JobsOhio has received a clean audit for its most recent fiscal year, but what does that mean?
Deloitte & Touche LLP on New Year’s Eve released the JobsOhio annual audit, which is available here. The audit is for the fiscal year ending June 30, 2019.
The “Big Four” accounting organization says all is well with JobsOhio.
JobsOhio operates as the State of Ohio’s privatized economic development agency, as The Ohio Star has previously reported. Former Gov. John Kasich ripped that function away from the Ohio Department of Development.
JobsOhio disburses millions in grant money every year, and it has been increasing its expenditures on economic development.
The organization has been planning to double spending on economic development but also add the mission of promoting government workforce development, the Associated Press reported.
The Star reported in November that JobsOhio increased its operating expenses from $115,133,000 in FY 2018 to $157,847,000 in FY 2019, working on its core mission, while Ohio gained only 3,600 jobs during much of the last half of FY 2019 (January-June).
With that much money being spent, there should be plenty of data to audit.
Ohio Auditor of State Keith Faber writes in a letter attached to the audit:
By way of background, JobsOhio is a 501(c)(4) non-profit corporation designed to promote and drive economic development through job creation and new capital investment in Ohio through business attraction, retention and expansion efforts. During the fiscal year ended June 30, 2019, JobsOhio had total operating expenses of $162,107,000 in pursuant of this task.
As mentioned above, the General Assembly requires that JobsOhio work with the Auditor of State to select a private independent auditor to perform an engagement reviewing compliance with relevant statutes and internal controls for JobsOhio.
Faber also is the former Ohio State Senate president who in 2013 supported efforts to shield JobsOhio from scrutiny by the Auditor’s office — helping make the organization not “a public office,” The Star reported. Faber also helped Kasich create JobsOhio.
In March 2018, the Ohio Democratic Party took note of former Senate President Faber’s work to shield JobsOhio from full scrutiny.
“Ohioans deserve to know if Keith Faber still believes it’s appropriate that billions in taxpayer money should be kept away from public scrutiny, as is the case with JobsOhio,” Ohio Democratic Party Chairman David Pepper said,
Now, JobsOhio must work with Faber as Auditor of State to pick an outside private auditor to perform a compliance and control review, which in this case is Deloitte & Touche.
The Deloitte & Touche audit does not identify which companies or individuals it studied as recipients of JobsOhio’s economic development grant money.
The audit does say the organization spent $162.1 million on operations in FY19 while showing a $382.8 million profit on the $1.5 billion lease of the state’s liquor operations, according to a story by The Columbus Dispatch.
Also, the audit hits metrics at random, meaning it takes only snapshots for the fiscal year and not the entire picture of JobsOhio’s performance. The audit relies upon JobsOhio to help fill in some of the requested data — an honor system.
For example, Deloitte & Touche studied lists of grants JobsOhio made and whether the recipients met certain criteria such as creating a certain number of jobs.
We selected 20 Projects, which was the greater of 20 or 20% of Projects listed, from the 2018 MEvD list and obtained the 2018 Annual Reports for 19 projects. One project did not file an annual report based on JobsOhio’s clawback of project grant funds due to non-compliance. A replacement selection was made. Fifteen of the company’s Projects met their required metric commitments as illustrated in Exhibit A. Five of the Projects did not meet at least one of their metric commitments. We then performed each of the aforementioned procedures. For the five selected Projects that did not meet at least one of their metric commitments, we inspected the Project records and observed that all five records had contained an explanation of the shortfall. All five Project records contained evidence of follow-up from JobsOhio to the company. All five Projects were selected to go before PPRT and were included in the agenda. All five Projects had a PPRT decision that was acted on through the date of the report. No exceptions were found as result of applying this procedure.
MEvD refers to Metric Evaluation Date; JobsOhio requires that jobs are created within a certain time period.
But which projects did Deloitte study?
The audit does not say specifically.
From the JobsOhio Monthly Executed Agreement Reports located on the JobsOhio website covering the period July 1, 2018, through June 30, 2019, randomly select a sample of five JobsOhio Economic Development Grants, five JobsOhio Workforce Grants, five JobsOhio Research and Development Grants, five JobsOhio Revitalization Grants, five JobsOhio Phase II Grants, five JobsOhio Site Redevelopment Grants, five JobsOhio Growth Fund Loans, five JobsOhio Revitalization Loans, and five JobsOhio Site Redevelopment Loans.
One can dig into the JobsOhio site to find a list of grant recipients, located in multiple documents here. The Deloitte report did not tell anyone how to find that data, nor do they say which of these companies they studied.
Deloitte & Touche acknowledged that their study has limits but added they followed common accounting practices.
This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to, and did not, conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on compliance with certain requirements.
One revelation in the audit was that five JobsOhio employees and/or board members have some kind of financial interest in grant recipients, but reportedly did not have an active participation in making those grants. No names of employees/board members or grant recipients were named.
For fiscal year 2019, obtain from the JobsOhio Senior Director of Compliance the confidential list of each Board member’s and employee’s financial and fiduciary interests (the “JO Disclosures List”). From the JO Disclosures List, randomly select a sample of 10 Board members or employees and compare their financial and fiduciary interests with the Projects or arrangements listed on the DSA End-of-Year Reports covering the final six months of calendar year 2018. Where a Board member or employee had a financial or fiduciary interest in an entity that JobsOhio had a Project or arrangement with during fiscal year 2019, inspect the JobsOhio customer relationship management (CRM) system Project file for the Project or arrangement and identify whether the financial or fiduciary interest was listed in the Conflict of Interest section of that Project file. Report any Project files where the potential conflict was not identified by JobsOhio. Additionally, inspect the rest of the Project file for the subject Board member’s or employee’s name and report if the person is listed as having participated in the Project.
We obtained the confidential list of financial and fiduciary interests for each Board member and employee from the JobsOhio Senior Director of Compliance and randomly selected a sample of 10 Board members or employees. For each of the selections, we compared their financial and fiduciary interests with the Projects or arrangements listed on the DSA End-of-Year Reports covering the final six months of calendar year 2018. We identified five Board members or employees who was said to have a financial or fiduciary interest in an entity that JobsOhio had a Project or arrangement with. For each interest, we inspected the JobsOhio CRM system Project file for the Project or arrangement and observed therein that the Board Member or employee did not participate in the project. The other five selected Board members or employees were not said to have a financial or fiduciary interest in an active Project or arrangement.
No exceptions were found as a result of applying the procedure.
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Jason M. Reynolds has more than 20 years’ experience as a journalist at outlets of all sizes.