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Beth Wood informs Kiwanis Club ins and outs of the state auditor’s office

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At the Nov. 19 meeting of the Roxboro Kiwanis Club at La Piazza restaurant in Uptown Roxboro, Kay Rudd with Person County Special Olympics received a contribution from the club in support of this program. She mentioned that the local Special Olympics basketball team recently placed second in its division in statewide competition. Rudd shared some statewide numbers about Special Olympics, which sponsors 463 competitions for 39,820 athletes in 19 different sports.

North Carolina State Auditor Beth Wood addressed the club as well. A certified public accountant, she is in her third term in this elected position. She is the first woman to be elected state auditor in North Carolina. Areas of emphasis under her leadership have included health care expenses and vendor selection.

She noted that she is from a small farming community in Craven County and is glad to be in a place where people care for one another. It takes $43 billion to run state government each year. $22 billion is raised from taxes, including income taxes ($11 billion), sales taxes ($6 billion) and corporate taxes ($1 billion). Another $21 billion is in the form of federal grants like Medicaid, food stamps, infrastructure funds and education funds.

Wood emphasized that the state auditor’s job is to watch how these funds are being spent and to ensure that they are reported properly. Her office audits state government, the UNC system, community colleges, clerks of court and other component parts of state government. Wood pointed out that the state auditor cannot check every aspect of every statement from every constituent, but must instead work from representative samples.

She gets financial statements from each audited subject, with lots of notes supporting these summarized numbers. Her staff audits these statements and renders an opinion on whether these are “fairly stated,” not whether they are “accurate.” She says the state’s financial statements are accurate only give or take $900 million.

This reason the work of her office is important is that the financial statements are used by others who deal with the state. North Carolina has a triple AAA bond rating. We are one of only 12 states with this top rating, which gets North Carolina the best interest rate possible on borrowing.

Client audits are also a function of the office of the state auditor, determining whether federal grant funds are being properly used for the purpose for which they were intended. She sees it as her mission to guard against the waste of taxpayer monies. If funds are not properly used, a grantor can ask for reimbursement, which is to be avoided.

Performance audits are also done to look at processes within agencies, in order to be sure that when money is spent, the desired purpose is being accomplished. $14 billion is spent annually on the Medicaid program and a like amount on education, which are the two biggest expenditures of tax funds.

With Medicaid, it is important to make sure that the right people are qualified. Eligibility determinations are made on a county-by-county basis. Wood explained that her office surveyed procedures in place in all 100 counties to determine eligibility, as a result of which it was realized that everyone is doing it differently. This prevents using a statistical sample, so 10 counties were picked to be representative, then 500 samples were taken from each county to determine accuracy. The error rate in 9 of these 10 ranged from 5 to 22 percent, whereas federal regulations require that the error rate should not exceed 3.5 percent. The legislature then required the Department of Health and Human Services to implement procedures to correct this problem. She noted that she had problems with the plan DHHS initially proposed, so her office is on schedule to go back in the future and review revisions to the proposed plan.

There is an investigative group in the state auditor’s office as well, which handles allegations of fraud, improper spending or malfeasance. As an example, it received a tip that a community college was paying its staff for more holidays than allowed. This was confirmed, and this college contended it was not the only ones doing this. 31 of the 58 were determined to be engaging in the same practice. Wood indicated that the state community college board has now passed a rule prohibiting this practice of paying for more holidays than allowed for state or county employees.

She contends that her office is the only one that looks at whether tax dollars are being properly spent, although her authority is limited to investigation, not enforcement. Violations that are criminal are referred to law enforcement. She advocates for the value of knowing why things are done the way they are being done, rather than simply accepting practices of questionable effectiveness because “that’s the way we have always done it.”

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