Short-staffed audit office took years to probe Raleigh business incubator

ccampbell@newsobserver.comAugust 10, 2013 

— While the Raleigh Business and Technology Center got free rent and annual funding from the city, it operated with little oversight from city leaders, allowing financial problems to go unnoticed for years.

Raleigh’s chief information officer, Gail Roper, first called for an audit in fall 2011. That was shortly after she took over contract management from retiring Assistant City Manager Lawrence Wray, who served on the center’s board.

“There were multiple reasons that I asked for the audit,” Roper said. “The lack of sharing of information (from the center) caused me to believe that we needed to look at performance.”

But the audit didn’t begin until February of this year, when City Manager Russell Allen approved the task for Raleigh’s tiny internal audit department. The city’s staff of three auditors can handle only eight audits per year, and its schedule is usually filled with reviews of city departments.

Audit manager Martin Petherbridge says his crew rarely audits contracts with outside agencies that get city funds. One auditor worked full time for four months to complete the business incubator’s audit.

‘We are short of staff’

“We are short of staff compared with any large municipality,” Petherbridge said, pointing to Charlotte’s 10 internal auditors and Greensboro’s five.

But even as internal auditors uncovered years of financial improprieties at the Southeast Raleigh incubator, Allen denied Petherbridge’s budget request for more staff.

Without additional auditors, city leaders will have to pare down a list of 35 proposed audits for this fiscal year. “It becomes just a task of prioritizing what audits would have the most value,” Petherbridge said.

Given the results of the Business and Technology Center audit, a review of a similar contract made the cut. Auditors will probe the city’s contract with Southeast Raleigh Assembly Inc. for the first time later this year.

The assembly, which gets the bulk of its budget from a $207,000 annual city contribution, aims to improve the quality of life in Southeast Raleigh through community building and economic development. Last year, more than half of its city funds went to cover staff salaries, according to tax filings.

In all, nonprofit arts and human services agencies got a total of about $3.8 million from the city this fiscal year.

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