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Audit shows clean opinion but flags reconciliations, purchasing and budget violations
Summary
An independent audit of Hoke County Schools’ 2023–24 financial statements gave a clean opinion but found internal-control weaknesses including unreconciled accounts, purchase-order violations and roughly $432,000 in budget violations; auditors urged staffing and process changes.
An audit firm representative told the Hoke County Schools Board of Education on May 13 that the district's audited financial statements for the year ended June 30, 2024, received a clean, qualified opinion while the compliance testing uncovered internal-control problems that need board attention.
The auditor said the financial statements were “free from any sort of material misstatements or errors,” but reported four internal-control findings. The largest operational concern was that several general ledger accounts were not reconciled timely, a lapse that led to state and federal grant reimbursements for employer health insurance premiums not being requested on time and required local funds to cover roughly $400,000 of those premiums. The auditor recommended management implement month‑end reconciliations and ensure experienced oversight at year end.
Why this matters: the auditor advised the board that maintaining an adequate fund balance and timely reconciliations helps protect the district’s cash flow and prevents unbudgeted charges that could require local dollars.
Key findings and details from the audit presentation: - Fund balance: the auditor reported the general fund ended June 30, 2024, with a positive fund balance the firm described as “adequate,” while noting the district is among the lower‑funded districts the firm audits. (Exact prior-year comparisons were described by the auditor during the presentation.) - Budget violations: the audit identified budget violations across three funds — the other special revenue fund, the school food service (child nutrition) fund, and the childcare fund — totaling about $432,000. The auditor said this was a repeat finding from the previous year and stressed ongoing budget monitoring and timely amendments. - Child nutrition: the program reported a loss for the year but retained strong cash reserves at year end (the auditor cited reserves over $5.9 million) and had paid $170,000 in indirect costs to the district during the year. The auditor noted changes in USDA reimbursement rates as a factor in child-nutrition profitability shifts statewide. - Purchasing and pre-audit: auditors found instances where purchase orders were created only after goods or services were received, a violation of the School Budget and Fiscal Control Act’s pre‑audit requirements. The auditor recommended re‑training staff with purchasing authority to submit POs before obligating funds. - Timeliness: the audit was not submitted to the North Carolina Local Government Commission by the statutory November 30, 2024, deadline; auditors tied that delay to finance staff turnover and unreconciled general ledger accounts.
Board-level recommendations from the auditor included dedicating adequate staffing and oversight for financial reporting and year‑end close, timely reconciliations of GL accounts, and consistent enforcement of purchase‑order procedures. The auditor said management has been briefed on individual‑school comments and is working on corrective plans.
The presentation prompted board questions about staffing and year‑end procedures; no formal board action occurred during the audit presentation.
Ending: The auditor left detailed findings, recommended adjustments and proposed journal entries in the audit packet for the board and management to address ahead of the next fiscal close.
