RALEIGH — Interim city manager Perry James is restructuring Raleighs grant process for outside agencies, addressing oversight problems highlighted in the scathing audit of a city-funded business incubator.
James announced the changes to the Raleigh City Council in an Aug. 22 memo, obtained last week through a public records request. Hes moving the citys three-person internal audit staff under his office, beefing up annual reviews of nonprofits financial documents and paying many agencies only after they have documented their work.
While I feel that (the existing process) has provided a high level of accountability on such funds, the current review found that there were additional ways to strengthen this oversight function, James wrote to the council, and I have directed that all of these improvements be implemented.
The review of oversight practices came after city auditors probed the Raleigh Business and Technology Center, set up by the city and several partners to nurture small minority-owned businesses in Southeast Raleigh. The auditors found unexplained cashiers checks and payments to the incubators tenants, and they discovered that the agencys nonprofit status had been revoked. Bob Robinson, the incubators longtime director, resigned after auditors found he had drawn $65,000 in teller checks from the incubator. Police are now investigating possible fraud.
Email records show city officials were considering an audit as early as 2011, but the probe didnt start until February 2013. The citys lead auditor, Martin Petherbridge, says his office is understaffed compared with peer cities.
James plan will move Petherbridge from the finance department to the city managers office for more independent reporting. The move wont include additional staff, but James said he expects more audits of agencies receiving city funds.
Outside nonprofits will be responsible for conducting their own audits each year, and theyll need to provide the city their budget documents and tax forms. Thats been the rule since 2010, but the Raleigh Business and Technology Center was receiving city dollars even though it hadnt filed IRS forms and its auditors werent licensed certified public accountants. City finance staff will now be tasked with verifying auditors credentials.
Agencies will no longer get paid up front. The city will instead require them to submit their expenses first before getting a check.
Economic development grants will go through Mitchell Silvers planning department, instead of the smaller community development department. Those grants which until recently included the incubator had been overseen by Chief Information Officer Gail Roper, who was warned of problems at the incubator long before an audit began. Community development will still be responsible for one grant, a $207,000 annual payment to the Southeast Raleigh Assembly, which is about to undergo a city audit itself.
Campbell: 919-829-4802 or twitter.com/RaleighReporter