A limited performance audit of the state's economic development effort released Thursday identified some difficulties in making the transition from a separate state department to part of Gov. Jon Huntsman Jr.'s office.

Huntsman, who promised during his campaign to make economic development a top priority, dismantled the former Department of Community and Economic Development shortly after taking office in January, firing more than 30 employees.

That has left his new Governor's Office of Economic Development with little access to institutional knowledge and past performance data, the report by the legislative auditor general found.

Nearly all of the programs within the office have new directors, including many who are also new to public service and will have to deal with the appropriations process for the first time in the upcoming legislative session.

Additional concerns raised in the report, which will be followed up by a more complete examination of the office sometime next year, included a lack of oversight from the Legislature and other outside sources.

"Bringing the economic development function into his office seems to imply the governor will provide oversight either directly or through his economic adviser. Some changes, however, have limited the options for independent oversight," the report stated.

For example, an economic development board has become primarily an advisory group. And because the office is no longer a department with the power to make administrative rules, there is no direct accountability to the Legislature, which approves such rules.

The report noted that the office's business and economic development division is asking for nearly $25 million from lawmakers next year, a 155 percent boost, even though it "has little actual performance to use as justification for such a large increase in funding.

"In our opinion, the division could present a more persuasive argument for increased funding after documenting successful performance," the report stated. But the office's director, Dick Bradford, said he didn't believe the request would be affected by the auditor's findings.

Bradford told members of the Legislative Management Committee's audit subcommittee Thursday that the auditor's findings "essentially are accurate" and the office is working on "a better defined package of policies and procedures."

Legislative Auditor General John Schaff said the new office is working on the issues raised in the report and suggested a scheduled follow-up audit be delayed from March until September, "to give them an opportunity to perform."

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