North Dakota State Auditor Joshua Gallion joins multimedia journalist Jason Spiess to discuss several citizen-driven audits from western North Dakota that came to ESG University via our ESG Tip Studio Email. (Transcript below)
The audits in question were from the Williston School District and Parshall School District in the Mandan, Hidatsa and Arikara Nation (MHA Nation).
“The citizens went out collected signatures and turned those in,” Gallion said. “North Dakota state law says if we get those signatures, the state auditor's office shall conduct that audit.”
The audit on the Williston School District found that there were 21 “findings” within the report.
“That's a very large, large number,” Gallion said. “This audit came about through the efforts of the citizens and that in that community.”
Gallion said the state auditor’s office looks into internal controls and evaluating reporting requirements.
“We want to make sure that the statements, in this case, are an accurate reflection of the school district and that bank balances tie out,” Gallion said. “And one of the areas that we found something very simple that any business owner or anybody involved in management knows that your bank reconciliations that you should be doing on a monthly basis should balance. We had during the audit period, none of the bank reconciliations balanced.”
In addition to the citizen-driven audit issues with the school districts, the North Dakota Auditor Office uncovered some interesting news regarding Governor Doug Burgum’s use of the state’s airplane.
“Even on a short trip, you're talking probably a couple thousand in cost,” Gallion said. “And what we found is empty airplanes being flown to locations, not always within the state of North Dakota to go pick up the governor and bring him back to the capitol.”
Gallion continued citing state law and constitutional codes that basically state in state government, no employee and the governor is an employee of the state, no matter what your title is.
“State government does not pay you to get to work,” Gallion said. “It is your responsibility at every level. It is the responsibility of the employee to show up to the office.”
The audit on the governor’s airline use and manifest paints a picture of how exactly Governor Burgum’s administration is using government resources.
“For him to request a state airplane to come pick him up to bring him at the cost of thousands of dollars, that falls under waste and abuse,” Gallion said. “So we conducted that audit and what we found beyond those empty flights to go pick him up to bring him to work. We were sending that state airplane all across the country.”
To read the entire transcript, see below Gallion’s official state biography.
Joshua C. Gallion was elected on November 8, 2016 to serve as North Dakota’s 17th State Auditor. He succeeded Bob Peterson who served as the State Auditor from 1997 to 2016.
Joshua, born in Spokane, Washington, served in the United States Air Force at Minot Air Force Base from 1998 to 2002, settled in Bismarck, North Dakota after his enlistment with his wife Becky. They have two daughters, Brooklyn and Sasha.
His education includes an associate degree from Bismarck State College, Bachelor of Science degrees in Accounting and Business Administration from Dickinson State University, and a Master of Business Administration degree from the University of North Dakota.
Prior to becoming the State Auditor, he served as the Accounting Manager for the North Dakota Public Service Commission. His other work experience includes project management and finance with the North Dakota Department of Transportation, customer service with Fougner Engineered Sales, Inc. in Bismarck, ND, and sales, flooring installation, and warehouse management with his family’s business R.W. Gallion, Inc. in Spokane, WA.
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Below is the raw, unedited transcript from our artificial intelligence translator.
Josh Gallion
My name is Joshua galleon and I am the state auditor of North Dakota.
Jason Spiess
I appreciate you coming on the program here, before we get started. Let's do a little context here because when we were on a super top 12 seventies, talk of the town with steve bock and you mentioned that you felt like this piece of legislation currently going through the Senate floor was an attack on you.
Let's talk a little more context for the people, the listeners out there so they can have a better understanding of what that is before we get into some of the other meat and bones, meat and potatoes, the juiciness if you will again
Josh Gallion
Appreciate the opportunity. So when I was elected back in 2016, you know, I made some commitments to myself and and for me, my military background, serving the United States Air Force, you know, I I believe in um service and um, you know, the core values of the Air force integrity, first service before self and excellence and all we do. I have incorporated those into my life.
So when I came into this position, I committed to making sure that we're gonna do the right thing each and every day without fear. Uh, and what we see today and what we've experienced over the last six years is yes, this auditor's office has been under attack by the legislature. Each session has brought um different avenues to try to undermine this office, try to dissuade us from from doing the right thing.
And, and right now, what we're facing is, you know, a legislature that won't say that they don't like the audits. But what they're trying to accomplish is when you rip away the funding behind an audit, when you take away the money to be able to accomplish something you can in turn and the audit. Uh, and so this is a really indirect approach that they're, they're doing these, these attacks have gotten um more, more innovative. They are getting more and more creative and what they're
doing. But again, I go back to my commitment, I am going to do the right thing. I'm gonna do the right thing without fear. I love what this organization does. I believe in what it accomplishes and providing transparent information about government and communicating that to the people because it is the people who hold government accountable and they have the right to know how their government is spending their money
Jason Spiess
being in the media for over 30 years. I can understand what you're talking about when More or less you don't drink 100% of the Kool aid. Sometimes some people that you thought were your friends are no longer your friends and they can use resources that maybe they shouldn't be using. And I'm telling you that from my experience and I found that out actually trying to do some transparency things out in Western North Dakota as well because my commitment much like you as to the people.
So when I do news stories I try to think of if I was a person that's a taxpayer, what kind of information would I want if I was a person trying to support my family, what type of information would I want? And so when we started the crude life for example, we were about the community first, we were about the innovation second and then we were about if those two things were followed, well the profits should be there and the profits are not there.
Well, why is that? Well, what we found out was that a lot of times it came down to regulation and it came down to taxes. So we wanted to explore that a little bit more and we found that there was some local governments, local school districts that were really abusing their power. And so when you came out with your story, this was remarkable because this is something we've been trying to talk about for almost 10 years, almost 10 years because we have a lot of C E O s from oil companies that
listen to this show because they cannot be in the bacon. So they need as many eyes and ears as possible. So when the school district of Stanley decides they want to get in the real estate business, they actually want to know that because that might impact their taxes going forward in the amount of money they have to invest in north Dakota because they live in Dallas Houston colorado Oklahoma city, we heard that there was a problem with the
Williston school district and their audit. Can you confirm that? Is there has there been any problems with that? Because that's like right in the ground zero of the bacon?
Josh Gallion
It is. And so the Williston School District, we did just complete that. That is the largest local government audit that we've ever conducted. Probably also one of the most expensive to to go through the number of issues that we uncovered. There were 21 findings within this report that is for us. That's a very large, large number. This audit came about through the efforts of the citizens and that in that community.
So one of the great things that we have in law is that if the community, if the citizens of of a jurisdiction would like they can go out and petition collect collect signatures for a petition once they achieve a certain threshold. Uh and I believe that's 35% of the qualified electors of the last election for schools and school board. If they achieve that number, they turn those in, we will verify those signatures to make sure they are actually qualified electors.
But once that happens, the state law here in north Dakota says we shall conduct that audit. And so I applaud the courage of those citizens to to call us in. Uh we were able to identify a lot of different areas. Um and we call them deficiencies. Uh and the approach that we take is the goal of an audit is to try to come in, apply the talents and the resources of the staff members that we have within the auditor's office, put that in a report and that's really a road map for these clients are are
are local schools in this case and Williston to be able to use that to improve their operations, improve their fiscal accountability, improve the transparency they give back to the citizens because again, the citizens deserve to know how their government is spending their money. You
Jason Spiess
Said 21 findings? What um what is a finding I guess just give us an example or two of that.
Josh Gallion
So we look at several different areas, um sets of criteria but but we also use the standards, we use laws and some of the standards we look at. There, there's a control framework. So we're looking at internal controls, we're evaluating reporting requirements. We want to make sure that the statements in this case are an accurate reflection of the school district and that bank balances tie out.
And and so one of the areas that we found something very simple and any business owner, anybody involved in management knows that your bank reconciliations that you should be doing on a monthly basis should balance we had during the audit period, none of the bank Ricans balanced. In fact, we went back some of those Ricans didn't balance for years. We never found um the last time they did balance.
Well, that means that the school district never really understood from fiscal period to fiscal period financially where they're at what their, what their revenues or expenses in the bank balance. It was, uh, it was all unknown. So it's, That to me is very concerning. That's business accounting, government 10
Jason Spiess
one. How far back does that go that they didn't know.
Josh Gallion
We, we, again, our audit period was just for a fiscal year. We checked all of those or spot check those, none of the, none of our samples balanced. We went back a little bit. None of those are guests. It's, it's years, it could have been 5 to 10 years since they last
Jason Spiess
and
Josh Gallion
we don't have the specific date.
Jason Spiess
My, you know, being a, being a business owner for pretty much over 30 years. Um, just the baseline of that would tell me that the cash flow must have been really good that they were able to do that
Josh Gallion
payroll or expenses. You know, none of those issues came up that they were delinquent on any expenses. So clearly the school had plenty of resources flowing in. Another key issue that we identified, which, you know, for the Willys and school districts. They voted a couple of years back to combine school districts and that's really the underlying issue with this petition as we were called in to audit one of the school districts.
Um, there's, uh, and they combined, the city school district that we audited combined with the rural school district to create a new school district. Well, in our audit, we found that $6.5 million in debt had never been disclosed on the financial statements was never made public. The people who voted were never privy to that information. That's very unfortunate because again, what the auditor's office wants to do is we want to come in, we want to make sure that we provide all of
the information to those charged with governance, whether it's a school board, uh the administration or ultimately the citizens have all of the information their disposal so they can make the best decisions. And that's, it's very unfortunate that 6.5 million in that fiscal period was never reported. Um That, but that could have been a 10 11 $12 million debt. That should have been on the books until we completed that audit. It was not,
Jason Spiess
this was a citizen driven audit,
Josh Gallion
correct? So the citizens went out collected signatures turned those in state law says if we get those signatures, the state auditor's office shall conduct that audit.
Jason Spiess
and when you did the audit, you found 21 findings. And what was the amount of what's the, I don't know the term abuse, misappropriation misallocated money, whatever the actual term is. Um correct me on the term, I guess. And then how much money was that?
Josh Gallion
Well, we don't, we don't look at findings in total and cross because each individual finding is a specific area. So we're looking at those internal control frameworks, we're evaluating the segregation of duties, the structure of the financial management, there's so many things that go into that. And as we evaluate all of those different processes and again our government auditors here in the auditor's office, they are the best government auditors in the state of North
Dakota. And so their processes, their procedures, the questions they ask. We really dig in to really understand our clients. Um but these are these are findings that you know, some of them are in the millions and some of them are much smaller. But all of these show that the structure the financial um framework for managing the Williston school district, we always try to make sure we're looking at a positive and
so what I say is it's there's a lot of opportunities for their, for them too to make these corrections and improvements and we will continue to work the school district to do
Jason Spiess
so. Was there a finding in the school district of partial as well. Was there an audit? I got an email on that.
Josh Gallion
So yes. So the partial district that was also a petition on it. So the citizen's initiative petition and we came in and we were able to, that was a couple years old. So I don't have all the details in front of me on that one.
Jason Spiess
But what I can
Josh Gallion
tell you is we were called and we found a lot of opportunities for them to improve as well. And again, I think one of the same areas, bank reconciliations, um you know, these are, these are some of the things that we look at and what we left that school district with again was a roadmap, so they can be much better. ...
Jason Spiess
Was there any other citizen driven audits that I guess in the last year? Has there been any, I guess. Um How many more have there been? I haven't, I didn't even know that was a thing. I've called to get an audit before and they told me to kiss off. So I mean, it's yeah,
Josh Gallion
When I when I first took office um you know, this section of code had probably been on the books since uh since the 60s. You know, we haven't really done the research on that, but it's probably been there for a long time. Nobody here in the auditor's office had any record of it ever happening. But uh it must have been around 2018. I think we we started we did our first one that we could we could recall. Uh and that was Belcourt public schools. ...
Jason Spiess
And what year was that? Sorry? What what year was that?
Josh Gallion
I want to say. That was probably back in 20
Jason Spiess
18, 20, 2018.
Josh Gallion
And we kind of did our first um that's that's the first one again that any of us here in the office could recall receiving an official petition um, to do. And I know the Belcourt um is travel government and so the history on that one is, you know, they went to the governor's office asking the governor to order an audit because that is, the governor can order those.
Um the governor didn't want to. And so I think maybe because of the tribal relations and some of the things that he was trying to prepare and and improve, uh, he got them started on this petition process and pointed that out that that's an avenue that they could go because at that point, I mean, nobody had really known it was there. And when they successfully completed that petition, we did that audit, we found quite a few areas of improvement as well.
A lot of these findings and I can't remember the exact number, but it was, it was considerable. You know, they were, you know, had funds in the wrong place and and balances and Ricans and all of these things. Again, we're not happening. Uh, since then we have seen the number of petition on its increase considerably. You know, and right now we've got, I think there's a Lewis and Clark school district that, that is on our radar that we're working on the city of Lincoln right outside of
bismarck. Um, we have a petition on it there. Uh, so we have seen quite a few of these pop up And you know, the challenge for us is, this is not on our work list. We have a client list. We have audits that we do routinely. We have 45 people who are on our waiting list that want us to do these audits. But when these petition audits hit, these kind of get forced into the mix because the law says we shall do them. So
Jason Spiess
excuse me, you've, we've been talking about school districts here and by the way, partial and Williston are up in the oil country. And that would make sense if they just had so much cash flow that they just were able to operate. No problems because generally when you're flush with cash, you know, whatever.
No problems. Right, that type of thing. And that's not a slight on anybody. That's just the way business works if you're not paying attention and that type of thing. So we have citizen driven audits. Um, It sounds like a city is gonna get audited or has been petitioned. So you do more than school districts.
Josh Gallion
We do cities, counties, park districts. Uh, in our section of law, there's 21 different categories listed. And so there's uh, over 2000 local government entities across the state of North Dakota. About 400 of them right now require an audit. The other 1600 are still required to submit financial information to us that we review on an annual basis.
Um those 400 entities that get audits, we do about 70 of them. So we're in the state and the auditing field, um, for the individual to understand business. We're about 15% of the market share for audits in government audits. So we're actually very small component of that. The majority of those audits are done by the private sector.
Jason Spiess
You mentioned the governor earlier. Have you ever done an audit on the governor for any reason at all?
Josh Gallion
So I, I do get questions about that. Early on after my election, we were informed of some, some concerning travel and the use of the state airplane. And so we did issue a performance audit to look at that. You know, some of the issues that were brought to our attention. Um, and I'll caveat this by the use of the North Dakota State airplane is very expensive for that to go out and come back.
Even on a short trip, you're talking probably a couple $1000 in cost. And what we found is, you know, empty airplanes being flown to two locations. Um, not always within the state of North Dakota to go pick up the governor and bring him back to the capital and in state government, no employee and the governor is an employee of the state, no different than anybody else.
State government does not pay you to get to work. It is your responsibility at every level. It is the responsibility of the employee to show up to the office. Uh And so for them to, to for him to request a state airplane to come pick him up to bring him at the cost of thousands of dollars. Um That falls under waste and abuse. And so we conducted that audit and what we found beyond those empty flights to go pick him up to bring him to work.
We were sending that state airplane all across the country. You know, we'd have maybe one or two people on the plane and we'd fly them out to Washington D. C. Well that cost $15,000 for that small state airplane to travel across the country And back. When a commercial airline ticket would be about $500. We could have bought them first class tickets there and back and it still would have been cheaper for the taxpayers.
And so when we get, when we brought some of those things um that I want to honor the governor and his travel. No, because there are cases where that is important for the governor to be there to be present, to support state of North Dakota to support the industries and the economy. Um there is value.
But when that crosses a line and that comes to my desk, when I said we're gonna do the right thing every day, even if it's not popular to me the right thing was understanding those travel issues uncovering um what's going on and reporting that back to the people
Jason Spiess
now, I got to apologize for my naive a tay. Uh, as an N. D. S. U. Alumnus got my education from North Dakota State University. So I apparently I don't understand everything. Um when the governor becomes a governor, where's his residence? I guess because I'm trying to see if you know, he's got a lot of homes. So is there a loophole that if he, you know, lives in one of those homes out of state, he can get, you know, the air Uber ride reimbursed by the state.
I'm trying to give him the benefit of the doubt here basically. I don't understand the residents law because Professor would, I don't, I didn't, sorry Professor would, I didn't retain it. Does the governor become a resident of the governor's mansion, correct?
Josh Gallion
That is. I think that is in the constitution of North Dakota.
Jason Spiess
I didn't know that. Okay, so
Josh Gallion
so the governor's residence that is right here on capitol grounds, it's just down down the way, it's probably just a couple 100 yards from my office right here and I in fact I can see it
Jason Spiess
out the window. Did you guys do an audit on his remodel job because I remember that was a huge issue in the media and everything and I think it was a $3,4 million bucks he spent or something like that. I don't even know. But did you guys ever do an audit on that? Just you know, as long as we're being a little a little juicy here. I might as well ask that question. ...
Josh Gallion
Did not, ... you know those things and those improvements, those are those are things that happened the natural course of probably building a new home and you know maybe there were some things that weren't planned but we did not dig into the changes and modifications that were made to the
Jason Spiess
Residents. five million. Okay. I just got looked it up some of the garage.
Josh Gallion
I think that was the original building costs and I know there are funds to update maintain um and make improvements and I know the Office of Management budget maintains a lot of those funding. I
Jason Spiess
just remember, yeah I remember it kind of ended up like the N. D. S. U. House where most people understood the need for a renovation but not the not the Taj Mahal renovation. So I think most of the taxpayers would have been cool meeting halfway as opposed to you know the the gold plated toilet seats were a little much. Not just kidding. That's that was that. Nds us actually, the joseph chapman's wife had to have her own bathroom.
That was a whole big deal. I was the investigative reporter on that. I was the one that climbed the fence in order to get the photos back in the day Um back in 2010. I think that was back then anyways. That's different times. Um Okay, so actually I was one question for you. You did an audit on the actual manifest of the governor then for his planes. Is that right?
Josh Gallion
We pulled all the manifest for a time period and we evaluated all of those. Um, and, and we, so we identified empty flights. We identified flights where we were picking up family members.
Jason Spiess
They do, ...
Josh Gallion
we know who went where and what those are. So we had all that information at our disposal and we evaluated that. The team here did some some really good work and we did identify some areas where some of these costs were. We're not in accordance with the Office of Management budget policies.
Jason Spiess
Well, no, I appreciate no, you answered yourself very well. I was just making notes because now I'm curious to see who all of his passengers were throughout the years because I work it out a few other stories and I think that, that that might come in handy. I don't know, maybe not, but maybe maybe it does. Um, That's a whole, that that plane sounds like a fun story in itself.
But uh, we got just about 5, 10 minutes left here. So I wanted to just talk about some more citizen driven audits and some other uh North Dakota audit type of activities that are happening. So from your standpoint, this current piece of legislation is basically they're trying to defund your office so that you can't do any more audits. And I've read the bill and taking a look at it. And the layman's term that I got was they're basically trying to give you 10 bucks and budget to go do an
audit that's supposed to cost you know $40,000 or something like that. So I get what they're trying to do um and and everything. But um what what do you want the people to do? What do you want the citizens to do? I mean, are you even an elected position? I don't even know. Are are you okay? You are okay. So I got
Josh Gallion
elected elected state auditor. I work for the people. They are that they are my bosses. And that's why we work diligently to try to take the information that we have and we want to put it in their hands. And I think from my perspective that's that's why I get so much pushback from the legislature.
In fact, I've had them tell me directly that it's the communication that they want to stop. That's what they want to end. They don't like it when we put press releases out there to inform the people. And to me, ...
Jason Spiess
wait a minute now you've put out a press release from your office before and you've gotten shamed or scolded or you know the finger shamed or written up or something, there's actually been a discussion about that
Josh Gallion
For the last five years.
Jason Spiess
Let's let's take a couple of minutes on that. So you're an elected official for department, right?
Josh Gallion
An entire state agency. I am, I am a constitutional officer for the state of North
Jason Spiess
Dakota. Who, who is, who's, who's trying to micromanage your communications with the people then, because I've never heard of that outside of a, you know, a Fox news media organization. Well Roger Ailes was notorious for that. He would put out a memo. You know, make sure these five topics are covered and 20% of your time go do whatever you want.
So hey, it was a formula that made money. I don't, you know, whatever who's, who's, I guess I thought your boss was the people. So who's, who's your boston micromanaging you?
Josh Gallion
Well, again you're correct, but I do work for the citizens. That, that is the boss. They are the ones that elect me to do this job and that's why I've taken the approach that I have with our communication strategy. I have an obligation to inform the citizens. But there is a growing number of legislators that they want to, they want to control the narrative.
They want to be able to probably sweep things under the rug. I've been told as much. You know, one of the audits we've done is on the uh winter rural fire district here in North Dakota. You know, we, we evaluated some of their annual reports. We did have to conduct an audit for one of the years. But in a five year span, a very small rural fire district spent over $30,000 on just alcohol, which by the way is not in accordance with North Dakota law or the constitution, we, we can't buy those
types of things. Um, we made that public and, and we informed the citizens and I've had several legislators and, and some of these direct attacks is, it's related to that. Um they want me to stop communicating. They want me to stop putting that out there because from their perspective what they're telling me is, well, it makes people look bad, It makes people feel bad feelings
are not something that we take into consideration. We have issues and, and my opinion is we can't correct those issues if we aren't willing to confront those issues here.
Jason Spiess
Here's what I say to all those state legislatures because I've enabled this long enough to, and a lot of people are really shocked at my behavior over the last six months because I'm done enabling it because I don't think a single mother needs to get a third or 4th job so that the state of North Dakota can send an airplane down to pick up doug Burgum at his lake home and bring him back so he can go to a business meeting to make sure that that single mother now has to work 1/4 job because
they're going to direct more state dollars to their little club that keeps getting money. And if anybody thinks that I'm being bitter, I'm not, I actually have a lot of respect for what's going on because I understand what's going on. I've experienced it firsthand, so I have a respect for what is going on. And I've got a lot of respect for you sir, because what you're doing is you are actually standing your ground for the people.
And I don't think that the citizens of North Dakota understand that David versus Goliath thing that you are taking on here because the average person has no idea. They have absolutely no idea. And if I'm an editorialized just for a second, because we're doing a lot of investigative journalism now on who the state is starting to support with these dollars.
These economic dollars, most of them are not only out of state companies, but they're even out of country companies now. So very little dollars are going to North Dakota people. So all these North Dakota people are paying into the federal and state coffer only to see it to go to out of state interests that only benefit a certain amount of small group of people who by the way, are trying to get rid of you now, that's what I've seen firsthand.
So I, I appreciate you coming on here. And by the way folks, I've actually never met this gentleman the first time I've ever seen him is over zoom right now. So I'm actually just responding to a couple of emails tips that I got after we had our little talk of the town um interaction last week with steve bock in where I was guest hosting. Um so anyway, I just wanted to be a little transparent about that because I, I didn't realize all this.
I didn't even know you're an elected official because we never interview the auditor never. We just fact check stuff with the auditor over email. So this was this, I appreciate this. Um got just a couple of minutes left, anything in closing. We
Josh Gallion
would much rather work in the background behind the scenes and do our things. Um, but unfortunately this, this conflict between the legislature and the auditor's office. Again, it's been going on, this is my fourth legislative session. I'm under the fourth attack on the floor of the house. They accused me of money laundering, they accused me of double dipping and double building all of which are criminal offenses.
And so that's why we came out. I I crafted an op ed um to defend the integrity of this organization and, and now we have a situation where um legislators feel like they need to defend themselves against me like they're the victim. But the last I checked, I didn't introduce this bill, I didn't pass around misinformation and I didn't make any criminal accusations.
Um, but for me, I love the work that these people do. The citizens of North Dakota should greatly appreciate their efforts, um to give them transparent, objective and independent information so that they can make the best decisions. And I am committed to continuing those efforts without fear and without backing down.
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Citizen-Driven Audits in ND Uncover Record Findings with Williston Schools, Governor Abusing Airplane Use