review found Santa Fe is not keeping track of property as large as vehicles, and city staff couldn't find water meters to prove that they were in place, as accounts claimed they were.

Customers of the city's water, sewer and trash services had been given credits by the utilities, but those credits hadn't been properly applied to balances, rendering them useless and effectively ripping off city utility customers. Someone erroneously credited an payment of more than $1 million to a customer that wasn't caught by supervisors or senior financial staff.

"The findings showcase some real deficiencies," Mayor Alan Webber said in a news release late Friday morning. He reiterated his belief that the audit and the earlier review would provide a sort of road map for improving the city's financial performance. "Taken as a whole with the McHard report, the audit gives us the information we need to attack this problem head-on—to change the way city business is conducted."

Webber referenced the release last week of a corrective action plan, which addressed in advance some of the restructuring the city believes is needed in the Finance Department, including hiring for two new oversight positions. The city also plans to outsource auditing functions previously handled by an internal position. It's in the process of hiring a firm that will conduct a risk assessment, develop an audit plan for up to 10 audits in the next year and complete the top item on that list.

As recently as Wednesday, the city's Audit Committee and acting finance director were expecting the audit to be released at the beginning of next week, in line with standard practice at the Office of the State Auditor. But on Thursday evening at 5 pm, the city requested a waiver to allow it to release the audit on Friday. City leaders have already seen its findings, and the decision bore the hallmark of a Friday afternoon "news dump" tactic in which bad news is released right before the weekend, when the public is less focused on city matters.

After issuing a short news release late Friday morning, a city spokesman said the mayor had events scheduled in the afternoon and was trying to schedule phone calls between them. He later called to say the mayor met with city finance staff Friday morning and that there was no reason following the meeting to delay the audit's release. He did not make the mayor available for questions.

In its response to the audit, the city acknowledged financial management shortcomings, such as misstating the amount of bond proceeds from 2016 by $280,000; making an $86,000 entry to balance an account for revenue from liquor licenses six months after the end of the fiscal year; and failing to properly record a $93,611 payment to a city vendor.

The city also admitted that Santa Fe's tracking of construction projects was abysmal. Auditors weren't able to test the category because the city didn't have documentation to substantiate any of the costs for the project auditors selected. They did not reveal the nature of the construction project.

Auditors randomly chose 29 assets from the city's inventory to test. One of those assets was never found. Another had been auctioned off seven years earlier but was still on city books. One couldn't be identified as city property by tag. Five city-owned vehicles didn't have the right identifiers, including unmatched vehicle identification numbers and license plates. Tracking of city property was so lacking that city leaders refused sign a letter affirming the current value of its inventory.

While city leaders took great pains last fall to absolve lower-level city employees of responsibility following the jarring review of city finances by McHard Accounting Consulting, the official audit was blunt about the importance of hiring the right people: "The city needs to ensure the Accounting and Reporting Department is staffed with individuals who fully understand the [Comprehensive Annual Financial Review] and accounting process." Auditors repeated that urging at other points in their review.

The city's 2018 fiscal year ends in less than two weeks, and it's just now closing the books on the fiscal year that ended in June 2017. Typically, the Office of the State Auditor considers such reviews delinquent if they're not submitted by the middle of December.

This story has been updated to include a partial response from the city.