News: CJ Exclusives

Auditor says H.B. 233 will help clean up local government finances

State Auditor Beth Wood at a Local Government Commission meeting in January. (CJ photo by Dan Way)
State Auditor Beth Wood at a Local Government Commission meeting in January. (CJ photo by Dan Way)

State Auditor Beth Wood says passage of her agency bill to help clean up local governments’ slipshod financial bookkeeping is a major win for taxpayers across the state.

The House passed a Senate-revised version of House Bill 233 115-0 on Tuesday, May 28. The Senate passed its version a week earlier by a 45-0 vote.

The bill gives the N.C. Local Government Commission more enforcement of its oversight role of financial and debt management practices of hundreds of city, county, authority, and commission units of government.

“I am so excited that this passed,” Wood told Carolina Journal after the Senate vote. “This is a big step.”

The legislation requires local governments to have a finance officer. It spells out a list of mandatory job duties. It would modify state law by letting local governments that can’t recruit and retain finance officers audit their books using CPA firms in good standing with the state, bookkeepers, other local governments, or regional councils of government.

Small, financially strapped rural governments say the vacancies have led to poor accounting practices and budget overruns.

Wood said taxpayers can take comfort the bill would make elected officials become better financial stewards. If they don’t, the Local Government Commission can step in, appoint a finance officer, and make the local government pay for it. Elected officials would remain responsible for spending decisions.

Imposing more timely reporting and accounting standards should lessen the need to increase utility fees and taxes for local government, Wood said.

Better county financial controls also would help her prepare Medicaid eligibility determination reports for the federal government, she said. County departments of social services perform those checks, and she has to audit them. Incomplete or inaccurate information can affect her federal report.

As a member of the Local Government Commission, Wood said, she heard local governments regularly blaming the lack of a finance officer for failing to perform bank reconciliations, disorganized financial statements, and incomplete or late annual audits.

“We just didn’t see any progress being made towards continuity in having finance officers, and therefore good financial management, and good financial data for council members and commissioners,” Wood said. “I would say more or less it just came to a head.”

Wood raised the prospect of pursuing legislation to tighten municipal auditing standards during a Local Government Commission meeting in January.

“I am about tired of begging people to do their job,” Wood said during the meeting.

It was a recurring irritant for her.

“The statute is on the books that cities, and counties, and school boards will not spend [money] they have not budgeted for,” Wood told CJ following a July 2018 commission meeting. “What’s the use of having a law if you’re not going to hold anybody accountable for breaking the law?”