Iowa Finance Authority under a microscope after executive director’s firing

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CHICAGO – Some financial operations of Iowa’s top bond issuer are being scrutinized after the governor fired Iowa Finance Authority Executive Director Dave Jamison over sexual harassment allegations.

The turmoil at the statewide conduit became public in late March after Gov. Kim Reynolds fired Jamison after receiving “credible” allegations of sexual harassment, according to a statement.

Carolann Jensen, IFA chief programs officer, was named to serve as interim executive director. Jamison had led the agency since 2011.

Over the ensuing month, scrutiny of fiscal oversight and accounting practices under Jamison has increased, broadening the scope of scandal.

Most recently, state Auditor Mary Mosiman jumped into the fray when she announced her office would conduct a limited review of IFA financial operations.

“This decision resulted from media reports in which possible financial irregularities were identified,” a statement from the auditor said. “The scope and target completion date have not yet been determined.”

The IFA, created in 1975, is a conduit for not-for-profit borrowers and administers and borrows for the state’s affordable housing programs and the state revolving fund. The $628 million of bonds it sold in eight deals last year made it the state's largest issuer and represented more than a quarter of all Iowa municipal bond volume, according to Thomson Reuters.

Questions have been raised over the autonomy Jamison had to spend up to $100,000 a year in agency money without direct approval of the eight-member IFA board, his planned $17 million move of the agency headquarters, and the use an employee PayPal account to collect agency fees.

Mosiman’s office annually audits nearly all state agencies with the exception of IFA, but state law permits the office to review IFA finances if it believes such a review is necessary. Mosiman recused herself from participation in the audit due to an “independence conflict,” with those duties being delegated to her deputies Andy Nielsen and Tami Kusian.

In late April, Reynolds ordered an independent review of the harassment claims and IFA conduct to be led by attorney Mark Weinhardt. Reynolds last week expanded the probe to include a third-party review of financial transactions during Jamison’s tenure.

“It’s important that we take a look at it” and that “we acknowledge what best practices are and so that’s the whole point of doing the review,” Reynolds said during a news conference.

Eide Bailly LLP is the private CPA firm currently responsible for IFA’s annual financial audit and it will conduct the forensic accounting and internal controls examination Reynolds referred to, according to Jensen.

That review will include internal controls examination interviews to determine if existing policies and procedures are being followed and to identify internal control deficiencies; a review of the policy and procedures manual for internal control processes over accounting functions; and examination of specific expense reports, credit card expenditures, and supporting documentation for fiscal year 2016 through fiscal 2018 to date.

“IFA is continuing to conduct our business and are confident we will be a better organization after the reviews,” Jensen said. “I don't anticipate the reviews from impeding our work with conduit bonds.”

Jensen said she has not received any inquiries raising concerns over the scandal from borrowers.

“IFA priced bonds the week following director Jamison's dismissal and the market reception was favorable,” she added.

The authority's largest deal came in 2013 when it issued about $1.2 billion under the federal Midwest Disaster Recovery Bond program on behalf of the Iowa Fertilizer Co.

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