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State auditor general taking closer look at grants sent through state departments

PIERRE -- State Auditor General Marty Guindon presented on Monday the initial results from a 2016 law that requires audits on non-profit organizations that receive federal grants that pass through state government.

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(The Daily Republic file photo)

PIERRE - State Auditor General Marty Guindon presented on Monday the initial results from a 2016 law that requires audits on non-profit organizations that receive federal grants that pass through state government.

Guindon said he's reviewed 25 of the audits performed so far by certified public accountants. He showed the findings from three of the audits to the state Board of Internal Control that was created by the same new set of laws last year.

"None of them are too serious," he said.

The laws came in the wake of the Gear Up scandal involving Mid Central Educational Cooperative at Platte. The federal Department of Education sent money to South Dakota through the state Department of Education to the cooperative.

Gear Up was intended to help lower-income students and their families understand what was needed for post-high school education. The program now operates through Black Hills State University.

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Under the new laws, the auditor general compares the money received by a non-profit to the money distributed by a state agency. This is "the first time" South Dakota has made the connection, according to Lt. Gov. Matt Michels.

Senior Citizens Services Inc., doing business as Active Generations, made small errors in amounts.

Guindon said the state Department of Social Services plans to see that all amounts are properly reconciled and reported properly within monthly reports from the program.

Said Guindon: "This sort of allows the board to follow the money."

He said the audit reports would allow the state Board of Internal Control to become aware of issues and determine their significance.

Said Michels about senior services: "The piece that's hard to grab out of this is this is no small (enterprise)."

Guindon said $1 million-plus is coming through state government for a $3.5 million program.

"This is not small," Michels said.

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Feeding South Dakota received money from the federal Department of Agriculture passed through the state Department of Education and money from the federal Department of Homeland Security.

Guindon said Feeding South Dakota didn't ensure that all of its sub-recipients weren't on the suspended or disbarred list. Three were found of 11 tested.

"They weren't aware of the new requirements and didn't get the job done," Guindon said.

Butte Electric Cooperative received money through the state Department of Public Safety. They didn't retain some reports related to the spending of the federal money, Guindon said.

"That was a simple one," Guindon said.

Monte Kramer asked what the board members should do with the information. Guindon said the board can gauge what should happen if there are more-serious situations.

Guindon said the three sets of findings were "minor" but he noted that in the case of Mid Central there wasn't an audit of the organization two levels down.

Liza Clark, who is state commissioner of finance and management, said the Board of Internal Control could decide what its future policy should be, such as calling on the agencies and programs to appear before the board.

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Michels said it depends on the amount, too. Michels credited Guindon for the idea.

"This was the first time ever we've had this interface," Michels said.

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