Audit finds weak policies, record-keeping and costly legal practices at Private Investigative and Security Board

A performance audit of the North Dakota Private Investigative and Security Board (NDPISB) identified multiple operational weaknesses, including missing documentation, licensing backlogs and avoidable legal costs, auditors told the Legislative Audit and Fiscal Review Committee.

The audit, ordered by Senate Bill 2051 and covering Jan. 1, 2019 through June 30, 2025, concluded the board lacked documented policies and internal controls, relied on historical motions and recollection rather than written procedures, and was six years behind in filing required audits or financial reviews. "There are no documented policies or procedures for the Private Investigative and Security Board," Josh Galley, the state auditor, told the committee. "The conclusion to that objective is, no." (auditors' report and communication of other matters were provided to the committee.)

Auditors found licensing-process inefficiencies tied to a largely paper-based filing system and electronic records that overwrite historical data. They identified a backlog of incomplete applications and some checks found in files that had not been deposited and had become stale. The board issues pocket cards annually for roughly 1,800 licenses; auditors sampled renewals and found processing workloads make it infeasible for staff to meet the board's established deadlines without additional staffing.

The audit recorded about $275,173 in legal expenses billed to the board (with roughly $253,745 recouped through settlements and stipulations) paid to a private law firm. Auditors suggested the board consider using the Attorney General's Office, which would likely be materially cheaper based on average hourly rates; the board agreed to consider that option.

Auditors also reported 31 missing board meeting minutes from Oct. 2021 to June 2025 and recommended improved records-retention and minute-preparation procedures. The board's executive director told the committee that he has completed and posted the delinquent minutes and the board will work to implement Green Book-based internal controls and other recommendations. Board members and industry representatives who spoke at the meeting said they supported implementing the audit recommendations and would work with the auditor's office on corrective actions.

The committee asked the board to provide status updates; the board said it will coordinate with the auditor's office and report back at future meetings.