The Public Finance Accountability Act establishes new funding criteria and grant management requirements for state agencies in New Mexico. It mandates that grantees must complete an annual audit for one of the past two fiscal years to be eligible for capital outlay appropriations or special purpose appropriations. If a grantee's audit reveals material weaknesses or significant deficiencies, they must create an actionable plan to address these issues, with support from the state agency. Additionally, the act outlines specific conditions for grantees not required to have annual audits, ensuring they demonstrate adequate accounting methods and compliance with financial reporting requirements.

The act also delineates the duties of the Department of Finance and Administration, which include developing procedures and templates for grant agreements, monitoring compliance with the established funding criteria, and conducting field audits of capital outlay projects. The effective date for the provisions of this act is set for July 1, 2025. Overall, the legislation aims to enhance accountability and oversight in the management of public funds in New Mexico.