By Neil Offen

noffen@heraldsun.com; 419-6646

DURHAM -- A report by the state auditor has found "significant deficiencies in internal control over financial reporting" at Durham Technical Community College.

The audit, which covers the 2007-08 academic year, also found that Durham Tech did not satisfactorily reconcile its monthly bank statements and "inadequately reviewed" its accounts receivable, among other lapses.

Durham Tech President Bill Ingram Friday did not dispute the findings, but said the problems had been corrected.

"We recognize that there were issues that needed to be addressed, and they have been," Ingram said. "This is not the best headline I want to see for Durham Tech [concerning the findings], but I am confident that we have solved the issues and are continuing to work on dealing with them."

The report by auditor Beth Wood did not suggest that the school had misused any of its funds. But it detailed a litany of faulty handling of paperwork by Durham Tech that included:

-- Failing to disclose an outstanding commitment on construction contracts in the amount of $5,039,010;

-- Failing to disclose future minimum lease payments in the amount of $1,.407,206 for operating lease obligations;

-- Failing to perform an adequate annual review of capital assets to ensure the reasonableness of estimated useful lives, thus requiring an audit adjustment of $3,834,911;

-- Failing to submit the school's financial statement package to the state in a timely manner;

-- Failing to supply adequate explanations and supporting documentation for financial entries;

-- And failing to properly prepare for the implementation of a new accounting system used to maintain student accounts, causing many sums to be recorded twice.

Ingram said he became aware of the problems soon after he became president of the college in January 2008.

In the spring of 2008, he began reorganizing the school's financial management division and brought Ed Moore back to be Durham Tech's chief financial officer.

Moore, who had retired from Durham Tech in 1999, said he quickly made a number of changes to the school's financial accounting operation.

"We assigned more seasoned staff persons to accounts receivable and management monitoring," he said. "We've placed different departmental management in charge of bank reconciliations, and have had them review that on a regular basis. And we have implemented a training process for all of our staff to better utilize the computer system we have."

Moore emphasize that no funds were misused "in any way."

"They were accounted for in an incorrect manner," he said. "That was the problem. They were misclassified, or disclosure was not properly stated as part of our financial reporting."

While he is convinced the problems have been solved, Ingram acknowledged that "we still have a responsibility to demonstrate that we've made it right."

To do that, he said, the school has invited the state auditor's office -- which normally performs audits only every two years -- to return this year, and look at the books again.

"We want the auditor to come back now, and verify that we have corrected the findings," Ingram said. "We believe we have."