Oct 08, 2024
PIERRE, S.D. (KELO) -- Recent allegations of financial deceptions in two state government departments are leading a panel of South Dakota lawmakers to recommend more resources that could help deter future scandals. On Tuesday, members of the Legislature's Government Operations and Audit Committee unanimously urged Governor Kristi Noem to speed up getting all state agencies through an internal control process. The Legislature eight years ago established the state Board of Internal Control at the suggestion of then-Governor Dennis Daugaard. Among the seven-member board's responsibilities were establishing and maintaining financial guidelines for state agencies. The board's creation came in the wake of the state Department of Legislative Audit uncovering widespread misuse of federal Gear Up funds that were administered through the state Department of Education and the now-defunct Mid Central Educational Cooperative at Platte. The board's chair, state Finance Commissioner Jim Terwilliger, and his bureau's statewide internal control officer, Allysen Kerr, met on Tuesday with the GOAC members. Nineteen state offices and departments have gone through the board's review process, and completing the rest of state government could take at least another two years. UPDATE: 112 ‘noncitizens’ found on Minnehaha Co. voter rolls Republican Senator David Wheeler asked Terwilliger whether the state Bureau of Finance and Management that he heads had sought more resources for internal control. “That is being considered through the upcoming budget process,” Terwilliger said. Wheeler also sought Terwilliger's opinion whether the board is correctly configured. “That’s a fair question to ask, where we are at this point,” Terwilliger replied. He said Kerr was “the right person” to be the statewide internal control officer and that, because of her, he now better understands the importance of internal controls. “I don’t have the right answer. I think those are good questions to ask at this point in time,” Terwilliger said. He noted that Kerr's services have been in demand. “We’re certainly open to that feedback and conversation,” he told Wheeler. Terwilliger recalled a recent conference where he asked other states' budget directors about the internal control processes in their states. “I think we’re actually a little unique in that we have a state board that oversees that,” he said. He also acknowledged that it “might be worthwhile” to get some outside feedback. Democratic Representative Linda Duba said the GOAC members would like to have feedback from Terwilliger on whether changes in the board's composition are needed. He replied, “Absolutely.” He said the board is in state law and he would get back to the lawmakers with his thoughts. According to Terwilliger, the Legislature didn't provide any additional funding for a specific internal-controls employee when the new board was established. He said the state Department of Social Services was now designating a specific person within the agency to focus on internal controls, after a now-retired employee allegedly had stole more than $1.7 million from the state child-protective services offices over a period of 13 years. Terwilliger said the state Department of Revenue, which reportedly had two now-former employees creating false ownership titles for fictitious vehicles and using them to secure loans, also was looking at designating an internal-control employee from its staff. He said several other large state agencies were considering it as well. "I think it's something that needs to be reviewed as we go forward," he said. Kerr said that so far 2,297 controls had been documented in state government. She said departments share best practices and ideas, but she acknowledged there haven't yet been any gatherings for control officers and others. The next agencies to go through the internal-control review process are the state Bureau of Information and Telecommunications and the state Public Utilities Commission, she said. Republican Senator Jean Hunhoff complimented the board for its work. She said that "with everything that's happening" it was important that the board continue being transparent with GOAC and for the committee's members to stay on task. "In order to do that, we totally depend on you for information," Hunhoff told Terwilliger and Kerr. Hunhoff said it would be important to develop a type of briefing format that would keep the GOAC members abreast of what's happening. Terwilliger said he would do that. Republican Rep. Ernie Otten, the current GOAC chair, said it would be important that Terwilliger provide information to the new GOAC chairs next year. SD Attorney in court for child rape charges Senator Wheeler asked the committee to recommend that the governor include additional resources for the Board of Internal Control in the budget proposal that she'll make for lawmakers to consider during the 2025 session. He said that providing additional resources would allow more agencies get through the process at a faster rate. "I know that we can't commit anything. We all know there's a lot of question marks about the state budget next year," he said. The committee will meet later this month to focus on the Department of Revenue situation and then will meet in mid-December regarding the alleged thefts from the Department of Social Services. (See related story.) The committee must by law review the performance of each state agency at least every three years. At least five of the committee's 10 members won't be back in 2025 because they didn't seek re-election or lost in a June primary. Terwilliger presented BFM's report, which now includes metrics regarding internal controls. The committee accepted the performance reports from the board and from the bureau. "Thank you, mister chair, thanks committee for having a visit about this important topic," Terwilliger said after the final vote. "I know it doesn't get the attention it deserves, but I look forward to those of you going to be back and having additional conversations in the 2025 legislative session."
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