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Public Statements

Governor's Column: Update On Audits

Statement

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Date:
Location: Pierre, SD

By Gov. Dennis Daugaard

In recent months, a number of news stories have been written about alleged wrongdoing by a former employee of the state economic development office. I called for an investigation into this matter last spring, and released the Attorney General's report of his findings in the fall. We have also continued to aid the federal investigation into this wrongdoing. The allegations brought to light evidence that public dollars may have been misappropriated.

Good stewardship of public money is important to me, and I know South Dakotans share that concern. In November, I sent every member of the Legislature a memo explaining that I have ordered three separate, independent audits and reviews of the economic development office, in response to this situation.

First, an external auditor is reviewing every disbursement made under several economic development programs, including the Future Fund, reaching as far back as 2009. This review will verify that there was an approved application and supporting documentation for each disbursement, that each payment amount was correct, and that a check or electronic payment was made to the intended recipient. This review has taken longer than anticipated because of the need to obtain bank records to verify some older payments. Still, l anticipate this review will be completed early in the legislative session.

The second review is being conducted by the Department of Legislative Audit, the independent auditor that reports to the State Legislature. Legislative Audit is performing a financial and compliance audit of the fund financial statements for all government funds in the economic development office, also reaching back to July 1, 2009. This will supplement the audits that Legislative Audit already performs of some economic development programs.

Third, a separate, independent auditor is conducting an examination of internal control procedures. This review will look for weaknesses in policies and procedures, and will make recommendations to ensure that the economic development programs have adequate internal control procedures in place to safeguard public funds.

All of these audits and reviews are expected to be completed by the end of January and will be shared with the Legislature and the public. When the results are known, I will work closely with legislators to decide how the state should respond to the results, and to determine if further reviews are warranted.

This is a serious matter and it deserves serious attention from state officials. It is important to be thorough and comprehensive, even if doing so takes more time. My goals moving forward are three-fold: to continue to aid in the federal investigation, to recover misappropriated state funds, if possible, and to use these extensive audits and reviews to find ways to improve our processes.

Human beings are imperfect. They make mistakes, and sometimes, they act intentionally to benefit themselves, against the public interest. Although we can't always control individual behaviors, we must do all we can to protect the public interest, through policies and processes designed to foresee, detect and prevent mistakes and intentional wrongdoing. Nothing less is acceptable.


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