Topeka Forensic auditors said Tuesday that they stand by their investigation of the Kansas Bioscience Authority and that any further work would be a waste of time and public funds.
The supplemental report released by BKD Forensic and Valuation Services was in response to legislative questions about the scope of the firm's investigation of the KBA since April 2011.
BKD and a team from Meare Welch Browne were paid $960,000 to look at the KBA at the request of the agency and insistence of Gov. Sam Brownback's administration.
"In our professional judgment, continuation of the investigation is not likely to lead to any information which will change the findings and conclusions in any material way, if at all," the auditors wrote. "We believe the investment of additional time, effort and expense is not a wise or efficient use of resources."
The audit found that the KBA made sound investments in emerging bioscience companies since its inception in 2004. However, questions were raised about the KBA's former CEO Tom Thornton, a number of vendor contracts that violated KBA policy and missing files from the CEO's computer.
Legislators have questioned how thorough the review was, especially in light of documents that Thornton deleted from his state-issued laptop after his resignation was submitted. The Johnson County District Attorney's office is conducting its own investigation in to the KBA. Auditors have given copies of their findings to the prosecutor.
KBA Board of Directors Chairman Dan Watkins said the agency has complied with auditors during their investigation and had taken action on recommendations to change some of its governance practices.
"I do not plan to request or authorize further work by BKD on forensic audit matters but stand ready to discuss BKD's findings and conclusions with the board, KBA appointing authorities and other members of the Legislature," Watkins said.
Sen. Susan Wagle, a Wichita Republican whose questions in 2011 led to the audit, said overall the report provided valuable information about how the KBA's board has operated.
"I believe it is a case of crony capitalism," she said. "I know enough for my concerns to be validated about how the agency was managed. We have here an agency that has no oversight. It's an agency that failed to police its executive director and itself."
She said questions still remained to be answered about the ties between the KBA, Thornton and Cleveland organizations. Thornton resigned in to take a position as general manager at the Cleveland Clinic Innovations.
The audit found that Thornton misled the KBA board about a trip he took to Cleveland to interview for the job, a trip he eventually reimbursed the agency for the cost of the plane ticket.
Watkins said BKD spent more than 3,150 hours working on the audit. He said Brownback's office has requested detailed billings by BKD by each professional, which the KBA has provided.
Auditors were asked to probe how the authority was making its investments, potential conflicts of interest, personnel decisions and how job creation figures were determined. The KBA's purpose is to distribute millions in state tax dollars to emerging bioscience companies.
The audit concluded that the KBA had policies in place to safeguard its investments, but did suggest that there may have been the appearance of conflict of interest over two financial commitments by the board to organizations involving two members.
Other findings found fault with Thornton's management style, his destruction of documents on his state-owned laptop and misuse of some $4,700 in KBA funds, which he later repaid. Agriculture Secretary Dale Rodman, who led the administration's oversight of the audit, said the report suggests that "intellectual property" of the KBA was taken by Thornton to his new job in Cleveland.
Legislators continue to raise questions about the KBA's investment practices and the appearance of conflict of interest between the board and companies receiving funds. A bill has been introduced in the Senate to expand state law to prohibit KBA board members from personally benefiting from the authority's investment in emerging companies.