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Analysis Of SD Development Office Released

January 30, 2014, 11:19 AM by Ben Dunsmoor

Analysis Of SD Development Office Released

The internal reviews ordered after revelations of misconduct in the South Dakota economic development office did not find any major deficiencies.

Two reviews of the Governor’s Office of Economic Development, and the programs it administers, were released Thursday and turned up a few weaknesses but no glaring gaps in procedures.

“We are pleased that nothing in these reports indicate any wrongdoing beyond the findings the Attorney General made last fall,” Tony Venhuizen, Governor Dennis Daugaard’s Director of Policy and Communications, said.

The analysis was ordered by Daugaard after it was revealed last fall that former Secretary of Tourism and State Development Richard Benda double-dipped on three state trips and improperly redirected a half million dollars of a state Future Fund grant in early 2011 after he left office to work as a loan monitor for the bankrupt Northern Beef Packers plant in Aberdeen. Benda committed suicide in October.

Eide Bailly Review

Accounting firm Eide Bailly was hired by the state to conduct an internal controls examination of the Governor’s Office of Economic Development. The review that was released Thursday was conducted by accountants from Fargo and Minneapolis and did not involve the firm's South Dakota offices.

The main areas of concern discovered in the examination include:

-Background checks are not performed on all new hires at GOED.

-Employee expense reimbursements and directly billed travel expenses are not compared when approving employee reimbursements.

-Employee expense reimbursements are not required to be submitted within a set period of time.

-A small percentage of Future Fund grants lack adequate third party supporting documents.

The areas of concern correlate with the alleged misconduct involving Benda that was uncovered by the South Dakota Attorney General’s Office this fall; however, state officials say none of the deficiencies found in the reports released Thursday directly relate to Northern Beef Packers or Benda.

“It certainly identified opportunities for us to improve our processes and better track supporting documentation,” Commissioner Pat Costello of the Governor’s Office of Economic Development said.  “We were relieved there was no additional wrongdoing uncovered."

State officials say they have worked to correct all of the concerns outlined in the report.

Examination of Economic Development Programs

A separate review of two economic development programs conducted by the Pierre accounting firm Stulken, Petersen, Lingle, Walti & Jones also found some minor areas for improvement.

An analysis of the Future Fund grant program found that 19 of the 302 files that were examined were missing some supporting documentation. Most of those gaps include organizations that received grants and did not properly turn in third-party receipts for expenses but simply turned in internal documentation of the expenses.

The analysis of the Dakota Seeds program also found that 43 files of the 215 that were examined were missing some supporting documentation.  A majority of that documentation was student completion reports that weren't submitted as part of the internship program.

However, in both cases all of the payments made in the programs had a corresponding file.

State Officials Satisfied With Reports

State officials say they are satisfied with analysis that was conducted by both organizations and add that if the reports didn’t find any areas for improvement, they would have questioned the validity of the examinations.

“We weren’t surprised there were some findings. We would have been surprised to receive a blank sheet of paper,” Venhuizen said.

The South Dakota Department of Legislative Audit was also asked to conduct an audit of the Governor’s Office of Economic Development but that analysis is not complete. Officials expect to receive that report in the next few weeks.

Review the reports for yourself by clicking on the link below.

GOED Reports.pdf

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