ND Security-Licensing Board's Reserve Fell From $230K to $10K

The North Dakota Private Investigative and Security Board (PISB) -- the small, self-funded agency that licenses private investigators and security guards and is supposed to run entirely on the fees it collects -- has watched its cash reserve collapse.▸ A legislatively mandated performance audit by North Dakota's independently elected State Auditor's Office⧉, ordered by 2025's Senate Bill 2051 after lawmakers raised concerns about the Board's solvency, found the Board had over $230,000 in the bank in 2016 and approximately $10,000 by June 30, 2025 -- a decline of roughly 95.7%. The audit, covering January 1, 2019 through June 30, 2025, identified five separate problems, and the Board agreed with all five in its formal written response.

The reserve's decline traces to 2016, when unlicensed security companies operating during the Dakota Access Pipeline protests forced the Board into legal action it had to pay for out of its own pocket.▸ That spending pattern never really stopped: over the full audit period the Board incurred $275,173 in legal expenses pursuing unlicensed activity and recouped $253,745 of it through settlements, stipulation agreements, and fines -- a net shortfall of $21,428, even before counting everything else auditors found wrong. In 2025, with its reserve nearly gone, the Board asked the legislature for a fee increase; lawmakers granted a 50% bump on most fees (the security-trainer fee moved from a one-time $25 charge to a $40 initial-and-renewal fee) but made the increase conditional on this audit.

Auditors found the Board has no documented policies or procedures at all -- decisions rest on "historical motions and recollection of previous situations," with no established system of internal control.▸ That is not a new finding: the same gap was flagged in the Board's prior audit, for the period ended December 31, 2018, and the Board disagreed with the recommendation at the time, saying it did not feel internal-control documentation was necessary. This time the Board agreed to build a system based on the federal Green Book standard for internal control.

Visiting the Board's Bismarck office in July 2025, auditors found backlogged license and renewal applications scattered across three filing cabinets, 10 banker boxes, and 11 storage crates -- 24 separate containers, in varying stages of processing.▸ The Microsoft Access database meant to track licensees is overwritten every time a record is renewed or modified and was not being maintained because of the backlog, meaning the Board has no accurate list of who it has actually licensed. Meeting minutes were not prepared for 31 board meetings between October 2021 and June 2025, a violation of state law. Digging through unsorted correspondence, auditors also found $2,755 in stale-dated checks that had never been deposited and, after reviewing every bank statement from the audit period, another $455 in deposits reversed from stale-dated checks -- $3,210 combined in mishandled cash from an agency that can least afford to lose it.

The Board issues a new pocket identification card to every licensee and registrant each year, and the process is entirely manual: the Executive Director told auditors each card takes 10 to 15 minutes to produce.▸ At the Board's own estimate of roughly 1,800 licenses and registrations processed annually, that adds up to as much as 425 hours of staff time a year on card production alone -- and a sample of 28 renewals found 22 never got a new card issued at all, a casualty of the time crunch and the backlog. The math on the renewal calendar is no better: state law sets a September 30 annual deadline, the Board typically opens its window around August 1, and auditors calculated that squeezing the Board's own volume into that roughly 60-day span would require processing about 30 applications every single day of it.

The audit's fifth finding goes straight at the legal bills that helped drain the reserve in the first place.▸ Auditors compared what the Board pays its contracted private attorneys to what the North Dakota Attorney General's Office charges its client agencies: an average $241 an hour for a lead attorney under private contract, versus $127 an hour for an assistant attorney general -- a $114-per-hour gap. More than 75% of North Dakota's 55 regulatory boards and commissions already use the Attorney General's Office for legal work. The PISB does not.

The Board agreed with all five findings in some form, but its commitments vary in strength.▸ On policies, the backlog, and the pocket-card process, it agreed to specific fixes: an internal-control system built on the Green Book, an Excel-based tracking process (having already dropped Microsoft Access), documented handling of incomplete applications, timely check deposits regardless of application status, and industry consultation on whether annual card reissuance is even necessary. On the renewal calendar, it agreed to widen the processing window and start using late fees. On legal costs -- the finding tied most directly to the reserve's collapse -- the Board's response is the softest of the five: it will "consider whether" the Attorney General's Office could handle some or all future matters, without committing to actually switch.