Durham schools accept 2023–24 audit after report cites seven material weaknesses; staff lays out fixes

Durham Public Schools on Thursday accepted the district's audited financial statements for the 2023'24 fiscal year after external auditors reported seven findings and material weaknesses in controls. The audit, presented by Paul Carson of Anderson, Smith & Wike PLLC, found repeated issues including unreconciled bank and general ledger accounts, budget over-expenditures and a sharp increase in accounts payable that auditors traced to a management decision in April 2024 to delay paying larger invoices while cash position was uncertain. Auditor Carson also reported a net loss in the school food service fund and an actuarial correction of the district's self-insured workers'compensation liability. The findings matter because they affect the district's financial transparency and its ability to plan. Carson's firm issued an unmodified opinion on the financial statements themselves, meaning the numbers can be relied on, but also flagged material weaknesses and repeated deficiencies that require sustained remediation. During the meeting the district's chief finance officer, Jeremy Teeter, described the work already under way. Teeter, who joined the district in November 2024, said his team completed overdue bank reconciliations, migrated fixed-asset records into the new financial system, improved construction accounting workflows, instituted move-management procedures for capital projects and began a program of training and standard operating procedures for school treasurers and central office staff. Teeter said his office had paid down the 2324-year outstanding prior-year invoices to below $600,000 as of early August and had engaged an outside actuary to re-evaluate the workers'compensation liability for a small fee so the liability in the financial statements is accurate. The auditors' management letter also described additional, less-severe matters the district should address, including salary "exceptions" that required correction between funding sources, unused position allotments that cost the district state allotments, and gaps in internal controls at some individual schools. Board members repeatedly emphasized that the audit covered a period before the current finance leadership team took responsibility. Board Chair Spire Umstead said the board and the community expect the district to build back reserves and correct control gaps. Following the presentations, the board voted to accept the audit. A separate staff memo and subsequent public comments outlined next steps: quarterly board reporting on reconciliations and cash flow; formalizing standard operating procedures; hiring an internal auditor; continuing staff training for school bookkeepers and principals; and additional internal monitoring of payroll, purchasing and accounts payable. Teeter told the board he expects some audit findings to persist in the 2024'25 audit because of the late timing of the 2023'24 audit and the time it takes to operationalize new processes, but he said the district's work so far reduces the risk of recurrence. The board recorded a roll-call vote accepting the audited financial statements.