State Auditor Identifies Multiple Financial Deficiencies In Zebulon

ZEBULON — A North Carolina Office of the State Auditor review has identified multiple financial management and internal control deficiencies within the Town of Zebulon, including unsupported consultant payments, duplicate payments, weak oversight of executive compensation and budgeting concerns.

The report, released Monday by State Auditor Dave Boliek’s office, was initiated following a Tipline complaint alleging insufficient financial controls, excessive travel expenses by town officials and unsupported consultant payments associated with preparation of the town’s budget. Auditors reviewed the town’s handling of public funds during fiscal years 2023 through 2025.

Among the report’s findings, auditors said the town could not produce a fully executed contract supporting payments made to a former interim town manager’s consulting firm at a rate of $250 per hour for consulting work performed in January 2025. Records showed the town paid the firm $4,500 for 18 hours of work, but officials were unable to provide a signed agreement authorizing the consulting rate.

Auditors also found the town paid an outside consultant $22,630.22 for work related to preparation of the fiscal year 2026 budget but could not provide invoices, work products or other documentation showing what services were performed before payments were made. The report states auditors were unable to verify what, if any, deliverables the town received.

The audit identified additional financial control issues, including the failure to investigate checks that remained outstanding for more than one year or report them as required under the North Carolina Unclaimed Property Act. Auditors also found duplicate and invalid payments remained undetected because of weaknesses in invoice processing and accounts payable reconciliation.

One of the more unusual findings involved a town finance employee whose personal bank account was linked to the town’s credit card account. According to the report, the employee inadvertently used personal funds to pay a $16,668.87 town credit card balance before being reimbursed by the town the following day. Auditors concluded the incident highlighted weaknesses in internal controls designed to prevent the commingling of personal and public funds.

The report also found deficiencies in oversight of executive-level compensation and reimbursements. Auditors said a former interim town manager was overpaid $6,100 before the error was later corrected and refunded. They also found no evidence of independent review of certain timesheets and reimbursement requests, with some reimbursement forms reportedly approved by the same individual who submitted them.

Financial reserves also drew scrutiny. The audit found the town’s unrestricted General Fund balance fell below the minimum level required under its own fund balance policy during fiscal year 2025. The report further concluded the town continued appropriating fund balance despite not meeting its policy threshold.

In addition, auditors said Zebulon’s budgets consistently differed from actual revenues and expenditures between fiscal years 2022 and 2025, raising concerns about the reliability of the town’s budgeting process. For fiscal year 2025, actual expenditures were approximately $6.8 million below the final budget. Auditors said recurring variances of that magnitude can weaken financial planning and reduce the usefulness of the town’s adopted budget as a management tool.

The report also included two observations that were not listed as formal findings. Auditors noted the former interim town manager was reimbursed $6,945.12 for a four-bedroom Airbnb rental in 2024 after the Board of Commissioners determined the lodging was reasonable. The report also noted board travel reimbursements exceeded budgeted amounts during fiscal year 2025.

The Town of Zebulon has experienced significant leadership turnover in recent years, including multiple town manager changes between 2024 and early 2026.