Audit finds $97.3M in NC DPS financial reporting errors

The North Carolina Department of Public Safety (NC DPS) had $97.3 million in financial reporting errors for the Fiscal Year ending June 30, 2025, according to an audit released on Wednesday by the North Carolina Office of the State Auditor (NCOSA).

NCDPS is the chief agency for law enforcement, juvenile justice initiatives, and emergency management responsibilities in North Carolina.

Inadequate internal controls, including review procedures, led to the overstated and understated errors that if not fixed, would have led department management and other stakeholders to have relied on inaccurate information, leading to greater errors in the future, according to auditors.

NCDPS, which operates under the governor’s office, reported $2 billion in revenues and $2.8 billion in expenses for the fiscal year ending June 30, 2025.

NCOSA did stress that the financial statements for NC DPS for fiscal year that ended June 30, 2025, are accurate and reliable, despite the internal controls issue.

findings

Auditors say that gaps in financial reporting oversight within the high volume, decentralized environment of NC DPS resulted in the financial reporting errors. Additionally, they acknowledged that NC DPS management had problems ensuring that personnel responsible for financial reporting had the necessary knowledge and experience following recent turnover.

NCDPS management also didn’t have adequate written policies and procedures related to the preparation and review of the financial statements, or consistently communicate or monitor financial reporting requirements across divisions.

Auditors said once they identified and accounted for the 34 adjustments needed, the audit no longer shows any material errors.

Recommendations

NCOSA said personnel responsible for financial reporting should have the necessary knowledge and experience, including targeted training and support to address gaps resulting from turnover.

Second, written policies and procedures should be established and maintained, including a year-end checklist, allowing for a thorough review of the financial statements and related information to ensure accurate and complete financial reporting.

Auditors also stated that financial reporting requirements should be clearly communicated and consistently monitored across all divisions, with defined expectations, and NC DPS management should actively monitor the year-end financial reporting process to ensure corrective actions are implemented.

NCDPS Secretary Jeffrey Smythe acknowledged the findings and said his department is developing standard operating procedures and checklists for staff to use during the preparation of year-end statements to enhance internal controls for future financial reporting activities. Additionally, he said the department’s financial services sections have also conducted a year-end information session to equip divisional staff to perform the necessary year-end requirements. Staff also continue to hold virtual office hours to monitor progress and ensure timely and appropriate submission of year-end documentation to support the accurate completion of the financial statements.

Last month, North Carolina Senate Judiciary Committee leaders were reviewing ethics compliance, potential conflicts of interest, and a history of progressive policing policies ahead of a confirmation hearing for Smythe.

He was appointed in January after Eddie Buffaloe’s retirement. Smythe is a former Burlington police chief and current city council member. 

In a May 15 letter to Acting DPS Secretary Jeffrey Smythe, Sens. Danny Britt, R-Robeson; Warren Daniel, R-Burke; and Buck Newton, R-Wilson, said the committee is undertaking a review of “ethics compliance and conflicts of interest” connected to Smythe’s nomination. The senators cited Smythe’s simultaneous service as acting DPS secretary and as a member of the Burlington City Council. 

Smythe pushed back in a May 22 response, telling the senators that the State Ethics Commission had been made aware of his Burlington City Council role and “determined that my service on the Council does not create a conflict of interest.” Smythe also said he had discussed potential conflicts with his general counsel and that no conflict had arisen to date.

In June 2020, Smythe attended a George Floyd protest at North Park in Burlington and accepted a sign reading “End Police Brutality.” Smythe brought the sign back to the department so officers on duty could pose with it in a show of solidarity with protesters.

There were also many other progressive policing policies raised from Smythe’s tenure.

Smythe’s appointment is subject to confirmation by the North Carolina Senate under state law governing the governor’s cabinet appointments. A date has yet to be set for a confirmation hearing. 

“Audit finds $97.3M in NC DPS financial reporting errors” was originally published on www.carolinajournal.com.