State audit finds $2.1M in reporting errors at USS North Carolina Battleship Commission

WILMINGTON, NC (WWAY) — The North Carolina Office of the State Auditor says it found $2.1 million in financial reporting errors in the USS North Carolina Battleship Commission’s fiscal 2024 statements, citing inadequate internal controls and a material weakness in financial reporting.

In an audit report for the Fiscal Year ending September 30, 2024, auditors said key accounting duties were concentrated with one individual and several basic controls were missing. Among the lapses: three of six bank accounts (holding $5.1 million of $7.6 million in cash) were not reconciled during the year; no annual review of user access to the finance system; and 17 of 182 journal entries tested lacked evidence of independent review and approval.

Auditors said the control failures led to multiple misstatements, including:

• Deferred outflows related to pensions overstated by $430,000 and other postemployment benefits by $191,000
• Beginning net position overstated by $248,000
• Noncapital contributions overstated by $169,000 (and another $81,000 from an incorrect receivable)
• Other operating expenses understated by $168,000; salaries and benefits understated by $36,000
• Cash misclassified by $41,000 and net position categories misallocated (including a $96,000 overstatement of net investment in capital assets)

The audit warns the errors could lead to decisions based on unreliable data and increase the risk of fraud or undetected mistakes.

“These errors increase the risk of making financial decisions based on unreliable data and can lead to an increased risk of fraud. I met with management this morning to discuss our findings and next steps. Our meeting was very productive. The financial management issues can be remedied in a swift manner by the team at the Battleship Commission. Our office has worked closely with them and we will continue to provide support,” Auditor Dave Boliek said in a statement.

In a written response, NC Battleship Executive Director Jay Martin said the Commission agrees with the findings and is taking prompt corrective action.

“The Commission began addressing the deficiencies in July 2025 by working with the state auditors to correct our financial statements… We are committed to reestablishing adequate internal controls by reallocating accounting personnel to ensure proper segregation of duties and increasing managerial oversight,” Martin wrote.