“Good news” and “audit” generally aren’t found in the same sentence, but Tim Sullivan couldn’t help but put them together after an audit of the New Jersey Economic Development Authority’s handling of more than $100 million in public funds came back with high marks for the agency he runs.
The audit, conducted by the Office of the State Auditor, examined more than $200 million in grants that the EDA awarded during the first three phases of its Small Business Emergency Grant program and nearly $10 million in loans made in the EDA’s loan program and gave the EDA high marks for how its programs were set up and administered.
“We found that adequate controls were in place at the NJEDA to approve and disburse funds,” the audit said.
There was a finding in the loan program, but Sullivan said the EDA already had corrected the issue.
“When you have audit like this, you want a thorough audit, but you want a short report,” he said. “They had no findings on the grant program and one finding on the loan program, which we already had handled before they pointed out to us. So, it’s an extraordinarily good report.”
And it comes at a good time. Phase 4 of the Small Business Emergency Loan program is getting ready to release $235 million more in grants.
Sullivan said the audit is an affirmation that the EDA is doing its job correctly. He credits his team for establishing the processes needed to do that — processes that enabled the EDA to operate these programs at a scale that would be considered unheard of in pre-pandemic times.
“The facts speak for themselves,” he said. “The process we set up was rigorous. It was scalable. And it builds on some of the many improvements we’ve made to our tax credit compliance — doing things like being able to work directly with labor and taxations data in an automated way.
“If we hadn’t made those changes for (Grow New Jersey) and for doing tax credits, we would not have been able to do this grant program at this kind of scale. In a normal year, pre-pandemic, we’d work with 400-500 businesses in terms of having a direct grant or loan or tax credit in any of our various programs. In 2020, we did 55,000.”
The audit dealt with EDA actions taking place between March 1, 2020, and Feb. 28 of this year. It lasted for 7-8 months, Sullivan said.
Sullivan came into the role as CEO at a time when the EDA was being audited for years of work during Gov. Chris Christie’s administration (by way of an executive order by Gov. Phil Murphy).
“I think it’s validating some of the things we’ve been trying to focus on and have been highly focused from the controller’s audit, the task force and everything else that we’ve been responding to for the last several years,” he said.
“That we were able to get this money out, both efficiently and judiciously, is encouraging and validating for our team, which has tried to focus on fixing what needs fixing and getting right the processes we need to do to be stewards of taxpayer resources, which, at the end of the day, is a solemn obligation that we have.”
Sullivan said he had no insights into why the EDA was being audited by the state — except to say it is a necessary role of government.
“It should be expected that, when you’re given responsibility for significant chunks of money, that we should have that kind of transparency and that kind of oversight,” he said. “We welcomed it, and we will continue to welcome it in the future.
“Audits are opportunities to learn and get better. This one, I think, had a very positive report card. But we can always take good feedback and learn to do better.”
The process, Sullivan said, should never be taken for granted.
“Doing well on things like compliance and oversight is a bit like getting in shape,” he said. “You don’t hit a goal weight and stop exercising and start eating whatever you feel like. It’s something you’ve got to always be focused on and always be trying to improve on it.
“This is a good report card, but we run lots of programs and we have to continue to be vigilant and diligent on all of them.”
