The financial audit process has provided much transparency into the internal control structure and the ability of local governments to remain fiscally stable. The outcomes of many of these audits have provided much information regarding the ability of local governments to provide services in a timely and efficient manner. Even with the implementation of stricter legislation and more stringent accounting standards in addition to an increased level of state oversight, irregular practices and mismanagement continue to occur. This study examines the independent auditor findings in professionally administered governments in North Carolina. Findings indicate numerous reporting problems within a majority of county governments ranging from internal control problems to reconciliation issues that are required to be addressed for information users that question the sustainability of the unit. Lengthy audits processes, less expensive audits and smaller governments that do not have the ability to employ more accountants or accounting specialists are among the factors that increase the probability of reporting problems and inaccurate data.

This study examines county government participation in the state-sponsored investment pool, the North Carolina Capital Management Trust (NCCMT), during the recession years. Using panel data of all 100 counties in North Carolina with additional survey data from finance officers concerning annual practices between fiscal years 2008-2011, findings suggest that county sales taxes were the most influential revenue stream on NCCMT cash portfolio participation while the accumulation of alternative revenue sources decreased participation. The findings also determined that the NCCMT was the safest investment option for idle local government funds during the recession.

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This article examines the investing practices of North and South Carolina county governments during the recession. Unlike many local governments across the country, county governments in both states reported that there were indeed funds available for investing at any given time. Initial findings indicate that investors were concerned for safety and liquidity as the local government investment pool (LGIP) for both states along with certificates of deposit (CDs) were the preferred instruments. Regression models of the four most widely used instruments were analyzed. Findings indicate lower property tax collections and an external primary bank of business were associated with higher LGIP investment; whereas, a significant relationship was also found between those with less experience and official educational background other than accounting and an increase in money market funds and federal government securities.

Decreasing revenues among local governments across the country have placed an increased focus on governmental financial practices. For states with local government financial oversight organizations, the ratios and other benchmarks used to assess fiscal stability face increased scrutiny. This study examines financial reports sent to North Carolina’s financial oversight body, the Local Government Commission (LGC), to determine the types of operational and policy practices that can lead to fiscal stress based on guidelines established by the LGC. Findings indicate that lowering levels of fund balance, increased salaries, increased debt service levels, and the presence of a countywide water system all increased the probability of a county government receiving notice of potential financing problems requiring immediate action.