COLUMBUS, Ohio (AP) -- Ohio's state auditor scolded Gov. John Kasich's signature job-creation office on Thursday for sloppy handling of ethics and conflict-of-interest procedures in its first year, but he found that no business conflicts existed among its employees.
The formal review by Republican Auditor Dave Yost followed a high-profile fight for access to JobsOhio's private financial documents. It cited Ohio's private nonprofit development entity for eight procedural deficiencies during its first year of operation.
"Organizations at every level have areas where improvements can be made," Yost said in a statement. "I'm all for job creation in our great state, and I anticipate our recommendations will help strengthen JobsIOhio's operations."
JobsOhio says all the processes have been addressed since then, many of them voluntarily identified and remedied.
The review did not look at JobsOhio's fiscal soundness, a task that was handled earlier by KPMG.
The audit found that multiple requests and extended efforts were required to vet potential conflicts of interests that might have existed between JobsOhio directors, executives and employees, and the companies the office was recommending for state tax incentives.
"JobsOhio had no clear formal procedure to screen for senior management and employee conflicts of interest or any mechanism for managing these situations (during the audit period)," Yost said.
Yost's office "haphazardly selected" 28 project files to review - of perhaps 200 projects during the period - and identified potential conflicts in three instances. Two were fully cleared, the other determined to be inconsequential.
Those results, JobsOhio wrote in its response, "point out the danger of those who would - with limited information - rush to judgment on matters involving an individual's reputation."
The audit also said some JobsOhio directors failed to sign ethical conduct pledges or to make written assurances they'd follow the entity's self-imposed gift or conflict-of-interest policies until well after related business was conducted.
The review also found about $60,000 in mostly public spending that was undocumented.
With a subpoena, Yost had ordered JobsOhio to turn over its private books, as well as its public ones, for the review. The move was criticized by Kasich and fellow Republicans in the legislature.
JobsOhio complied under protest in March. At the same time, it returned $1 million in taxpayer startup money in a move possibly aimed at shielding the office from future government scrutiny.
JobsOhio President and Chief Investment Officer John Minor Jr. announced the refund in tandem with answering Yost's subpoena for access to the private side of the office's books. JobsOhio, state legislative leaders and the Kasich administration argue the records aren't public.
Lawmakers have changed state law to clarify the disagreement, shielding future private spending from the state audit process, which concerns JobsOhio's critics in light of Thursday's findings.
"The great Republican Ronald Reagan once said, 'trust but verify,'" said ProgressOhio Executive Director Brian Rothenberg, whose organization is challenging the constitutionality of JobsOhio. "JobsOhio seems to keep saying, 'just trust us.' I think the public deserves verification."
JobsOhio received $1.5 billion from the sale of bonds backed by 25 years of state spirituous liquor profits. Its executives have said the profits are public money but the bond proceeds are not.
JobsOhio was created in 2011 after being spearheaded by Kasich to replace the bureaucracy at the former Ohio Department of Development and "move at the speed of business." JobsOhio received $1 million in taxpayer dollars to start and recently offered $1.5 billion in bonds backed by its long-term rights to Ohio's liquor business.
In an independent audit released Cct. 11, KPMG gave a clean bill of health to JobsOhio and the corporation it created with the liquor proceeds. The review of JobsOhio and JobsOhio beverage system covered the fiscal year that ended June 30.