Appendix H

Implementing AOS (Auditor of State) Recommendations

Status Report – Implementing Auditor’s recommendations
(AOS 1/26/07  Review of the Grow Iowa Values Fund)

On January 26, 2007 the State Auditor released report resulting from a review of the Grow Iowa Values Fund. This report included a number of recommendations, including specific suggestions for changes to the project status reports issued by IDED. The AOS expressed the following concerns and as noted below each concern IDED has made changes to this year’s Annual Report in response to those concerns:
 

  1. “...the reports issued by DED include projects spanning from July 2003 through 2006 funded by FES and other funding sources in addition to GIVF. While it is not inappropriate to include additional information, the reports do not provide specific information required by the Code for the GIVF. The reports do not include the activity for only the fiscal year ended June 30, 2006, as required by the Code.”

                  Change made: The Report is limited to data and activities that occurred during fiscal year 2007 (July 1, 2006- June 30, 2007)

  1. “The status report identifies individual projects which were funded by IVF, but does not include aggregate information for projects funded by IVF, such as the number of projects, amount awarded and the number of jobs.....The only aggregate information provided includes all of the funding sources together.” “...the status report does not allow the reader to distinguish between projects funded by FES and the GIVF.”

Change made: The Report database has the ability to perform  searches by individual project  by program and funding source . Aggregate information about IVF(FES) and IVF(2005) is available in Appendix J.
   

  1.  “..the information presented by DED is “on the Iowa Values Fund(IVF)” and other state business development awards.” The term has been defined in [261] Iowa Administrative Code, section 2.2, as the GIVF established during the 2005 Legislative session. However, IVF is used by DED in the status report to refer to projects funded by FES and GIVF.” The term has been misinterpreted by public officials, media and the public to represent GIVF.” [FES refers to the Federal Economic Stimulus monies that funded the 1st Grow Iowa Values Fund created in 2003]

    Change made:  Standardized terminology was made easier for this year’s Report because on June 15, 2007 IDED adopted consolidated administrative rules for programs and established a centralized set of definitions, including definitions of IVF(FES) and IVF (2005). These acronyms are now used throughout the Report.

  1. The Code requires “DED report the amount, if any, of private and local government moneys expended as of the time of reporting, and the amount of moneys expended on research and development activities that were not included in the jobs created and wages paid criteria. This information is included in the memo simply as a dollar amount without any further explanation.”

Change made: Each project now has a one-page summary with detailed information. The detailed project summary includes data about private and local government  amounts expended and  the amount expended on research and development expenditures.

  1. The Code requires “DED to report expenditures for each component of the GIVF. The memo included a spreadsheet that shows only the amounts allocated by DED to other State agencies. The memo did not include any information on expenditures or the use of funds by other entities receiving allocations from DED.”

       Change made: Appendices A and B provide detailed financials schedules prepared by IDED’s Accounting section. The IVF(2005) schedule delineates expenditures to each component of IVF(2005).

 

PROGRESS ON IMPLEMENTATION PLAN

Following the release of the Auditor’s report, IDED developed and distributed an action plan for implementation of specific recommendations. The following chart describes the status of each element as of June 30, 2007.

 

IDED implementation plan proposed on  3-15-07

Steps Taken

Status as of 6/30/07

 

 

 
  1. IDED will streamline the reporting process by collecting data and preparing an annual report that would meet the GIVF report requirement and other statutorily-required reports for CEBA, VAAPFAP and EZ programs.  The new online reporting process will be unified, systematic, transparent and business friendly.

 
  1. The Department revised its report procedures to combine statutorily –required report requirements into one report, the 2007 Annual Project Status Report. It will meet reporting requirements for IVF(2005), HQJC, and CEBA. Other programs will be included voluntarily.
  2.  

 

 

COMPLETED
  1. IDED will complete and expand the work being done to integrate its departmental databases.  Work on the unified system (ReQuest) will become functional within 60 days.

 
  1. New enterprise wide database is in the development process.

 

 

Pending

  1. IDED will modify the way in which it defines the funding sources contained within the GIVF.   “GIVF v.2003” will represent the $100 million in federal funding from the Federal Economic Stimulus (FES) package created in 2003.  “GIVF v.2005” will represent the $50 million annually appropriated by the Iowa Legislature.

 
  1. New rules adopted by IDED which define the various funding sources more precisely. These definitions were used in the preparation of this Report.
  2. Rules became effective on June 15, 2007.
  3. 2007 Annual Project Status Report has financial statements (expenditure reports and obligation logs) by funding source.

 

 

COMPLETED

  1. IDED will modify the method in which jobs are reported to “contracted” as opposed to “pledged.”

 
  1. 2007 Annual Project Status Report distinguished between jobs “projected at award date,”  “contract obligations” and reported numbers.
  2. New job counting method and rules were adopted by IDED.  The new process tracks jobs, not individuals. A base employment number, and characteristics of that base, is established using payroll records. The new method tracks changes in the base and its characteristics throughout life of a project.
  3. The rules became effective on June 15, 2007.
  4. The 2007 Annual Project Status Report followed the new methodology.

 

COMPLETED

  1. IDED will consolidate certain compliance activities.  This group will be responsible for all post-award activities for state-funded business projects – contracting, monitoring, reporting, close-outs and collections – and the Annual GIVF Legislative Report.

 
  1. A Legal and Compliance team has been established in the Director’s office, reporting to the General Counsel.
  2. Staffed with 8 fulltime employees.
  3. As of 6/30/07, this group was responsible for  441 projects. They conducted onsite visits and closed 16 projects, negotiated contracts, analyzed 280 status reports submitted by businesses and the corresponding payroll records submitted by businesses.
  4. Prepared the Report.
  5. Reports monthly to the Due Diligence Committee and the Economic Development Board on amendments, closeouts, collections.

 

COMPLETED

OTHER IMPROVEMENTS
In addition to the changes identified above, IDED made the following changes to improve its oversight processes:

Application and Contracting
More attention is focused on ensuring that files are complete and that a third party independent reviewer can determine how the Project Managers arrived at their decisions and calculations.

Maintenance Period
The variance in the maintenance periods were reduced through the adoption of administrative rules with standardized maintenance duration.

Base Employment
Base employment is established at the time of application using payroll records from the business.

Project Monitoring  IDED will conduct onsite monitoring twice during the life of a contract. Once, at Project Completion and second at the Project Maintenance Date.

File Maintenance
Implemented  a three part project filing system. This system better separates and defines the contents of a project folder and identifies which team within IDED is responsible for the completeness and accuracy of each section.  This will permit earlier identification of missing or incomplete information by the staff closest to the source documents.

                                                                                                  


TABLE OF ORGANIZATION – LEGAL AND COMPLIANCE
As of January, 2008