A new state audit found serious deficiencies in how the Maryland Department of Business and Economic Development monitors state tax credit, investment, and grant programs.
The Office of Legislative Audits found that DBED, "did not require applicants for the One Maryland Tax Credit to document all of the related project costs, which serve as the basis for the tax credit amounts."
"Our test of 10 applicants, certified by DBED as eligible for One Maryland Tax Credits totaling $42 million during fiscal years 2008 through 2010, disclosed that 8 applicants, which were certified for project and start-up tax credits totaling $34 million, did not provide any documentation to support these reported project and start-up costs." the audit found.
In it's review of the Maryland Venture Fund, OLA found that "DBED did not take action to recover its investment in one company that moved its principal place of business out of Maryland. Specifically, in June 2008, DBED invested $250,000 from the MVF’s Enterprise Investment Fund (EIF) in an international technology company."
The company closed it's doors in Maryland in 2009 and as of June 2011, DBED had taken no action to recover the original investment. OLA estimated the original estimate plus interest to be $325,000.
The audit also found that DBED was not properly monitoring state grants. The department did not ensure certain state grantees submit expenditure reporting performance reports.
OLA summarized it's findings :
This report includes findings relating to conditions that we consider to be significant deficiencies in the design or operation of internal control that could adversely affect DBED’s ability to maintain reliable financial records, operate effectively and efficiently, and/or comply with applicable laws, rules, and regulations. Our report also includes findings regarding significant instances of noncompliance with applicable laws, rules, or regulations.
In it's response to the audit DBED agreed with all the finding and stated it would comply with OLA recommendations.
We should hope so given DBED is now overseeing $70 million in taxpayer dollars being used as venture capital in the InvestMaryland program.
Where was Governor O'Malley's vaunted StateStat program? Shouldn't his award winning program have caught these deficiencies?