A New York state authority that supports Standardbred purses and breeding has lax internal financial controls, according to an audit released Tuesday by state Comptroller Alan Hevesi.The New York State Horse Breeding Development Fund helps support the state's harness industry, but gets part of its funding from the state's four Thoroughbred tracks and off-track betting corporations."The trustees of the Agriculture and Horse Breeding Development Fund have failed to ensure that the organization is handling its financial matters appropriately and effectively," Hevesi said. "The lack of internal controls opens the door to potential fraud and corruption and diminishes the organization's ability to fulfill its mission to support horse breeding, harness racing and related activities, all of which are important to New York State's economy."The comptroller identified a number of weaknesses in the operation of the fund, including shortcomings in documenting key financial matters and having a lawyer who provides only occasional work to the fund but receives full-time benefits.Stacy Clifford, a spokeswoman at the state Racing and Wagering Board, whose chairman sits on the fund's board of directors, had not yet seen the audit and declined comment.The audit found that the fund does not adequately monitor that it is receiving the correct amount of revenue from tracks and OTBs for its operations, relying instead on information from the tracks themselves.Earlier this year, Gov. George Pataki proposed eliminating the fund--as well as other horse industry entities--and folding it into the state agriculture department.The Hevesi audit of the harness fund found no written policies involving a whole range of expenditures and payroll, no code of ethics for its board members and employees, and a bank account valued at more than $100,000 that was not properly collateralized. It said the fund spent more on administrative costs than legally allowed; in 2003 it overspent its legal limit by $191,000, or by 49%, the report said.The fund was formed in 1965 to help support the harness industry, including financing purses at stakes races and equine research activities. Its funding comes from several sources, including one-half of 1% on every bet on out-of-state Thoroughbred races that are simulcast at New York state harness tracks.