Macon County Schools earned the best possible opinion on this year’s audit, keeping a longstanding tradition of strong audits going.
A presentation from Shannon Dennison, a Certified Public Accountant with the Anderson Smith and Wike accounting firm, found there to be no misstatements or disagreements or difficulties with management in conducting the audit.
The system saw a decrease in balances for funds across the board from the beginning of the 2024-25 fiscal year. The general fund balance decreased $900,508 from $3,752,381 to $2,851,873. The 2025 decrease comes as the system begins to take funds from the large fund balance generated through Elementary and Secondary School Emergency Relief Fund dollars, granted during the COVID-19 pandemic.
The capital outlay fund dropped from $484,417 to $456,625 and “Other Special Revenue,” a grant-specific fund balance, decreased by $88,079 from $633,378 to $545,299.
The child nutrition fund dropped from $567,206 to $72,160. The fund is legally required and if the fund’s balance drops below zero the system will have to transfer money to maintain it, which could further affect the general fund, Dennison said.
“This is something we previously put out and discussed. I will say this is a trend that we’re seeing across the state,” she said. “Increasing cost of food, increasing salaries and benefits that are mandated by [the Department of Public Instruction] in many instances as well as the prior year, reimbursement rates decreased from the federal government coming out of ESSER funds. So, again, the decrease in fund balance is something I know the district is working on … you guys are not an extreme outlier in having that decrease.”
The audit revealed two deficiencies: a “material weakness” and a “significant deficiency.” A material weakness is a combination of issues that makes it possible a material misstatement of financial statements could be made. A significant deficiency is less serious, but still important enough to draw the governing body’s attention.
The 2025 audit’s material weakness stemmed from the system’s transition to new accounting software. The previous software was phased out by the parent company and DPI, and the county had to shift to new software. Dennison said multiple districts in North Carolina have encountered issues moving to the new software this year.
In Macon County, the school district encountered issues with reconciling balances, preparing liability reports and accurately listing employee pay. The firm said because the district did not have “adequate planning, staffing and monitoring procedures in place to ensure a smooth conversion and to maintain routine reconciliation processes during and after the transition,” there was an increase in the risk of a misstatement in financial statements.
The given recommendation was for management to implement “controls to ensure financial records are reconciled on a timely basis and all financial information is accurate and available,” and for the district to implement controls to ensure revenues and expenditures line up even when budgets are not exceeded.
“From my understanding from the software vendor, they say next year will be smoother but rolling into this year there were still some challenges,” Dennison said.
The “significant deficiency” centered around an issue in which the district had expenses that exceeded what was budgeted in the General Fund and School Food Service Fund resulting from a lack of oversight. The fund was overdrawn by $17,939 in June 2025. The firm recommended closer monitoring to ensure needed funds are requested of the board before they need to be spent. The school board agreed with both findings and both recommendations.