NC Auditor Finds $97.3M in Financial Reporting Errors at Department of Public Safety

DPS Secretary Jeff Smythe says the agency is developing new procedures after state auditors identified weaknesses in internal controls.

A state audit of the North Carolina Department of Public Safety found $97.3 million in overstated and understated financial reporting errors before the agency received a clean audit opinion following corrections.

The North Carolina State Auditor’s Office said the findings were the result of weaknesses in the department’s internal controls, including a lack of sufficient review procedures to ensure financial statements were accurate.

The fiscal year 2025 audit identified 34 required financial adjustments, including 14 considered material by auditors. After those adjustments were made, auditors determined the department’s financial statements were fairly presented in all material respects.

State Auditor Dave Boliek said accurate financial reporting is essential for government leaders making decisions about taxpayer-funded programs.

“A government agency's financial statements must be accurate in order for management to make informed, educated decisions,” Boliek said. “During its audit of the Department of Public Safety's financial statements, the State Auditor's Office identified a deficiency in internal control and ultimately had to account for 34 audit adjustments.”

Boliek said correcting those issues is a central responsibility of the auditor’s office.

“This is the bread-and-butter work of the State Auditor's Office — making sure financial statements are accurate, and management has reliable information at their hands,” he said.

The Department of Public Safety reported approximately $2 billion in revenue and $2.8 billion in expenses during fiscal year 2025. The agency is responsible for some of the state’s largest public services, including the Division of Adult Correction, juvenile justice programs, emergency management operations and other law enforcement responsibilities.

The audit was conducted to review the department’s financial stewardship and transparency in managing public funds and grants.

In response to the findings, NCDPS Secretary Jeff Smythe said the department is implementing changes designed to improve future financial reporting.

“The 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,” Smythe said in the department’s official response included with the audit.

Smythe said the department’s Financial Services sections also conducted year-end information sessions to help division staff better understand financial reporting requirements and complete necessary year-end procedures.

The audit comes as the Department of Public Safety continues through a leadership transition following the change from former Gov. Roy Cooper’s administration to Gov. Josh Stein’s administration.

Former DPS Secretary Eddie Buffaloe Jr. remained in the position for the first part of fiscal year 2025 before Stein appointed Smythe as secretary on Dec. 1.

The State Auditor’s Office said the purpose of the review is to provide accountability and ensure North Carolina agencies maintain accurate financial records for lawmakers, state leaders and taxpayers.