A state audit of an unusual public pension arrangement for an N.C. High School Athletic Association official is recommending a criminal investigation for possible fraud.

The audit said the association sought to help an associate commissioner stay on the state pension system by shifting his position over to the Chatham County school district. The association had been converted from a state agency into a nonprofit in early 2010, which meant its employees were no longer eligible to belong to the state pension plan.

The Chatham district's school board approved the arrangement, which allowed the associate commissioner, Rick Strunk, to be identified as a school employee while continuing to work for the association, which would give the district the money to pay Strunk his salary and benefits. The district had no control over Strunk's duties.

The audit found that the arrangement, which lasted roughly a year, did not cost the school system any money. But it meant that Strunk would continue to be considered a public employee accruing more money for his pension. Auditors found that the N.C. Retirement System was misled by the arrangement, which came to an end once it was discovered.

The audit said the arrangement could violate a state law forbidding the receipt of benefits through false pretenses. It said that Strunk, who had 26 years of eligible service, could have received more than $100,000 in improper pension benefits had he retired after 30 years in the system and had been collecting a pension for 14 years.

The audit also said that the association had tried a similar arrangement with the Orange County school district, but the state retirement system said it would have been improper.

The audit can be found here.

State Auditor Beth A. Wood says the state Ferry Division should reduce employee overtime costs and stop violating its rules on hiring employees' relatives, but her 20-page audit report finds no support for the charges of waste, nepotism and abuse leveled by Harold "Buddy" Finch last year when he was fired after 55 days as the ferry director.

Auditors found 13 ferry employees working alongside or under supervision of family members at the same location or shift. That violates state rules against one relative overseeing the work of another, as well as more strict DOT rules against family members working on the same boat or in the same office.

But the report did not confirm Finch's charges that employees' time cards were approved by relatives, that employees worked excessive overtime to increase their pay, and that ferry managers made questionable purchases. ... [MORE]

The state auditor is questioning the way N.C. A&T University used a state procurement card to buy clothes for student leaders to wear at homecoming.

Our Under the Dome blog has the scoop.