Gates County commissioners approve response to auditors' findings; pledge corrective steps

The Gates County Board of Commissioners voted unanimously to approve a resolution responding to the independent auditor's findings and recommendations related to the fiscal year ending June 30, 2024.

County Manager Scott Sauer presented the resolution to the board, saying the response groups the county's corrective actions and commits the governing body to oversight and improved procedures. Sauer told the commissioners, "we have 60 days from the date of the audit presentation, so we have until June, sixteenth." The board approved the resolution by a 5-0 vote.

Why it matters: the resolution formalizes the county's response to multiple audit items that the auditors flagged as concerns or material misstatements and is required to be filed with the North Carolina Local Government Commission (LGC). The county's submission to the LGC and the board's signature(s) are part of the LGC's review process.

Key issues cited in the audit and the county's responses - Financial close/general ledger adjustment: Sauer described a late payment on school-construction invoices that resulted from an incorrect ACH number. The corrective posting that drew auditor attention was $335,691 posted to the lottery fund to fix an accounts-payable/cash posting error. Management has committed to monthly balance-sheet reconciliations and accurate revenue classification to ensure statements comply with generally accepted accounting principles. - Prior-period restatements and opioid-settlement accounting: auditors identified restatements to opening balances related to opioid settlement receipts. Sauer said the restatements involved amounts of about $34,003.05 and $825,008.73; county staff cited evolving state guidance and GASB guidance (notably GASB 100) in the accounting of settlement proceeds. - Federal procurement and ARPA-funded water-meter project: auditors noted a significant deficiency in procurement practices tied to the county's water-meter replacement project, which used ARPA funds. Sauer described a sequence beginning in 2022 when informal solicitations were used while key finance and management positions were vacant; county leadership canceled the informal process, reran a formal procurement (RFP/bid number 2023-06-01), and in July 2023 awarded the project to Consolidated Pipe and Supply after completing a compliant solicitation. The county's response documents the corrective actions taken and timeline. - Reporting of lottery-funded school capital projects: the county's resolution notes that both the county and the Board of Education share responsibility for submitting the brief final report required by the grant, and staff are working to ensure future compliance. - Late submission to the Local Government Commission: the audit package was uploaded to the LGC portal by the auditor on April 7, 2025, not March 31 as intended; the county confirmed the LGC accepted the submission and did not levy a penalty. The resolution commits the county to address procedures that led to the late portal upload.

The resolution asks that a majority of the governing body sign the response before it is returned to the LGC. Manager Sauer told the board that the LGC's procedures call for signatures and that staff would seek the board's signatures and return the package by the June 16 deadline.

Next steps and context The board's approval authorizes staff to forward the response to the LGC and implement the financial and procurement controls summarized in the resolution. Sauer also noted the county has scheduled a kickoff meeting with the auditors for the FY2025 audit on June 11.

Ending The resolution formalizes Gates County's plan to address audit findings ranging from accounting entries to procurement process improvements and documents the county's commitment to the LGC's review timeline. The board approved the resolution by voice vote with all five commissioners voting yes.