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DAUGAARD: A look back on recent legislative audits

Over the last several months, legislators and state officials have looked carefully into our state's economic development programs.

I believe that government should always deal with issues in a straightforward and transparent way. When I first learned about allegations against a former economic development official in the spring of 2013, I immediately asked the attorney general to initiate an investigation, and I released the attorney general's findings as soon as I received them last fall.

Under our system, the governor and the Legislature do not decide when an activity should be prosecuted as a crime. That decision is made by the attorney general or by state or federal prosecutors. In this case, the attorney general conducted a thorough and independent investigation and was prepared to pursue criminal charges, until the target of the investigation died. At that point, the attorney general turned over everything he had found to federal prosecutors, and state officials have aided the federal investigation.

As questions have arisen, I have been open about what I knew, prompt about keeping the public up-to-date and willing to answer any question. State officials have responded to every request for information that the law allows.

Good stewardship of public money is important to me, and I know South Dakotans share that concern. For that reason, last year, I ordered three separate, independent audits and reviews of the economic development office. To conduct these reviews, the state retained two different accounting firms and the Department of Legislative Audit, the independent auditor that reports to the Legislature.

The auditors reviewed every disbursement made under several economic development programs, including the Future Fund, reaching as far back as 2009. They performed a financial and compliance audit of fund financial statements for all government funds in the economic development office, also going back to July 1, 2009. And they examined internal control procedures to look for weaknesses in policies and procedures to safeguard public funds.

Reports from all three of these reviews were released to every state legislator, and to the public, in January and February of this year. The reports, along with the state's responses, are online at On that site, the state also regularly posts every grant made by every economic development program.

Fortunately, the three reviews I ordered found no evidence of wrongdoing beyond what was already known. The reports did identify recommendations, which the state has accepted, to improve state processes. Those include background checks for economic development officials, closer scrutiny of travel reimbursements, and a plan for periodic future reviews on the advice of the Department of Legislative Audit and the external auditors.

I committed to work closely with legislators to respond to this situation, and that is what I have done. During the legislative session, external auditors presented their reports, in detail, to a legislative committee and answered questions. State officials also answered questions and explained how the state is implementing the recommended changes.

Last month, state officials attended a second legislative hearing with the same committee, to answer more questions and to update the committee on the new procedures the state has adopted. I'm pleased that every single recommendation has been accepted and put into place.

The state will continue periodic audits and reviews of our economic development programs. State officials will also continue to aid in the federal investigation, and will attempt to recover misappropriated state funds, if possible.

I respect the Legislature's power to independently judge how to proceed with this matter, based upon the advice they have received from legal counsel. Regardless, I will also continue to work closely with legislators. State officials will answer their questions and update them on our progress.

-- Dennis Daugaard, a Republican, is in his first term as governor of South Dakota.