No one may ever know the full extent of the financial mismanagement that existed at South Jersey Economic Development District.

The agency's latest audit, which Atlantic County officials recently said they expected to be horrendous, shows a string of problems so significant that auditors Ford-Scott & Associates wouldn't venture to express an opinion on the financial position of the district in the 2012 report released Monday.

Perhaps most troubling is the audit's revelation that former Executive Director Gordon Dahl was at times submitting a single bill for completed work to multiple granting agencies, thus possibly allowing SJEDD to be paid twice for the same work.

"It was over a period of about 18 months that the financial controls just completely unraveled," interim Executive Director Steve O'Connor said. "It would take a team of forensic accountants a significant period of time to track exactly how all the money was funneled between the grant agencies and the district."

Audits don't test every financial transaction. Instead, samples are taken to test the agency's practices. Those samples show cases in which the district submitted bills twice, but without testing every financial transaction, it's impossible to determine exactly how much money the agency might have improperly received while leading the infrastructure installation at the NextGen Aviation Research and Technology Park in Egg Harbor Township.

Regardless of any double reimbursements, the project still left the agency more than $1 million in debt — a financial situation SJEDD is still working to fix. Last week, Atlantic County entered into an agreement with SJEDD to provide as much as $474,000 for unpaid park contractors.

One finding in the audit questions $107,882 in bills submitted to granting agencies when full reimbursements had already been obtained through other sources.

"The extent of these multiple reimbursements could cause significant amounts of monies received to be due back to granting agencies. The potential effect of these is at the discretion of the granting agencies," the audit states.

O'Connor, however, said at this point there are no indications that any of the affected agencies — namely the U.S. Economic Development Administration and the U.S. Department of Agriculture — intend to try to decipher exactly what was lost or impose sanctions on the district.

The district is in the midst of trying to close out a federal EDA grant issued almost five years ago. After the park's contractors are paid, the district can recover a remaining $250,000 from that grant. The district faces a March deadline for doing so or risks losing the money, O'Connor said.

"The board of directors have directed me to ensure that the federal agencies are aware of what the audit found," O'Connor said. "At this point, none has indicated that it intends to move forward with trying to recoup anything. They're just interested in seeing the project move forward."

Representatives from the agencies could not be reached late Monday night.

Board members were all given a copy of the audit, which was planned for discussion in executive session at the district's monthly meeting at Cumberland County College in Vineland. Board members, however, have said they expected that the findings from the 2012 audit would be troubling.

The board unanimously voted to fire Dahl in April 2012 after some of the financial problems became evident. At that time, the district was two years behind in audits. The depth of the problems had not yet been discovered. The audit released Monday covers April 2011 through March 2012 — almost through the end of Dahl's time with the district.

The audit also touched on other financial problems previously discussed by the board, including the district's lack of a formal budget process and lack of a policy for paying unused vacation time. In recent years, the district had also allowed its expenses in salaries and benefits to exceed its revenues. Dahl continued to receive annual raises as the agency's surplus was used to fund the expenses.

O'Connor has since developed a cost-saving corrective action plan for the district that includes outsourcing grant-writing services. The district also has laid off its other two employees and given up its rented office in Millville.

Meanwhile on Monday, the board explored other options for sustaining the district's operations — namely merging SJEDD with the South Jersey Transportation Planning Organization, a federally designated planning organization that administers surface transportation funds from the Federal Highway Administration.

SJTPO Executive Director Tim Chelius addressed the board Monday and said his initial research indicates other regions have successfully combined transportation planning and economic development organizations.

Savings could be realized in combining administrative functions, and planning synergies could be realized in project administration, Chelius said. SJTPO was founded in 1993 and is based in Vineland.

The board asked Chelius to draw up a potential organizational structure, as well as a list of the benefits and challenges of merging the organizations, which would likely retain their own boards.

Contact Jennifer Bogdan:

609-272-7239

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