Abstract

Local government financial audits have provided increased transparency into the many transactions that take place over an entire fiscal year. In many of these cases, it can be determined if local governments have followed state laws, observed generally accepted accounting principles, and established proper internal controls. However, implementation of stricter state guidelines and more stringent accounting standards have not eliminated reporting errors. For these reasons, notes that accompany financial statements are not only useful for clarification and information purposes, but also to question various reporting aspects among statements. This study examines the fiscal year 2009 independent auditor findings among note disclosures in professionally administered county governments in North Carolina. Findings indicate numerous reporting problems within a majority of county governments ranging from employee retirement funding to inadequate insurance coverage and unexplained asset amounts. A more involved county manager, more internal staff dedicated to the audit process, and collaboration in auditor selection are all significant in reducing the number of note disclosure errors.

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