A 2015 audit of the state Department of Economic Development released Tuesday shows problems with documentation, lack of adequate monitoring and a need for formal written policies and procedures.
The audit also noted some improper and excessive meal reimbursements when employees traveled, lack of detailed receipts, excessive lodging charges and a lack of supervisory approvals. The department spent $386,334 in 2015 for travel expenses.
According to the report by state Auditor Charlie Janssen, the department paid a settlement of $14,286, including federal and state taxes, to the previous director, Brenda Hicks-Sorensen, without documentation to support why the settlement was necessary.
Gov. Pete Ricketts fired Hicks-Sorensen last year, less than nine months after hiring her and after what some described as growing disappointment from the state's business community about her performance.
Janssen's audit questioned both the necessity and the propriety of the agreement with Hicks-Sorensen.
Attorneys with the state Department of Administrative Services said that in exchange for the settlement payment, the former director agreed to resign and waive all claims against the department.
The audit also showed:
* The department had some problems with time-sheet documentation.
* One person was able to change, add and delete capital asset information without others reviewing the reports.
* The department lacked written policies and procedures for monitoring grant recipients. And two grants had no monitoring procedures performed by the department. The grant awards totaled $399,000 and $200,000.
For three grants, totaling $1.15 million, it was unclear what review, if any, had been done by the department to ensure requirements for reimbursement were met.
Department of Economic Development Director Courtney Dentlinger, who took over as director in January after the audit period, said on Monday the problems shown are all easily fixed with better policies, procedures and controls.
She and Ricketts announced some changes to the department Monday, including creating a budget finance team, hiring a chief financial officer and an internal auditor and adding an attorney to deal with a backlog of contracts.
The department will pay for the new employees by shifting funds from five unfilled positions, including a housing coordinator and business recruiter.
Ricketts said Dentlinger was the right choice. In six months, his office has worked with the department to create trade missions, has had the first-ever governor's summit on economic development and created a new state brand: Good Life, Great Opportunity.
In addition to the state audit, the department is undergoing a legislative performance audit and a federal audit.
The Legislature's Performance Audit Committee is looking at its process for awarding and denying grants for the Community Development Block Grant program, the Affordable Housing Trust Fund and the Civic and Community Center Financing Fund.
For each of the grant fund programs, the committee is looking into how the department determines the amount of committed and uncommitted funds at any given time.
It's also looking at whether the agency’s grant selection processes comply with legislative intent, state law and administrative regulations.
The federal audit is being done through Housing and Urban Development and is examining issues regarding block grants.
Dentlinger said she appreciated that auditors were able to bring needed areas of improvement to the attention of the department.
Changes being made will provide better documentation, enhanced policies and procedures, and better internal controls to catch errors, she said.