The state auditor said in an examination released Wednesday, May 26, that the N.C. Department of Transportation’s sloppy record keeping led to inaccurate reports on advance construction.

That type of construction allows for road projects to be financed with federal highway money administered by the Federal Highway Administration in advance of receiving them. But Auditor Beth Wood’s team found a few issues with how NCDOT tracks the money.

For one, NCDOT’s advance construction report didn’t include all information required by state law, with the department explaining that some information wasn’t included because it “was difficult to obtain,” the auditor examination says. 

NCDOT Division of Planning and Programming Director Van Argabright told auditors construction amounts weren’t included because that would have required pulling up each of 972 projects individually. NCDOT staff also told auditors the anticipated conversion and reimbursement schedule wasn’t included for all authorized federal projects because of the difficulty in predicting the rate of project costs at the time the report was written. Estimating advance construction conversions on a monthly or quarterly basis was particularly difficult during the pandemic when many projects were on hold, NCDOT said.

Auditors also found that some of the accounting was just flat wrong. For example, auditors discovered that the total advance construction balance was overstated by $114 million, or 2.7%. While the number should have been listed as $4.05 billion, NCDOT listed the balance in its advance construction report as $4.16 billion. 

“This error prevented oversight bodies from accurately evaluating the amount of project costs that the Department anticipates funding with federal-aid highway funds instead of state funds,” the audit says.

Examiners knocked the advance construction report for its limit in usefulness. The audit says that the report contains “limited guidance and discussion of what is in the report or how to use the information in the report.” 

Argabright told auditors that no detailed review of the advance construction report was performed because “the range of people who could do that review is short.”

The General Assembly enacted a law last year that required NCDOT to submit a detailed report because Wood’s office determined there was no external evaluation or oversight of the department’s advance construction practices. 

It’s not just state officials that are taking notice. In its January 2021 review of NCDOT’s Grant Anticipation Revenue Vehicle bond program, the Federal Highway Administration noted that personnel in the Accounting Operations and Budget Division’s Federal Funds Management Unit didn’t close out advance construction projects funded by GARVEE bonds when the bonds had been fully repaid. 

In a response to the audit, NCDOT Secretary J. Eric Boyette wrote that in the process of compiling the original report and assisting with the audit, agency staff was committed to improving its processes.

“DOT created an Advanced Construction dashboard, developed a policy with programmatic parameters, launched a website that helps detail the process, and provided data that supports the decisions contained within the process,” he wrote.