County audit finds material weaknesses; commissioners approve written response and a 2025 audit contract

Onslow County’s independent auditor presented the fiscal year 2024 audit results April 21, reporting a clean (unmodified) opinion on the county’s basic financial statements but identifying three material weaknesses and multiple restatements that delayed issuance.

Leanne Bagasala, audit director for Maldives and Jenkins, told the Board of Commissioners the firm issued a clean opinion on the financial statements and clean opinions related to federal and state single-audit reports. However, the audit identified three material weaknesses including: restatements of prior-year balances tied to new guidance for opioid settlement revenue recognition, errors in bond premium amortization method, and incorrect landfill closure/post-closure cost accounting. Bagasala said the county recorded a prior-period adjustment of about $17 million at the government‑wide level for opioid settlement amounts recognized under updated GASB guidance and other restatements (examples cited in the presentation included a $1.3 million prior‑period grant revenue correction and a $4.6 million correction to landfill closure costs).

Bagasala said the county received no single-audit findings on grant programs this year, noting eight major programs were audited and none produced findings. She described weaknesses in the general ledger close process and an incorrect schedule of expenditures of federal awards that required a $5.6 million adjustment.

Because the audit was late, and because of the material weaknesses and a budget violation disclosed, commissioners were required to submit a written response under the state Local Government Commission’s Financial Performance Indicators of Concern (FPIC) process. The board voted to approve the draft response letter and submit it as required.

Separately, the board approved a one-year engagement for the FY2025 audit with Maldives and Jenkins for $134,500. County staff said the FY2025 contract assumes audit of eight major programs (to meet single-audit coverage requirements) and targets an October 30, 2025 completion date. The audit contract passed on a voice vote with a recorded motion and second; commissioners did not record a roll-call tally in the meeting transcript.

County Chief Financial Officer Kevin Patson presented the county’s quarterly financial report to the board, saying property-tax and sales-tax collections were generally on target and noting seasonal timing differences for collections. The CFO and auditor said management has prepared corrective action plans to address the material weaknesses described in the audit report.

County management reported improved internal processes and said the FY2025 budget will be the first developed and audited under the current management team; commissioners and staff described recent improvements in finance and human resources processes over the past 18 months.

The board’s approved FPIC response and the signed audit contract were included in the meeting packet and will be submitted to state oversight as required.