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AAT <br /> 19 <br /> Orange County, North Carolina <br /> Audit Findings (Continued) <br /> • 2024-003 Annual Financial Closeout and Preparation of Records for the Audit <br /> Issue: The County's review and manual adjustments were not sufficient to prevent, or detect and correct, material <br /> misstatements in the County's financial statements. <br /> Cause/Context: During the audit for the year ended June 30, 2024, material audit adjustments were required to <br /> correct current year balances in several audit areas: <br /> Audit adjustments totaling approximately $6,350,000 were required to properly reflect debt proceeds, debt <br /> payments, debt premiums and interest expenditures/ expenses. <br /> Audit adjustments totaling approximately $1,100,000 were required to correct the reporting of the County's <br /> capital assets. The County incorrectly expensed construction costs that were capital in nature and should have <br /> been reported as capital assets. <br /> Across several of the County's funds, issues were noted with both accounts payable and accounts receivable <br /> balances. The amounts reported in the County's general ledger did not agree and reconcile with the <br /> underlying detailed listings or subsidiary ledgers. These differences led to delays in receiving from the County <br /> staff final accounts receivable and accounts payable balances with proper documentation to support the <br /> ending balances reported. <br /> Effect: While the errors were identified and corrected during the audit, the incomplete financial close process <br /> resulted in increased reconciliation efforts from County staff, increased potential risk for misstatements, and delays <br /> in finalizing financial statements, requiring additional review and adjustments. <br /> County Response: The County acknowledges the audit finding and is committed to improving its financial reporting <br /> processes and internal controls to ensure compliance with generally accepted accounting principles (GAAP). We <br /> recognize the need for enhanced financial statement preparation, reconciliations, and timely review processes to <br /> prevent material misstatements and ensure accurate financial reporting. <br /> Auditor's Discussion &Analysis (AD&A) Going Further. <br /> June 30, 2024 <br />