S.D. lawmakers want answers on audit problems

Capitol News Bureau
KELO pierre capitol building

PIERRE, S.D. (KELO) — The Legislature’s panel that keeps watch on how South Dakota’s state agencies use taxpayers’ money received a cleaner report from its auditors Tuesday.

But the Government Operations and Audit Committee still wants to hear from officials for two departments and two agricultural-commodity groups that were found to fall short on various accounting standards during the budget year that ended June 30, 2019.

The Department of Revenue will be asked to explain why its entire accounting staff had editing access to the CEDAR system for receiving tax payments and to the department’s accounting system, but there weren’t formal policies and procedures for monitoring the activities.

“As a result of inadequate controls over access rights, an employee could alter records without
the knowledge of management or other staff. This could allow for hiding errors, incorrect or
improper returns, or the misappropriation of assets,” said the audit finding that starts at page 264.

Nothing was found amiss. Revenue officials responded that they would put safeguards in place.

The Department of Human Services meanwhile discovered that it hadn’t fulfilled a match required on a federal vocational-rehabilitation grant (starting at page 266). The accounting year had already ended when the mistake was found.

That revealed a broader issue: A lack of standardization.

“The state (government) does not have a common grant module in its accounting system,” said Bob Christianson, an audit manager for the state Department of Legislative Audit, whose staff works for the Legislature and conducts the annual financial inspections.

Instead, state departments take various approaches, which he said can result in errors, such as when staff turns over, or when workload increases, although he couldn’t recall any time when any Human Services division didn’t fulfill a necessary match.

Senator Ryan Maher, an Isabel Republican, asked why there isn’t a standard way for state government to handle federal grants.

Christianson said cost could be a reason. Another, he said, was some departments, such as Transportation, or Game, Fish and Parks, don’t use the state accounting system for federal grants.

“There’s just a lot of different pieces to it,” he said.

Another DLA audit manager, Tim Flannery, said it made sense to explore a standard way.

“I think that’s a good point,” said Representative Sue Peterson, a Sioux Falls Republican who chairs the committee.

Legislators also want to meet with leaders for the Corn Utilization Council (starting at page 248) and the Soybean Research and Promotion Council (starting at page 250) about their repeated problems in segregating the handling of their finances.

Both councils have argued for years their office staffs were too small. Each handles millions of dollars in farmers’ check-off fees.

“We will get into that in more detail when we have them come,” Peterson said.

She complimented the Legislative Audit staff — “They do a phenomenal job.” — and noted there had been prior years with more findings from more departments. She praised the departments overall and said the state Board of Internal Control has been helpful in seeking ways to close technical holes.

“This report is much cleaner so to speak than it has been in past years,” Petersen said. 

This is the first time in at least five years that only two state departments had findings.

The corn council and soybean council had write-ups all five years. The state secretary of agriculture appoints members of the soybean council and is a nonvoting member of the corn council. The governor appoints the secretary of agriculture.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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