Auditor Merritt:  Getting the Job Done

2008 Progress Report

Progress Report:  Introduction

On January 15, 2005 Leslie Merritt took the Oath of Office as State Auditor of North Carolina, becoming the first Certified Public Accountant (CPA) to hold the position.  Since taking office, Auditor Merritt has aggressively investigated fraud, waste and abuse, worked to hold state-funded non-profits accountable, spoken out against irresponsible budgeting practices and proactively worked to change the way state government does business. 

As State Auditor, Leslie Merritt has demonstrated the courage to challenge the status quo in Raleigh.  This Progress Report provides a brief summary of Auditor Merritt’s efforts to improve the effectiveness and efficiency of North Carolina’s state government. 

Exposing Fraud, Waste and Abuse

▪  Reduced a backlog of investigative audits -- some more than three years old -- by 76%

▪  Exposed 27,000 invalid Social Security numbers in six separate state entities

▪  Hired a veteran FBI agent to lead the Auditor’s investigative division

▪  Aggressively promoted the Auditor’s fraud hotline, which citizens can use to report fraud, waste and abuse in state government; the hotline has seen a significant increase in credible tips since the launch of the PSA campaign

▪  Exposed numerous other instances of fraud, waste and abuse in state government; for additional examples, read the news articles archived here.

Keeping tabs on state-funded non-profits

▪  What Auditor Merritt Found:  “The state auditor is expected to send warning letters today to about 1,000 nonprofit organizations that haven't accounted for how they spent millions in state dollars.”  (The News & Observer, news article, 4/18/2005 -- barely three months after taking office)

▪  Auditor Merritt Took Action:  “A state auditor's warning appears to be paying off.  Nearly 900 nonprofit organizations have filed required financial reports with the state since being warned last month about missing their deadlines.” (News 14 Carolina, news article, 5/24/2005)

▪  Launched a new initiative to train personnel from funding agencies and grant recipients; the Auditor’s Office has trained more than 10,000 personnel since Les Merritt took office

▪  Shortened the processing time for non-profit reports from five months in 2005 to approximately three days in 2007

Proactively Improving the Way State Government Does Business

▪  Launched a new initiative in January 2008 to follow up with previously audited agencies to ensure that they are making needed changes.

▪  An audit of the State Child Health Insurance Program (SCHIP) identified $16,000,000 in annual savings and $3,500,000 in one-time savings if the State moved the responsibility for SCHIP medical claims processing from the State Health Plan to the Division of Medical Assistance. Click for more info.

▪  Under Les Merritt’s leadership, the Office of the State Auditor has developed a “strategic auditing” process to help identify unusual trends and potential problems in state spending.  The strategic auditing process uses existing hardware, software and skills in the Information System Auditing Division to analyze millions of state transactions -- far more than normally are checked during a regular agency audit.

▪  During the 2006 legislative session, State Auditor Les Merritt spoke out on the state’s budgeting process.  Auditor Merritt sent a letter to all members of the legislature strongly encouraging them to adhere to the following commonly accepted accounting and business principles as they developed the budget:

Ø All so-called “temporary” taxes should remain temporary.  This is an issue of trust.  If government tells the people of North Carolina that a tax is going to be temporary, it should keep its word.

Ø All money “borrowed” from designated funds (such as the Highway Trust Fund) should be repaid.  If funds are earmarked for important things like roads, they should not be diverted to other special-interest projects.

Ø No revenue gained from a one-time surplus should be used for recurring projects.  This is just common sense.  Your family wouldn’t use a one-time Christmas bonus to take on a huge monthly payment for a boat.  Our government should use common sense in this area.

Ø Raising the debt ceiling should remain a last resort.

▪  Following a 2006 Performance Audit, State Auditor Les Merritt pushed to increase accountability by strengthening internal audit functions throughout state government.  Based on the findings & recommendations from this audit the General Assembly enacted the N.C. Internal Audit Act, which requires large agencies to devote resources and attention to internal auditors. 

Increased Emphasis on Performance Audits

▪  The Office of the State Auditor (OSA) is on track to conduct 46% more performance audits during 2005-2008 (Auditor Merritt’s first four years in office) than were released during 2001-2004.  This increased emphasis on performance audits comes in spite of the fact that in 2005 numerous performance audit staffers were shifted to help clean up the backlog of investigative audits. 

Click here to download a .PDF of Auditor Merritt's Progress Report

Additional Information:

▪  Office of the State Auditor - 2007 Annual Report (PDF)

▪  Office of the State Auditor - 2006 Annual Report (PDF)

▪  Office of the State Auditor - 2005 Annual Report (PDF)

Progress.  Results.  Challenging the Status Quo.

State Auditor Leslie Merritt -- Getting the Job Done

for the People of North Carolina.