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County manager outlines corrective plan after late FY25 audit and accounting finding
Summary
County manager David Cotton told the Cleveland County commissioners that three financial-performance issues — a GASB 87 lease-recording error, late audit submission and unreconciled accounts — prompted a corrective plan including reclassification of lease payments, daily reconciliations, outside consultants and monthly and quarterly reporting; the board approved the response.
County Manager David Cotton presented the Cleveland County Board of Commissioners with a corrective plan on May 5 in response to findings tied to the FY25 audit and requirements from the North Carolina Local Government Commission.
Cotton told the board "there were 3 that rose to the level of being financial performance indicators of concern," identifying an accounting error related to GASB Statement 87 (lease payments recorded to departments rather than debt service), a late audit submission and unreconciled accounts. He said staff had booked future lease payments to debt service and would include qualifying software subscriptions where applicable.
Cotton said the audit was late by about a month and that reconciling county accounts was the direct cause. He said the county has 31 rental accounts overall and that "we have 3 out of 31" accounts that remain unreconciled, with two about one month behind and a third approaching a month behind. To address the problems, county finance staff have started daily reconciliations, will move to monthly reconciliations, enlisted help from the sheriff's office business officer and engaged independent consultants through the North Carolina Association of County Commissioners to review processes.
Cotton told commissioners the plan had been vetted by the independent auditor and that staff would provide monthly financial reports and quarterly audit-status updates to the board in public meetings. Asked about worst-case consequences, Cotton said being placed on the Local Government Commission's unit list is possible in extreme cases — which would increase oversight particularly for debt issuance — but he said he did not foresee Cleveland County being placed on that list given the corrective measures under way.
Commissioner (S5) moved to approve the manager's proposed response; Commissioner (S10) seconded and the board approved the motion unanimously. The board directed staff to finalize the response and submit it to the Local Government Commission as required.
