The financial performance of the North Dakota Development Fund, a state program crucial for supporting local businesses, is now under intense scrutiny. A recent audit, spanning over five years, has uncovered approximately $4 million in transactions with missing or incomplete documentation. These significant findings were brought before a legislative meeting on Tuesday, prompting serious questions from state lawmakers and ultimately leading to the fund's referral for investigation by the Attorney General's office.
The North Dakota Development Fund plays a vital role in the state's economy by providing essential loans and financing opportunities to both new and expanding businesses. The identified inconsistencies in its financial records present a considerable concern for the fund's operations and its management of public resources. North Dakota State Auditor Joshua Gallion highlighted the severity of the audit's findings during the legislative review. Gallion indicated that the situation, involving a lack of proper documentation and adherence to established policies, was "probably a little bit worse than on average." He stressed that such issues, particularly when dealing with this specific amount of money, justifiably "provide concern." Legislators on the audit and fiscal review committee actively questioned these documented inconsistencies, signaling their deep interest in the fund’s accountability.
Further compounding the issues, the North Dakota Development Fund had previously stated intentions to implement a new financial reporting system after 2024. This system was meant to proactively address and minimize potential problems, including the very types of documentation gaps now identified. However, despite these stated plans, the transition to the new reporting system never occurred. Jared Mack, a partner for Eide Bailly LLP, offered insight into the complexities faced by the fund in this endeavor. Mack explained that finding an appropriate accounting system in the marketplace is challenging because the fund, as a governmental entity, requires specific fund reporting while simultaneously managing loan and investment relationships that necessitate loan accounting. He described the search as needing to find a system that could achieve "a marrying of two different typical accounting systems or ERP systems."
Following the detailed review and discussions, the legislative audit and fiscal review committee decided to refer the North Dakota Development Fund directly to the Attorney General’s office for a comprehensive investigation. During their meeting, legislators also specifically raised questions regarding potential conflicts of interest within the fund's structure and operations. The North Dakota Development Fund functions as an integral part of the state’s Department of Commerce. This referral underscores the commitment of state officials to ensure transparency and proper fiscal management within programs designed to benefit businesses and residents across North Dakota.