Office of the Legislative Auditor - Financial Audit Division

Report Summary

Department of Trade and Economic Development

Fiscal Year Ended June 30, 2001

Key Finding and Recommendations:

• The department did not reflect recent changes to its Rural Challenge Grant loan program in the accounting system. The change allowed the loan monies to be retained at the regional level, rather than being repaid into the state treasury and reissued back to the same region. The department began disbursing new regional funding as grants and discontinued collecting loan repayments from the regional organizations. However, funds previously issued as loans remained on the accounting system as loans receivable. As a result, an audit adjustment for $7 million was necessary to eliminate the loans receivable balances reported in the state's financial statements. In addition, we noted that state statutes need to be clarified in light of recent structural changes to the program.

Management letters address internal control weaknesses and noncompliance issues found during our annual audit of the state's financial statements and federally funded programs. The scope of work in individual agencies is limited. During the fiscal year 2001 audit, our work at the Department of Trade and Economic Development focused on financial activities of the Agriculture and Economic Development Fund, three loan programs in the Special Revenue Fund, and one federal program administered by the department.