Agencies Receive Fiscal Warning

"That's a heck of a lot of money, especially in these difficult budget times," said Ernie Seneca, Easley's spokesman.

The (Raleigh) News & Observer reported Sunday that state agencies have lost millions of dollars due to theft and misuse of state property.

By state law, N.C. agencies must report thefts, damages and misuse of state property, an obligation that some say has not been met.

"The governor moved forward this memo with the attorney general, and it is a reminder of regulations of the use and misuse of state property," Seneca said. Agencies should report theft and misspending properly, he said.

Checks and balances already exist within state agencies to prevent abuse -- namely, accounting and inventory processes.

But Seneca said the problem is not in the process but rather with people not reporting crimes to the State Bureau of Investigation. "One of the concerns ... is that (theft) concerns are not being forwarded to the (SBI)," he said.

The organizations only can go so far to prevent theft if people break the law and their activities are not reported, he said. "These are illegal activities. This type of activity is unacceptable."

The memo makes it clear that state agencies are expected to report theft or property damages, Seneca said.

Jeff Davies, UNC-system vice president for finance, considers the governor's memo a reminder to report any mishaps to state property.

He said the system will not take additional steps to prevent losses because checks already are in place to ensure that the system minimizes theft and misspending. "We have internal controls, an annual report from the state auditor, internal audit programs conducted independently of the state audit and budget flexibility (for each institution)," he said.

If a discrepancy in records occurs, an institution has 90 days to eliminate audit findings or else budget flexibility is taken away, he said. Financial flexibility of UNC-system campuses came under the microscope in 2000 after the head of N.C. State's Department of Public Safety was accused of misusing about $1 million.

Davies said he thinks that, given the $5 billion the system handles, it deals well with potential mismanagement problems. "In an enterprise such as the university, we do a good job to ensure that (these abuses) don't occur," he said, adding that when mishandling of UNC-system property does occur, administrators act promptly.

UNC-Chapel Hill is an example of the system working well, said University Provost Robert Shelton. UNC-CH has followed the state law by consistently filing data and reports, he said.

Standard checks -- including inventory control, reducing spending power held by any one individual and locking up valuable property -- help stop abuse of University resources, he said.

"I think strong procedures are in place to catch these problems," he said.

UNC-CH has caught people stealing in the past. In one case, most of the stolen money was recovered and the $50,000 in unrecovered money was covered by insurance.

Shelton acknowledged that despite control measures, this behavior is likely to occur. "When you have an organization as complex as this is, it is complicated to (prevent) theft."

The State & National Editor can be reached at stntdesk@unc.edu.