NC Central University had over $45 million in financial reporting errors

According to an audit released Thursday by North Carolina State Auditor Dave Boliek, North Carolina Central University (NCCU) had over $45 million in financial reporting errors for the fiscal year ending June 30, 2024.

Fortunately, per a press release issued by Boliek, the university is back on track and moving in the right direction financially. He said the deficiencies in the school’s financial reporting have snowballed over the last several years.

The North Carolina Office of State Auditor (NCOSA) issued significant deficiencies to the school in 2021 and 2023.

Among the findings in the 2024 audit:

• Supplies and services expense was overstated by $8.3 million because losses from the disposal of capital assets were misclassified, which also understated other nonoperating expenses by the same amount.
• Scholarships and fellowships expense was understated by $1.2 million because revenues related to the UNC System’s Project Kitty Hawk partnership were not recorded correctly, which also understated state and local grants and contracts revenue by the same amount.
• Cash was overstated by $4.9 million because of inaccurate journal entries, which also overstated beginning net position by the same amount.
• Noncapital contributions were overstated by $4.8 million because donated capital assets were misclassified, which also understated capital contributions by the same amount.
• Federal grants and contracts were overstated by $3.7 million because of inaccurate journal entries, which also understated nongovernmental grants and contracts by the same amount.
• Restricted nonexpendable net position was overstated by $2.6 million, restricted expendable net position was overstated by $3.6 million, and unrestricted net position was understated by $6.2 million because of errors in the calculations.

Boliek stressed that while the audit report identifies material findings, the audit itself should not signal that the university is in financial trouble.

“Part of what makes our university system so great is we hold the institutions to high standards and strive to bring the very best out of our public universities,” said Boliek. “NCCU’s financial reporting fell far short of the standards expected of our high education institutions, but I’ve had productive meetings with university and UNC system leadership and have confidence NCCU is on a better path.”

He said the good news is that new leadership has taken the helm at the university and that he and his team have met school officials, including Karrie G. Dixon, the new Chancellor at NCCU, and a newly installed senior financial team to discuss the particulars of the audit findings.

Both Dixon and the new CFO, Laurie Wilcox, agreed with the finding of inadequate internal controls that resulted in significant misstatements. They’ve accepted the recommendations and taken steps toward improvement, like establishing a systematic evaluation process that will assess the knowledge and experience of personnel, especially critical accounting and financial reporting roles, as well as improving the training of those involved with financial reporting.   

“Our team is confident in the new leadership team’s ability to put the University on a positive trajectory,” Boliek said in the report. “With the right people in the right positions, NCCU’s financial reporting should improve.”

NCCU was the setting on Thursday for North Carolina State Treasurer Brad Briner’s announcement that his office has entered into a 12-week agreement with Open AI that he says will modernize systems and streamline data processes while providing more efficient and effective services to taxpayers and local governments while saving money.