As Wanda Greene is investigated, Buncombe County gets a clean audit. How?

ASHEVILLE — An outside auditing firm has issued a clean opinion of Buncombe County finances for the last year that former manager Wanda Greene, the subject of a federal criminal investigation for potential fraud, headed daily operations.

Despite "questionable" use of procurement cards and gift card purchases, along with other expenditures allegedly made by Greene over the past three years, the county's financial statements were accurate and the expenses were accounted for through normal operations, Chief Finance Officer Tim Flora told commissioners Tuesday. And while there is no missing money, he said, a clean audit "does not indicate no wrongdoing has occurred."

He knows how that sounds.

"But these events speak loudly to our past failures at transparency and accountability," Flora said during his presentation. "Things were approved. Authority was granted. It was clear messages got muddled, intent obfuscated.

"As department heads we let ourselves be put in silos. We trusted when we should have questioned, and when we did question, we let ourselves be convinced."

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Commissioners during their regular meeting Tuesday were presented the county's latest audit, conducted by Asheville-based Gould Killian CPA Group.

While officials said the audit showed strong internal controls, it does not mean that there wasn't misuse of taxpayer funds.

Auditor Ed Towson said the company's process included reviewing board minutes and policies to match expenditures to budget approvals and testing the systems to gauge the county's internal controls.

Towson said the county has strong internal controls to both prevent and detect fraud and other misuse. He said the system led to where the county is now: Buncombe officials were the ones who spotted inappropriate financial transactions and reported them to investigators.

"The system itself is designed in a way that is reliable, and therefore it is not deficient," he said. "Can it be improved? Any system can be improved. But it was reliable, and again, it did detect the problem."

While audits may be able to spot misuse of taxpayer funds, fraud detection "is not one of the primary goals of a financial statement audit," Towson said.

Towson said auditors did recommend that the county address the "tone at the top" to encourage every finance employee to report and question potentially inappropriate actions.

Greene, Buncombe's top administrator for nearly two decades, is the subject of a federal criminal investigation after officials discovered some $40,000 in gift card purchases and other payments for home decor and a non-county Verizon account. Investigators say she may have committed fraud, according to temporarily unsealed court documents.

The county also has declined to release records related to life insurance policy payments made for Greene, citing an ongoing investigation. Officials, after being challenged by the Citizen Times on the legality of the denials, now have said the payments are personnel records and are private.

County Manager Mandy Stone, who took over after Greene's departure, has been instructed to try to recover money that may have been illegally or unethically spent if legally possible.

Flora said Tuesday that Greene handed down "peculiar decisions and direction" in fall 2016, though "nothing concrete." By spring 2017, Greene's "questionable actions" raised red flags.

"Not much detail can be provided at this time, but these actions led to an increased level of scrutiny regarding specific financial events," Flora told commissioners. "It is likely you, the board and the public are unaware of these actions because ultimately, they were prevented from occurring because of our internal controls."

An internal review was launched in June after finance staff "noticed a series of irregularities," prompting the county to contact legal authorities. Flora said in the last two weeks of June, several departments restricted Greene's access to information.

Greene, who retired June 30, "was informed of the restrictions placed upon her," he said.

"Before, we had protocols in place to prevent and detect wrongdoing," Flora said. "However, we let someone in power and position take advantage of those systems. We also operated in an environment where discovering these exploits was made difficult and making changes to any other weaknesses incredibly hard."