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Audit: Commerce officials did not monitor legislative grants

Posted November 15, 2012 11:29 a.m. EST
Updated November 15, 2012 6:41 p.m. EST

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— The Commerce Department did not adequately monitor how $80 million worth of economic development grant money was spent by 20 nonprofits during fiscal 2011, according to a report issued Thursday by the State Auditor's Office.

The audit looked at grants directed as part of the state budget between July 1, 2010, and June 30, 2011. It found that the department did not follow its own "grant-risk assessment" policy for this group of grants, nor did it properly track how the money was spent and ensure that it went to its intended purposes.

"None of this information is being verified. It's not audited. It's not confirmed," State Auditor Beth Wood said. "It's just a piece of paper with a report."

In its formal response, the Commerce Department says it provides reports to the General Assembly but points out that the money has been directed by legislative fiat.

Department spokesman Tim Crowley echoed that, saying the agency only distributes the money and doesn't determine who gets it.

"The department does not make the funding decisions," Crowley said in a statement to WRAL News. "Each recipient of state aid is required by law to complete and submit an annual report to the General Assembly each year that includes program activities, objectives, and accomplishments, itemized expenditures and funding sources and financial statements."

Typically, money is set aside for specific nonprofit grant recipients in the annual budget bill. The Commerce Department administers the grant, but the question here seems to be whether it has any responsibility to more closely monitor the direct funding that lawmakers have ordered.

"We’re not saying anything was misspent. The problem is, nobody knows because nobody is looking," Wood said.

Accountability is at issue, she said, and the department needs to follow its own policies.

"We're in one of the toughest economic situations that the state and nation has ever seen. So, not to have accountability or policies and procedures in place and followed to make sure every dime we spend is being spent for the intended purpose and prudently is very disheartening," she said.

The list of grants examined include:

NonprofitAmount
N.C. Indian Economic Development$99,000
Research Triangle Institute$482,530
Research Triangle Regional$489,585
North Carolina Eastern Region$489,990
Charlotte Regional Partnership$558,732
Southeastern NC Regional EDC$623,842
Piedmont Triad Partnership$658,667
Land Loss Prevention$682,704
High Point Furniture Market$778,252
Northeastern NC Regional EDC$868,725
Partnership for Defense$916750
NC Association of CDCs$946,362
Western NC Regional EDC$1,127,559
NC Institute for Minority Economic Development$2,429,296
NC Minority Support Center$3,742,974
NC Community Development$4,518,844
Biofuels Center of NC$4,825,000
Wake Forest University Health$9,650,000
NC Biotechnology Center$9,650,000
North Carolina Rural Economic $27,220,575
Total$79,937,521

Source: NC State Auditor