More than 10 percent of businesses that received money from two state programs in Nevada were found to have questionable eligibility, according to legislative auditors. The audit revealed that the Governor’s Office of Economic Development (GOED) did not properly investigate recipients of pandemic relief funds meant to help small businesses with rent and operating costs.
Businesses with outstanding debts, late tax returns, or inactive state business licenses were awarded $10.7 million in coronavirus relief funds through these programs, while others were denied funding due to lack of available funds. Additionally, many applications were left unprocessed.
The State Treasurer’s Office assisted in overseeing these programs, but auditors identified GOED as the agency primarily responsible for oversight. The audit also highlighted a lack of monitoring for financial assistance programs not specifically related to the pandemic.
The findings of the audit have raised concerns about the distribution of funds to small businesses, whether pandemic-related or not. As a result of the audit, GOED received 14 recommendations to enhance its accountability practices, all of which were approved.
During a hearing, GOED Executive Director Tom Burns acknowledged the need for significant changes in internal controls to address the issues raised in the audit. State Senator Skip Daly expressed disbelief at the oversights identified, emphasizing the importance of adhering to rules and avoiding double standards in program administration.
The audit focused on two pandemic relief programs in Nevada: the Commercial Rental Assistance Program (CRAG) and the Pandemic Emergency Technical Support Program (PETS). The CRAG program provided up to $10,000 for rent expenses incurred during the pandemic shutdown, while PETS offered payments of $10,000 or $20,000 for operating expenses and pandemic-related costs.
Significant errors were found among CRAG and PETS awardees, including unpaid taxes, late tax returns, and inactive business licenses. The audit disclosed that a portion of recipients owed substantial amounts to the state as of March 2020.
In addition to the pandemic relief programs, the audit examined the State Small Business Credit Initiative (SSBCI). While no evidence of fraud or abuse was found, GOED was criticized for inadequate safeguarding of program funds, failure to ensure completion of financial reports, and lack of oversight regarding the program’s investment manager.
The audit serves as a reminder of the importance of thorough oversight and accountability in the distribution of public funds. Moving forward, GOED has committed to implementing changes to address the issues identified and restore public confidence in the administration of taxpayer dollars.