State audit finds $34 million in accounting errors at Rowan-Cabarrus Community College
SALISBURY — A regular state audit of Rowan-Cabarrus Community College’s finances showed millions of dollars in accounting errors and internal control problems.
The audit, published by the state auditor’s office on Monday, covered the 2019-2020 fiscal year and found “significant misstatements” in the college’s financial statements submitted for audit.
The audit says a lack of adequate internal controls resulted in the omission of $14.6 million in capital assets, misclassification of $16.2 million in completed construction as “in progress,” a $2 million understatement of supplies and services expenses that should have been listed in construction in progress and a $1 million overstatement of the college’s balance at the beginning of the current financial period. The report says there were corrections to the majority of the notes in the statements, statement of cash flows and supplementary information.
The report said lack of internal controls was the result of monitoring procedures, shortcomings in a year-end plan for preparing financial statements and college management “not adequately addressing the loss of institutional knowledge and expertise due to significant management and financial reporting staff turnover in recent years.”
The report notes long vacancies of important financial positions at the college. The chief financial officer position was vacant for nine months between December 2018 and September 2019. The technician position for capital assets was vacant between September 2018 and April 2019 and the executive director of budgets and financial reporting position was vacant between June 2020 and February this year.
The report concluded the issues found during the audit increased risk of fraud, and misinformation about the college’s financial data could impact the college’s board of trustees’ decision making and increase audit costs.
The auditor’s office recommended staff training, designing monitoring activities, a year-end plan and contingencies for periods of high staff turnover to address the issues.
A response from the college attached to the report agreed with the findings and the impact of turnover in the business office.
A statement from the college furnished to the Post says Rowan-Cabarrus addressed the problems during the audit period and the state is satisfied.
“The college has a strong history of excellent state audits and this is an isolated, one-time occurrence based on unfilled personnel vacancies which are always a challenge to any organization,” the college said in its statement. “These issues did not include any loss of funds and do not impact our service to students or the college’s mission and overall operations.”
The college is currently seeking to hire a new chief financial officer.
The state audit was a regular process that the college undergoes every two years. The audit it received for the 2017-2018 fiscal year showed no deficiencies.
There are 19 positions in the business office with four vacancies. The college expects to fill three of the four within the next two weeks and plans to add two new accountants to the office as well.