Third term and election defeat
In late 2001 Campbell accused the North Carolina Technological Development Authority, a nonprofit designed to promote small technology companies, of wasting its money on frivolous travel and entertainment expenses and excessive salaries. As a result, Easley—who was governor—cut off the organization from state funds and it later filed for bankruptcy. In May 2001, the auditor's office began exploring the cybersecurity vulnerabilities of state computer networks. In December 2002 Campbell was elected president of the National Electronic Commerce Coordinating Council. The following year his office reported on the John A. Hyman Foundation, a nonprofit founded by Congressman Frank Ballance, accusing it of financial improprieties. The audit led to state and federal investigations, and as a result the auditor's office lobbied for increased oversight into nonprofits which received state funds, including the implementation of new financial reporting requirements and the hiring of additional auditors. Following an audit of state juvenile justice facilities, the Department of Juvenile Justice and Delinquency Prevention adopted one of Campbell's recommendations and declared that it would create task forces to review the department's reporting and investigative procedures for incidents of abuse.
In March 2004 Campbell released an audit of the North Carolina State Ports Authority which led its chief executive officer to resign and the board of directors to revise its rules regarding credit cards and travel expenses. The following month the auditor's office released a report which accused the North Carolina Medicaid program of misallocating $414 million in federal funding. Campbell sent the audit to state and federal prosecutors for review, and said, "This is the most damaging audit that we have ever had to release in my 11, 12 years as state auditor." The audit led to a public dispute between Campbell and Secretary of the North Carolina Department of Health and Human Services Carmen Hooker Odom. Odom denounced the findings during a North Carolina General Assembly committee hearing, asserted that what problems existed would have been fixed if Campbell had followed-up on issues his office discovered in 1997, and stated that she wished to return to the "very good relationship" she had with Campbell before the release of the audit. Campbell followed her presentation by saying, "Let me thank the secretary for her magnanimous gesture of working together as I pull the daggers and the arrows out of my back from the beginning part of that presentation." His comment elicited gasps from the audience, and after he summarized the report, the legislators intensively questioned Odom on the spending of the Medicaid funds. In June he was elected president of the National State Auditors Association.
Merrit challenged Campbell again for the auditor's office in the 2004 election. He criticized Campbell for not fully uncovering the Medicaid problems in 1997. The North Carolina Republican Party attacked Campbell's connections to his brother Bill, who had been indicted in the course of the federal investigation on corruption charges. Campbell lost re-election in November, with Merritt receiving about 28,000 more votes. Campbell believed that his race and some of his audits played a role in his electoral defeat. His office performed about 3,600 audits during his tenure. His tenure ended on January 15, 2005. Another black person was not elected to serve on the Council of State until Mark Robinson was elected Lieutenant Governor of North Carolina in 2020.
