The full board of directors for the Wisconsin Economic Development Corp. is meeting today in Eau Claire to review what critics say is a troubling audit.
Details of the audit by a private firm on WEDC operations emerged yesterday.
The audit, discussed during a meeting of WEDC’s audit committee, confirmed problems in the quasi-public agency’s internal financial controls. Auditors said the failures were partly a result of vacancies in financial staff positions.
“Financial transactions were either not recorded or improperly recorded throughout the year and went undetected by personnel of the Corporation,” the audit says of WEDC’s first year.
The report also noted the agency didn’t properly review and approve 25 percent of credit card purchases, though COO Ryan Murray said it’s believed that may be the result of staff’s unfamiliarity with software programs used to review those purchases.
The financial audit estimated that approximately $19 million in loans were in danger of not being collected, though $15 million of that amount is a combination of forgivable loans and loans that might still be paid back. The remaining $4 million is expected to be completely uncollectible.
The audit also showed that $75.6 million of WEDC’s budgeted $84 million in economic development funds had yet to be spent.
While auditors attributed part of the unspent funds to WEDC’s lack of authority over Community Development Block Grants, Murray, a former aide to Gov. Scott Walker, noted there are also economic development funds that are taking longer to disburse.
Earlier on Monday, WEDC interim CEO Reed Hall told a Senate committee the agency “did not appropriately implement the staff needed” to manage aspects of its loan portfolio and other issues.
Hall also said that the agency needs new loan officers and a new computer system to track those loans.
Hall, testifying before the Senate Committee on Economic Development, Entrepreneurism and Biotechnology, said parts of the quasi-government entity should be run more like a bank and could use someone with financial experience on its board of directors. Still, he said the group has to take more risk than a standard bank in aiding entrepreneurs and business owners, which is in line with its mission.
“If the companies we deal with could get bank loans, they wouldn’t need us,” Hall said. “The job creations that come out of these loans pay dividends again and again.”
Assembly Minority Leader Peter Barca, a WEDC Board member, railed on the agency, saying the problems with the entity were a result of a lack of a proper transition and oversight.
Barca said that the group needs more input from board members and that if the agency can’t turn itself around in the next year, it might be necessary to go back to the old Commerce Department.
GOP Gov. Scott Walker and majority Republicans in the Legislature created the WEDC early in 2011.