State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_115C > GS_115C-447

§ 115C‑447.  Annual independent audit.

(a)        Each local school administrative unit shall have itsaccounts and the accounts of individual schools therein audited as soon aspossible after the close of each fiscal year by a certified public accountantor by an accountant certified by the Local Government Commission as qualifiedto audit local government accounts. The auditor who audits the accounts of alocal school administrative unit shall also audit the accounts of itsindividual schools. The auditor shall be selected by and shall report directlyto the board of education. The audit contract shall be in writing, shallinclude all its terms and conditions, and shall be submitted to the Secretaryof the Local Government Commission for his approval as to form, terms andconditions. The terms and conditions of the audit contract shall include thescope of the audit, and the requirement that upon completion of the examinationthe auditor shall prepare a typewritten or printed report embodying financialstatements and his opinion and comments relating thereto. The financialstatements accompanying the auditor's report shall be prepared in conformitywith generally accepted accounting principles. The auditor shall file a copy ofthe audit report with the Secretary of the Local Government Commission, theState Board of Education, the board of education and the board of countycommissioners, and shall submit all bills or claims for audit fees and costs tothe Secretary of the Local Government Commission for his approval. It shall beunlawful for any local school administrative unit to pay or permit the paymentof such bills or claims without this approval. Each officer, employee and agentof the local school administrative unit having custody of public money orresponsibility for keeping records of public financial or fiscal affairs shallproduce all books and records requested by the auditor and shall divulge suchinformation relating to fiscal affairs as he may request. If any member of aboard of education or any other public officer, employee or agent shallconceal, falsify, or refuse to deliver or divulge any books, records, orinformation, with an intent thereby to mislead the auditor or impede orinterfere with the audit, he is guilty of a Class 1 misdemeanor.

The State Auditor shall have authority to prescribe the manner in whichfunds disbursed by administrative units by warrants on the State Treasurershall be audited.

(b)        When the State Board of Education finds that incidents offraud, embezzlement, theft, or management failures in a local schooladministrative unit make it appropriate to review the internal controlprocedures of the unit, the State Board of Education shall so notify the unit.If the incidents were discovered by the firm performing the audit undersubsection (a) of this section, the board of the local school administrativeunit shall submit the audit together with a plan for any corrective actionsrelative to its internal control procedures to the State Board of Education andthe Local Government Commission for approval and shall implement the approvedchanges prior to the next annual audit. Where the firm preparing the auditunder subsection (a) of this section identifies significant problems withinternal control procedures the local school administrative unit shall submitthe audit together with a plan for any corrective actions relative to itsinternal control procedures to the State Board of Education and the LocalGovernment Commission for approval and shall implement the approved changes priorto the next annual audit.

If the incidents were not discovered by the firm performing the auditunder subsection (a) of this section, the State Board of Education and theLocal Government Commission shall employ an audit firm to review the internalcontrol procedures of that local school administrative unit. Upon completion ofthis review, the audit firm shall report publicly to the State Board ofEducation, the Local Government Commission, and the board of the local schooladministrative unit. If the State Board of Education determines thatsignificant changes are needed in the internal control procedures of the localschool administrative unit, the local board shall submit a plan of correctiveactions to the State Board of Education and the Local Government Commission forapproval and shall implement the approved changes prior to the next annualaudit. The local school administrative unit shall pay the cost of this audit. (1975, c. 437, s. 1; 1981, c. 423, s. 1; 1983, c. 913, s. 17; 1987(Reg. Sess., 1988), c. 1025, s. 14; 1993, c. 539, s. 891; 1994, Ex. Sess., c.24, s. 14(c); 2005‑276, s. 7.58.)