GOED reviews at a glance
Here’s a snapshot of the scope of three sets of reviews conducted recently by private accounting firms for the Governor’s Office of Economic Development, along with the responses from GOED and others in state government.
GOED INTERNAL CONTROLS: The Eide Bailly accounting firm interviewed 12 employees of the Governor’s Office of Economic Development, reviewed the state employee handbook, examined GOED’s travel reimbursement policies and practices, and looked at nine business-assistance programs operated by the agency.
Eide Bailly recommended improvements in fraud control including more information in the employee handbook, informing employees of the channels for reporting theft and fraud, and conducting background checks on new employees.
Regarding expense reimbursements, Eide Bailly found that employees’ vouchers and direct billings haven’t been routinely checked against previously submitted vouchers and direct billings, as a safeguard against double billing and double payments, whether within GOED or by the state auditor’s office.
There also wasn’t a set time frame for employees to submit their expense reimbursement requests.
Regarding payroll, Edie Bailly found that one GOED employee adds and removes employees to the accounting list and also administers the payroll.
Some safeguards against fraud and misuse were missing in the Future Fund, Community Development and Ethanol grant programs.
The Bureau of Human Resources in its response said it will add information to the employee handbook and add a link on its website. The bureau said a fraud-training course is required for all managers and is offered every three years; there is a second person involved in the payroll duties at GOED; and the chain of command for reporting fraud is set in state law.
GOED is gathering information on background checks and changed some practices regarding payroll and grant administration.
State Auditor Steve Barnett said his office is pursuing a new rule that would require expense reimbursement requests to be submitted by employees within 60 days of when the expenses were incurred. The proposed rule also would have additional guidelines that must be met if an employee fails to submit the request within the 60 days.
FUTURE FUND: These grants are paid from a portion of the unemployment insurance taxes that businesses pay in South Dakota. The governor has exclusive control over the distribution of these monies, which can be as much as $14 million in a year.
The Stulken Petersen review discovered 19 instances where information was missing. The accountant examined 302 files for grants made in the period of Jan. 1, 2009, through Sept. 30, 2013. The accountant didn’t conduct an actual audit.
In response, the Governor’s Office of Economic Development has updated its internal controls to specify what types of supporting documents are to be kept in each file.
GOED also added a follow-up system to better track grants; now requires formal amendments for any changes in grant agreements; and will specify what counts as a match for a grant and the conditions for fulfilling grant requirements.
DAKOTA SEEDS / PROOF OF CONCEPT: The Stulken Petersen accountant found 43 instances of missing documents or payment mistakes among 215 files that were examined.
Dakota Seeds is a work-experience program that provides financial assistance to businesses for hiring interns. The Stulken Petersen review found payment mistakes or determined student reports were missing in 39 instances.
The Governor’s Office of Economic Development said adequate controls were in place but staff made mistakes on payments. GOED is dropping the student-report requirement because it was inconsistently followed.
Proof of concept is a program related to commercial applications of state-university research. Quarterly reports weren’t filed in four instances, according to the Stulken Petersen accountant. GOED removed the quarterly-progress report requirement.