USS North Carolina audit finds $2.1M in reporting errors

RALEIGH — A state audit of the finances for the USS North Carolina has uncovered $2.1 million in reporting errors for the year ending Sept. 30, 2024.

The North Carolina Office of the State Auditor’s (OSA) financial audit report states the financial reporting errors “include, but are not limited to, overstating deferred outflows to pensions by $430,000, overstating beginning net position by $248,000, and understating salaries and benefits by $36,000.”

The financial reporting issues in the OSA’s audit span 12 different areas, the largest of which was the cited $430,000 related to pensions and was due to incorrect recording of transactions associated with the plan.

Understatement of restricted expendable net position was the second biggest amount at $378,000, mainly due to errors in net position calculations.

The OSA recommendations included strengthening internal controls by reallocating responsibilities, including key accounting and financial reporting responsibilities, to help reduce reliance on a single individual and ensure proper segregation of duties.

Additionally, it was recommended that the Battleship Commission management should set up a formal review and approval process to increase internal oversight over areas like journal entries, and make sure bank account reconciliations are independently reviewed and approved.

USS North Carolina Battleship Commission’s Executive Director Jay Martin said the commission agreed with the report’s findings and will be taking “prompt corrective action.”

He also said the commission began addressing the issues in July while working with the state auditors.

“All journal entries have been made to correct the misstatements,” Martin said.

The Battleship Commission will be working with the Department of Natural and Cultural Resources Office of Budget and Finance to “identify and engage an accounting firm on the statewide term contract for assistance.”

“The Commission is committed to achieving a high standard of financial reporting and internal controls. We have had a history of clean audit reviews,” Martin wrote in the response to the audit. “We are committed to reestablishing adequate internal controls by reallocating accounting personnel to ensure proper segregation of duties and increasing managerial oversight.”

The commission has hired a new business officer competent in accounting and financial reporting, along with a new administrative assistant to support the business officer.