A state audit report released today criticizes the Golden LEAF Foundation's accountability.

The performance report found that the Foundation does not have sufficient monitoring systems in place to know how grant money is spent.

It reads, "Consequently, state funds could be wasted on grantees that are not achieving desired results or lack the capacity to sustain operations."

Rocky Mount-based Golden LEAF, created in 1999, has granted more than $300 million for projects intended to help North Carolina's economy.

It gets its funding from the money North Carolina receives from a 1998 Master Settlement Agreement with cigarette manufacturers.

"In my opinion, those are state funds meant to help the citizens of North Carolina and those affected by the tobacco buyouts," said State Auditor Beth A. Wood. "There has to be transparency."

"We want to make sure that we're good stewards of this money," said Dan Gerlach, president of the Golden LEAF Foundation. "There are some questions about grant oversight. I think the auditor acknowledges that we do a lot to make sure this money is spent well. I've put 40,000 miles on my car in the past year since I've been here, going and visiting grantees, taking a look at what they're doing."

The audit also reports that Golden LEAF violated North Carolina opening meeting laws. Some records from meetings were unaccounted for, and a $15 million grant was approved behind closed doors.

Gerlach said most of those mistakes occurred in the Foundation's early years.

"We're going to make sure we have our minutes in the right place going forward," he said. "And the auditor acknowledges that our record-keeping is much better than it used to be."

The auditor recommends that the Governor and General Assembly discuss whether Golden LEAF should be subject to the same rules for investing as state government agencies.

Click here to real the full report.