An Audit Report on the Capital Access, Defense Economic Adjustment Assistance Grant, and Tourism Programs at the Department of Economic Development
May 2003
Report Number 03-034
Overall Conclusion
The Department of Economic Development's (Department) management of its Capital Access Program did not consistently ensure that the Department (1) spent the program's funds in accordance with laws and regulations, (2) reported reliable results for the program, or (3) held lenders accountable for performance. This program contributed $1.2 million to loan loss reserve accounts for enrolled loans in fiscal years 2001 and 2002.
While the Department generally spent funds in accordance with laws and regulations and held contractors accountable for performance in the Defense Economic Adjustment Assistance Grant (DEAAG) and the Tourism programs, the Department did not perform sufficient monitoring to ensure that reported results for these programs are reliable. For fiscal years 2001 and 2002, the Department spent $7.4 million on DEAAG grants and $33.3 million on Tourism contracts.
Additionally, the financial account balances in the Department's internal accounting system are not reliable because the Department did not perform its year-end accounting close-out procedures for fiscal year 2001. For this reason, the Department had to use the Uniform Statewide Accounting System to prepare its fiscal year 2002 Annual Financial Report. The Department's internal accounting system should be the main source of information for budget analysis and financial data vital to effective management decisions. Due to the unreliability of financial account balances, the Department's accounting system may provide misleading information for analyzing budgets and making management decisions.
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