RALEIGH – A state audit found significant control weaknesses over $66.5 million in inventory held by the North Carolina Department of Adult Correction, while the department said it has begun training and monitoring changes.
The Office of the State Auditor released the financial statement audit Oct. 9. The report, dated Oct. 7, covered the fiscal year that ended June 30, 2025. Auditors said the department’s financial statements were accurate and reliable overall, but they identified a significant deficiency in internal control over inventory.
In a sample of 40 general fund inventory locations, auditors found eight discrepancies that together overstated inventory by $106,821. In a sample of nine Correction Enterprises locations, six discrepancies together understated inventory by $122,846.
Auditors also found that using cost rather than the lower of cost or market overstated finished-goods inventory by $304,795. The report identified $1.9 million in general fund inventory and $774,629 in Correction Enterprises inventory that had not been used during the fiscal year and could be obsolete.
The department said not every unused item was obsolete and that most remained useful. It identified $168,958 in general fund inventory and about $65,093 in Correction Enterprises inventory as potentially obsolete, pending further review.
The report linked the discrepancies to employee turnover, implementation of a new inventory system and insufficient oversight. It said inaccurate records could lead to inventory being misstated, lost, stolen or unavailable when needed.
Auditors recommended that the department train employees, monitor inventory counts, investigate discrepancies and consistently review inventory for obsolescence and proper valuation.
The department said it has started training and monthly follow-up monitoring. It attributed most of the sampled discrepancy to human error at its Sign Plant and said it added a second verification checkpoint. It also said Correction Enterprises is implementing an integrated manufacturing system.
The Department of Adult Correction reported more than $1 billion in revenues and $2.4 billion in expenses for the fiscal year. The auditor’s office said it will monitor implementation of the recommendations.
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Photo Credit: State Archives of North Carolina via Wikimedia Commons. Central Prison aerial view, Raleigh, 1949; no known copyright restrictions. Cropped. Source.
Editor’s Note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.