Wood knows ins and outs of State Auditor's Office

Longtime employee closely monitors stimulus funds, reviews county requests for bond sales as member of Local Government Commission

Previous interviews:

• DENR Secretary Dee Freeman
• State Treasurer Janet Cowell
• DoR Secretary Kenneth Lay
• DHHS Secretary Lanier Cansler

As one of its initiatives, the NCACC strategic goals team charged with "enhancing the state-county relationship through effective communication and the development of a working partnership" is interviewing members of Governor Beverly Perdue's Cabinet and Council of State. In late October, Meeting Coordinator Penny Cummings and Underwriter Willie Allen sat down with Beth Wood, who in November 2008 became the first woman elected to the position of State Auditor in North Carolina.

State Auditor Beth Wood grew up on her family's farm near Cove City in Craven County, where she said she gained perspective from making sacrifices and working hard to make ends meet. "If someone had told me 10 years ago I would ever run for office, I would have laughed in their face. I never wanted to be a politician," she said during the interview for this feature. (Photo by Jason King)

How does the Office of the State Auditor impact and interact with county government?
"Not directly as far as using the office for counties and cities, but it's more from a citizen's perspective. We are auditing state agencies, and all of the state agencies pass along federal and state grants. I think a big issue that is important is that we are auditing how state agencies are monitoring that money that they pass down to cities and counties. So making sure that state agencies have good monitoring programs in place for the grants that they pass down will certainly affect local governments. We want to make sure at the state agency level that the monies are being spent for the stated purpose and that the objectives of the program are accomplished. So we've been looking at that a lot closer, making sure that the monitoring programs are in place, that they are using or implementing them and that they are, in fact, effective.

"We are currently looking at the state agencies that are getting stimulus money, and of course the stimulus money is going down to the counties to a large part, and we are going to be looking again at the internal controls that the agencies have in place for how they get those monies out, making sure they are going to the right counties and the right people.

"I sit on the Local Government Commission, and we approve or reject a county's bid or application for trying to sell bonds to pay for projects. I'm looking at the information that I get from the Local Government Commission and staff and looking at: did the audit report for the county get accepted or rejected? Did it have findings in the audit report, and if so, what were the findings? I'm looking at their internal controls. I'm looking at whether there are management issues, as to how monies are being managed well at the local level. So I'm not rubber stamping every application to sell bonds to fund projects at the local level, specifically county school boards.

"With cities and counties, I'm looking at whether they have a tradition of sound money management and controls, and even if they have, do they have issues in the audit reports of their central control? I'm looking for good stewards of a county's money. When they call me to borrow funds and I say 'no,' I'm basing that on the ability that county has to repay that debt, because certainly if counties can't repay their debt, the state will have to figure this out some way, so I really am trying to make the right decision with the information I have as opposed to being a rubber stamp."

How has your experience as a long-term staff member with the State Auditor's Office prepared you to lead the department, and what specific strengths do you bring to the role of State Auditor?
"I think the fact that I know how the office is supposed to run. I've been Assistant State Auditor Level 2, which is two positions down from a supervisor, and that's where I started out when I came in the door. I've also been in the training department the whole time. I was the Training Director for the past four years, so I've gotten to know all aspects of the office. I've been able to see the capacity of every person in this office – the managers, supervisors – so I have a great working relationship not with just one aspect of the office but all of the office. I knew this office inside and out before I ever ran for office. I think the strength that I bring is that I do understand the office from the ground floor up. So you can't blow smoke up my skirt because, when you come to me, I have a working knowledge. I've audited counties. I've audit cities. I've audited large nonprofits, so I have a good grasp of government accounting and government auditing. And then coming from within the state, I know this office and what it is responsible for from the inside out.

"The strengths that I bring are that I'm not bashful and I'm not afraid to speak out. When I came to work, I only planned to be with state government probably for a couple of years. Here I am 11, 12 years later, still here. But I'm not bashful. I've never thought that I would retire from the state, so I've never been afraid of saying what I felt.

"I also react as more of a citizen than I do a state employee. I look at things from the perspective of the citizen. I look for what this office is doing, and we are not just an 8-to-5 job. We are auditing tax dollars that you and I, our parents, our friends, people we don't even know, are paying into the state. And we are the owners as taxpayers, and I feel the strength that I bring is that I'm always looking at it from the taxpayers' perspective, even though I've been here almost 12 years in state government.

"I am a CPA. I am only one of two that's ever been elected to this office, and this office has been in existence since the 1800s. I am the first female, but I think even more important than that is that I'm the first auditor to bring the culmination of the experience I've just explained. I do have my CPA. I do have city and county and not-for-profit audit experience. Then I went to the Local Government Commission to work where it was my responsibility to accept or reject the very same reports on behalf of North Carolina state agencies. And so I produced those reports, then I was on the other side accepting or rejecting them. Then I came into this office and I have trained this staff, I've trained in statistics, I've trained in sampling, I've trained in internal controls, how to audit federal grants, so I have a real great working knowledge from all perspectives, practical, theoretical – and I do have a CPA license that I have to maintain. So I believe I bring the background and experience that no state auditor has ever brought.

"Nobody has to speak on my behalf about the audits that we do. When I go down to the General Assembly, when I speak to the governor, when I'm out talking to different groups, I can tell you what are the findings in our audit, and I can tell you the consequences of the findings. I am now going through all of our audit reports in meticulous detail because I want to make sure that, No. 1, they ask the right questions to ensure that nobody can punch holes in the findings of our audit. So I have such a great working knowledge of the audit and government that I can ask the right question to my staff auditors, managers and supervisors so that when they answer them and defend them to me, by the time the audit report gets out the door, it is as factual as this office has ever put out.

"It's not that I think my staff can't do it. It's a cold set of eyes, looking at something that they've been immersed in the details, but as a cold set of eyes but still with a great working knowledge of how this stuff is all supposed to be put together. When they tell me here's the audit, here's the objective, here's what we went and did, when I hear that information I can ask all the right questions so we've got all of our ducks in a row. Then when we are being attacked from the outside, nobody can find fault or fallacy or a hole in our audit, and I believe that's something this office has not always been responsive to."

What steps will your administration take to strengthen and improve the relationship between your agency and county government in North Carolina?
"I'd have to say that that is probably more from the perspective of getting out and about to the counties and speaking and letting them know what it is we do. I want them to understand my position. And when I sit on the Local Government Commission, when I reject an application to go out for bonds for a project, I want them to understand why it is we do that. I want them to understand how our audits here at the state level will affect them at the local level. We will ensure that state agencies are monitoring what they pass down. We will ensure that state agencies are giving them the information that they need to do their job better. So, all in all, I'd like to think that we are going to make state government more transparent, that we are going to be able to hold people accountable for the money that they pass down and then for the money that is spent at the local level.

"And what I hope to do is to be able to talk to the counties by attending your Association, by doing presentations, and then just on a county-by-county level to those who want to talk about the presentations that I make to help them understand what it is that we do, how we do it, and how we affect them, so that they will understand some of the citizens' concerns.

"I've been on the road speaking about some of the stimulus funds because there's very little information out there. I felt the need to get out there and talk about the stimulus money, and I know that there have been some county finance officers in on those presentations. In fact, the last one I did at the local level was the county finance officers association. We talked for a couple of hours about the stimulus money, what information that I had they could use, Web sites, people that would be overseeing some of the things that they could do, who they could contact. I really worked hard to help push that information to the local level when it's not really my responsibility. I'm a citizen, and I felt the need."

How do you expect counties to interact and communicate with your administration?
"The way I would hope I would hear from counties … if there are issues that they feel need to be looked into from a state auditor's perspective, looking at state agencies for audits, that the counties would feel comfortable in calling this office and telling us of their issues.

"Just something as simple as the FDA numbers not being identified when the federal money goes down from the state to the local level, the money's not being identified. Is it federal? Is it state? What are the requirements for this program? They didn't make it clear. So any information they can give us that we need to protect them from the state agencies, I would hope that they would, No. 1, understand what we do, and No. 2, by understanding that help us perform a better audit of the state agencies.

"I'm not sure that the county governments understand what the state auditor does and how it affects them because we audit the state agencies that give them money. I'm not sure that they always understand that, so hopefully we can get this information out there so we can perform better audits of state agencies. Then again, when their auditors come in to audit them they will have the information that they need to administer the program correctly, to identify the program correctly to the auditor, to put together the schedule of expenditures of the federal award, that they will be able to do a better job, so that when their auditors come in, their findings will be low."

Now that you have transitioned into your new role, what additional information, materials or contacts would you like to have from counties or the NCACC to help with oversight of your programs?
"I haven't thought about if I had an issue that involves a county that I could go to the Association of County Commissioners and the finance officers that work through you, and so just having gone to the County Finance Officers Association conference and talking to their people there, I think I now have a better idea that if I need to get in touch with someone in county government that I can call your Association, say this is my issue, and you can direct me on who to call.

"All of the information that you have and that you can just reach out and touch a county within seconds, and that you have very good information on who's supposed to be doing what, who's good in what areas and strengths – probably just the revitalization of this relationship and knowing that you all are there.

"I know having worked with the Local Government Commission that, usually, if we want something communicated, we usually do try to go through them, simply because they do the oversight, and I'd hate to do something that left them out of the loop."

At the end of your term, what criteria will you use to measure your success as state auditor?
"If I can stand back and say that the audits that we issued made the way the State of North Carolina does business better, if we are more efficient in the way we do business in North Carolina.

"If people take the findings in their audit and do something for the good of North Carolina that affects the citizens then I will say that my four years have been very successful. People may look back on my audits and say, you know what, that hurt when I had to read that, but you know what, everything she said is factual, and I can't argue with what was there, I believe then I can say my four years were successful.

"If state agencies are held accountable for how they treat taxpayer dollars both from the federal government and at the state level, if I can look at that and see a major difference in them being held accountable, I'll say my four years have been a success."