Audit: Nash County Public Schools used $1.6 million of reserves but auditor calls finances sound

An external auditor told the board that Nash County Public Schools’ general fund had cash and cash equivalents of about $13.0 million and an ending fund balance of roughly $11.0 million as of June 30, 2025, representing a decrease of about $1.6 million from a year earlier. "So basically, y'all spent about 1,600,000.0 of your savings last year," the auditor said during the meeting.

The decline reflected both planned use of fund balance — the district had budgeted to spend $2.0 million this year and came in about $400,000 under that amount — and one-time transitions, the auditor said. He told the board that conversations with "Doctor Ellis and Sanders" indicated the demerger and a drop in funding from Edgecombe County were the main drivers of the drawdown.

The audit identified several significant deficiencies in internal control and compliance. Finding 25-01 described untimely bank and ledger reconciliations tied to a general-ledger software conversion from Sartox to LINC and staffing turnover; the auditor said there were no lost funds and the reconciliations were current by the time the audit was finished. Finding 25-03 found accumulated depreciation for government-wide statements had been understated by $1,667,939 after the conversion; the auditor called that a presentation issue with no budgetary impact.

The audit also reported budgetary findings (25-02) related to appropriations and a common issue in districts when capital items such as buses are ordered in one fiscal year but received in the next. The auditor explained the state requires a lease or installment purchase accounting treatment for school buses, which can trigger budget entries even though cash never flows through the district. "So y'all borrow the money, but then DPI pays off the debt," he said.

A federal- and state-programs review produced a related finding: allowable indirect cost for one grant (AWARE ACTIVATE) was $46,171.27 and budgeted at $43,225, but $75,336.21 was charged to the grant — an overcharge of $29,001.94 (finding 25-04). The auditor said that difference could prompt a federal request for repayment.

Finding 25-05 documented that the board exceeded the Department of Public Instruction (DPI)–allocated months of employment for several program categories, producing a questioned cost of about $279,399; the auditor and finance staff said the item was reconciled with DPI after June 30 and corrected in August/September. Finance staff (identified in the discussion as Shanice Sanders) confirmed the reconciliation work with DPI occurred after year end and reduced the outstanding item.

Despite the findings, the auditor delivered a required communications letter noting no disagreements with management, no uncorrected misstatements, and no reportable issues beyond the listed findings. He labeled the items "significant deficiencies" rather than material weaknesses and concluded: "overall, the audit went well" and the district is in "very good financial shape" while urging monitoring of the Child Nutrition program and remediation of the control items.

The board asked clarifying questions during the presentation; several motions and committee actions followed in the meeting's policy committee segment.

The audit referenced state and federal program testing, DPI reporting requirements and GASB 101 accounting changes (sick‑leave liability) discussed during the presentation. The district will consider corrective steps recommended in the audit and return with any additional budget amendments or policy changes as needed.