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State auditor questions future of little-known agricultural loan program

State Auditor Beth Wood is questioning whether an obscure agricultural loan program run by the state should continue, saying it's operating at a loss and issuing few new loans.

The N.C. Agriculture Finance Authority issued four new loans totaling $622,670 in 2012 and one new loan for $590,000 through the end of February. All told, the agency administers 47 loans with seven staffer, down from 169 loans at its peak in 2004, state auditors found.

It has operated at a loss for four straight years at about $270,000 a year.

Auditors questioned whether the authority was "cost effectively meeting its legislative mandate, saying if the authority is abolished by the legislature, it could return $1 million to the state's bank account.

Moeser forgets school's past indiscretions

UNC School of the Arts Interim Chancellor James Moeser this week thanked State Auditor Beth Wood for uncovering problems with an employee who had misappropriated a laptop computer for her son's personal use. He also promised new procedures to prevent such state property misuse in the future.

"We believe that the fact that we have had only one financial audit finding over the last 22 years validates UNCSA's serious efforts toward ensuring properly functioning internal controls," Moeser wrote to Wood.

Of course, Moeser, the former UNC-Chapel Hill chancellor, is a short timer at the public arts conservatory in Winston-Salem. He's been the interim leader for just a month. So Dome can forgive him for not remembering to mention UNCSA's past problems on investigative audits.

Audit finds lack of verification in JDIG grants

The state Department of Commerce issued $20 million in job-creation grants in 2010 without performing audits or onsite visits to confirm that the companies met the requirements of the grants, according to a state audit released Monday.

The department instead relied on withholding records from the Department of Revenue to confirm the accuracy of the wage and tax information being reported by companies, while also requiring companies to submit and certify annual reports.

“Relying on a company that is receiving grant payments to confirm that the company is in compliance with the grant requirements does not meet the definition of an objective and independent process,” the auditor’s report concluded.

State Audit: Rural Center lacks oversight, pays president 'unreasonable' salary

The taxpayer-funded N.C. Rural Economic Development Center has failed to provide proper oversight of millions in state money and pays its longtime president an “unreasonable” salary of $221,000, state auditors say in a report released Wednesday.

Auditors also found that leaders of the nonprofit Rural Center have put nearly a quarter million dollars into a special account to pay president Billy Ray Hall, 65, a severance when he leaves the rural agency, which emphasizes its efforts to help poor and struggling pockets of the state.

The severance account for Hall was started in 2003 and board members have put $10,000 to $40,000 a year in it since, according to the audit. The severance account held $241,856 on June 30, 2012.

That money for Hall is above and beyond regular retirement account contributions that he also has received, according to the audit. The auditors did not comment on the severance account, but mentioned it in a footnote.

Morning Memo: GOP fundraising, Rural Center face major questions

GOP ABANDONS PLEDGE FOR TAX REFORM: From Rob Christensen's column: Tax reform in North Carolina died last week. RIP. …The House has rolled out its plan, and the Senate has rolled out an alternative plan. Those plans focus almost exclusively on cutting corporate and personal income taxes, rather than revamping the 1930s tax code. So tax reform is dead. In its place, we have large tax cuts, the size and shape of which will be worked out in a House-Senate conference committee. Cutting taxes is in the Republican comfort zone. Reforming the tax code is not. Full story.

LOBBYING FIRM ACTED AS TILLIS, McCRORY FUNDRAISING CONDUIT: The giving by the sweepstakes industry also puts a spotlight on fundraising efforts organized by McGuireWoods. Multiple contributions from sweepstakes operators were often recorded on the same days, with the largest group coming on May 16, 2012, when the Tillis campaign tallied a total of $60,002 from 19 individuals. Days earlier, on May 10, McGuireWoods held a fundraiser at its Raleigh office attended by Payne and lobbyists from other organizations. Harry Kaplan, a McGuireWoods lobbyist, said he invited clients who were interested in meeting with Tillis to talk about the issues they represented. They could also make campaign contributions, which some did, he said.

***More on Tillis, McCrory campaign fundraising, the sweepstakes industry and questions clouding the N.C. Rural Center and top Republicans below in the Dome Morning Memo.***

State audit faults testing of new Medicaid billing system

The state Department of Health and Human Services' testing program for the new Medicaid billing system was seriously flawed, a report from State Auditor Beth Wood's office said.

The state is preparing to launch a new, expensive, and long-delayed Medicaid billing software on July 1. DHHS did not have adequate tests and evaluations in place to make sure the system, which DHHS calls NCTracks, is ready, the audit says.

In its response, DHHS agreed with the recommendations and is acting on them.

Even though DHHS was moving to plug holes in its preparations, the audit includes an ominous warning.

"The complexity of the NCTracks system makes it impossible to predict all of the scenarios that could impact the project, even after it is tested in accordance with industry best practices."

In other words, providers should expect things to go wrong.

State audit investigation leads to firing

A state auditor's investigation into a Durham Technical Community College employee working a private business on the state's dime led to the employee's firing, a report released Wednesday revealed.

The investigation began with a call to the auditor's fraud hotline describing an assistant registrar at the college's Center of the Global Learner who ran a bird supply store and sold Amway products during business hours.

State audit finds major cost overruns for IT projects

A new state audit finds state agencies spent more than double the projected cost for information technology projects that took more than a year longer to complete than original estimates.

The Office of the State Auditor released a report Monday that determined the state spent $356.3 million more than expected on 84 IT projects during the Gov. Bev Perdue administration. It also found inadequate controls to monitor how much state agency's spend on various technology needs.

Morning Memo: McCrory, Foxx square off as legislature takes fast track

UPDATED: IS IT MAYOR PAT OR GOVERNOR PAT? Gov. Pat McCrory told two city of Charlotte staff members this week that state money for the light-rail extension to UNC Charlotte could be at risk if the city builds a controversial streetcar, according to a memo sent Thursday. Without the N.C. Department of Transportation’s $250 million grant, the $1.1 billion Lynx Blue Line extension can’t be built. As Charlotte mayor, McCrory, a Republican, championed light rail, which was one of his signature accomplishments. But he vehemently disagrees with using city property tax dollars to build a streetcar, and used the meeting in Raleigh to relay a message to City Council, according to the memo.

FOXX 'OUTRAGED' OVER WHAT HE CALLS A THREAT: “It’s particularly alarming that he would choose to deliver messages to city staff, particularly messages that contain threats," said Charlotte Mayor Anthony Foxx, a Democrat and potential challenger to McCrory in 2016. “He is governor of the state, and there are a host of issues – tax reform, health care. Why the governor would choose to place focus on a transit project, particularly one contained in a transit plan that he voted to implement makes no sense,” Foxx said.

***This is the Dome Morning Memo a tipsheet on N.C. politics. Click "Read More" for other headlines and news.***

Reporting fraud? There's an app for that

The state Auditor's Office has a smartphone application that allows people who spot government fraud or waste to report it, using their smartphones, to the office's investigative division.

Users can download photos or video to support their allegations, according to the office. By law, the names of those making reports are kept confidential. The app, available for iPhones and for phones using the Android operating system, allows for anonymous reporting.

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