Pa. Auditor General to release report on business closure, exemption process in October

State Auditor General Eugene DePasquale said his department’s report on the state’s controversial waiver process that allowed certain businesses to operate amid the pandemic will be released to the public during the first week of October, with a target release date of Oct. 6.

This week’s announcement is the first update in more than four months from the Department of the Auditor General on its audit of the waiver process managed by the Pennsylvania Department of Community and Economic Development (DCED) that exempted some firms from Gov. Tom Wolf’s March 19 shutdown order, deeming them “life-sustaining.” By April 3 when the DCED ended the waiver process, the DCED received more than 40,000 applications for exemption from the closure order.

DePasquale announced the audit April 30 following outcry from business owners and lawmakers who said the process for qualifying some firms as “life-sustaining” and others as “non-life-sustaining” lacked consistency and transparency. In a statement released Tuesday by the Department of the Auditor General, DePasquale said the department has been working with the DCED throughout the summer and his audit team is “making progress.”

“We’re analyzing whether there was consistency or not and if this type of thing ever happens again what will be necessary to make sure there is consistency,” DePasquale said on a Wednesday morning media call. “We’re not prejudging, but that’s what we’re analyzing.”

DePasquale, addressing reporters on a Wednesday morning press call, said the “primary point of focus” of the audit is to evaluate the “consistency and fairness” of the process for exempting businesses from Wolf’s March business closure order. He said the audit is looking into any potential “undue influence” in situations where a business was granted a waiver to stay open while a competing business in the same sector was forced to stay closed.

“We want to make sure this was all happening based on the merits of whether the business should or should not get the waiver,” DePasquale said. He declined to provide any details of his department’s findings on Wednesday.

While no allegations of wrongdoing have been made publicly by the state Auditor General as of Wednesday, DePasquale said his department reserves the right to refer any findings of the audit to the appropriate legal authorities and the State Ethics Commission.

DePasquale said Gov. Wolf was within his authority when he invoked his own protocol for containing the spread of the novel coronavirus via mandated business shutdowns instead of adopting the less-restrictive guidance offered in March by the Cybersecurity and Infrastructure Agency (CISA), under the Department of Homeland Security. However, the “pros and cons” of the governor’s decision will be discussed in the October report, DePasquale said.

“We have concluded that the governor was within his legal right to set up a different standard…but that certainly created pros and cons moving forward that we will outline on Oct. 6,” DePasquale said.

DePasquale said he hopes the report will conclusively disclose the audit’s findings but said any loose ends could require a second phase of the report, released at a later date.

DePasquale said department officials would provide members of the media with inquiries his audit team made to the DCED as part of the audit. This story will be updated when that information is provided to Central Penn Business Journal.

Update 3:45 p.m. 9/9/2020: A spokesperson for the Pennsylvania Department of the Auditor General provided the following summary of information the audit team requested from the DCED as part of the audit.

• Development of criteria/guidance used in making waiver decisions
• Guidance/training provided to DCED staff to implement waiver program
• Guidance/information used in development of portal and waiver application
• Communication and guidance provided to businesses during application process
• Communications from outside sources regarding businesses that applied for a waiver
• Details on processing of waiver requests, including decisions made, in what order they were processed, and data in database
• Number of waivers initially granted then rescinded
• Number of waivers initially denied then later granted