A recent audit of the Town of Robbinsville by the North Carolina Office of State Auditor (NCOSA) revealed several areas of alleged misconduct, including the violation of the state’s open meetings law, overriding internal policies and laws, overruling decisions made by town employees, and failing to issue corrected wage and tax statements (W-2) to former town officials and employees.
NCOSA received 23 allegations about the Graham County town.
The report, which was done under the direction of former state Auditor Beth Wood, said the town council disregarded its responsibility to the town by intentionally ignoring fixing issues identified in a prior investigative audit performed by NCOSA. The town council also did not have a written Code of Ethics.
Regarding the overriding of policies and laws, town council:
• Failed to take action to issue corrected Wage and Tax Statements (W-2) to former town officials and employees in response to a 2019 investigative audit performed by the North Carolina Office of the State Auditor (OSA)
• Violated open meeting laws.
• Overrode internal policies and procedures. For example, the former finance director refused to issue a $414 mileage reimbursement to a town alderman due to a lack of prior approval for travel and supporting documentation of a valid business purpose for the travel. The town alderman overrode this decision by issuing and signing a check to herself with the mayor as a co-signer.
• Failed to address issues that were brought to their attention in their annual financial statement audit. For example, during the fiscal years ending June 30, 2020, and 2021 audits, the town’s financial statement auditors communicated a lack of routine inventory counts over their water and sewer maintenance inventory. The town council failed to ensure that the audit findings were resolved.
The report said the town council’s override dates go back to at least July 2016. The state auditor’s office issued an investigative audit report in May 2019 that listed examples, including between July 2016 and February 2018, when town employees and officials spent over $34,000 on credit card purchases without adequate documentation to support a business purpose.
NCOSA recommended that members of the town council should ensure that they follow town policies and all applicable laws, develop a written Code of Ethics for the town council, and ensure they are followed by all members of the council, and work with the UNC School of Government to attend training detailing their responsibilities as the governing board of the town.
The second finding revealed that the town council failed to take action to issue corrected Wage and Tax Statements (W-2) to former town officials and employees. As a result, the town is potentially at risk of IRS penalties and fees. The report said town council refused to provide the information needed to issue corrected W-2s.
The town was made aware in May 2019 when the NCOSA issued an investigative audit report that reported $15,900 in fringe benefits were excluded from W-2s provided to town officials and employees. The investigative audit report found that the following was excluded from W-2’s:
• $7,900 in gift cards.
• $8,000 in payments in lieu of health insurance benefits.
• The former mayor and town alderman’s personal use of a town vehicle. According to the current mayor, the town has not issued corrected W-2s to any of the former town officials or employees.
The mayor told investigators that he repeatedly requested that the town council provide the necessary information to issue corrected W-2s, including amounts to be included in the corrected W-2s. However, town council refused to provide the information necessary to issue corrected W-2s.
Auditors recommended corrective W-2s be issued to former employees and comply with federal tax law, and town council should cooperate with one another to ensure that the town follows all rules and regulations. They also say the finding will be referred to the Internal Revenue Service to assess and collect any additional taxes, penalties, and interest.
Auditors also found that the town council violated the North Carolina open meetings law by not properly entering closed sessions, discussing items in closed session that should have been discussed in open session, and not maintaining meeting minutes for closed session meetings. Robbinsville’s Tourism Authority Board (RTA) also had a similar finding. Both the town council and the RTA board said they were unaware of laws surrounding public meetings.
Auditors recommendations include that both entities familiarize themselves with state laws governing public meetings.
Lastly, the town did not complete its monthly bank reconciliations from July 2022 to August 2023 for five of the town’s six bank accounts. The town did not complete its monthly bank reconciliations because the finance director position was vacant.
NCOSA said when key positions are vacant, town council should consider alternative approaches to ensure key functions, such as timely bank reconciliations, continue to be performed.
Auditors said they weren’t told when the town would take corrective action and who would implement it.
Town council said it will create a Code of Ethics and work with the UNC School of Government to receive training.
The full report can be read here.