State audit shows James Sprunt Community College Incubator Kitchen financial mismanagement

Published: Jan. 14, 2020 at 7:12 PM EST
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A North Carolina State investigative audit finds major financial concerns with the oversight of the Eastern Carolina Food Ventures Incubator Kitchen managed by James Sprunt Community College (JSCC) causing the school to miss out on nearly $100,000.

Located in the WestPark Business Technology Center in Warsaw, the Kitchen Incubator is a collaborative effort of James Sprunt Community College, Duplin County, and Pender County.

The audit found JSCC failed to provide proper oversight of the regional shared-use commercial incubator kitchen, designed to help develop food entrepreneurs, new jobs, and new economic development in Eastern North Carolina.

According to the State Auditor’s Office report, from January 2016 to December 2018, the Small Business Center Director at James Sprunt "did not require kitchen clients to complete required production sheets, prepared inaccurate invoices and failed to ensure monthly billing for the kitchen rental” at the incubator kitchen.

“The Director did not bill clients at least $34,193 as a result of clients not completing the production sheets and the Director preparing inaccurate invoices,” the report reads. “In addition, the College did not collect at least $63,037 in revenue as a result of the Director’s failure to bill clients monthly.”

Auditors say lack of oversight caused the school to lose $97,230 in services contracts in 2016, 2017, and 2018.

School President Jay Carraway said they acknowledge and accept the findings and agree that the lack of governance and oversight was grossly inadequate.

"The administration of James Sprunt Community College thanks the staff of the Office of the State Auditor for the professional manner in which the investigation was managed," said Dr. Jay Carraway. "The institution has learned from this experience and will endeavor to ensure past mistakes are not repeated," said Carraway.

Several changes have been put in place since the audit, including a monthly financial program report and hiring a Small Business Center director to provide oversight and leadership for the Kitchen Incubator Program.

The Small Business Center Director referenced in the report resigned in August 2019, according to Carraway. The new director started around a month ago.

James Sprunt leaders will also require all clients utilizing the facility to sign new contracts outlining new operational and clients with past balances must pay them in full within 12 months.

The business office, under the direction and supervision of the Vice President of Fiscal and Administrative Services, will also assure that funds related to the Kitchen Incubator Program are managed within normal acceptable accounting practices.

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