Home Care In Zebulon, NC

ZEBULON, N.C. (WTVD) -- A new state audit is raising concerns about spending practices in Zebulon, where officials found that a town finance staff member's personal bank account was linked to the town's credit card and nearly $7,000 was spent on an Airbnb rental for an interim town manager.

The findings come as many North Carolina towns are increasing property taxes, prompting heightened scrutiny from the State Auditor's Office.

The audit detailed multiple issues, including the Airbnb rental approved by the town council, which "described the lodging as reasonable."

Residents expressed frustration after learning about the spending.

Robert Hernandez of Zebulon said, "It's too much, way too much."

Another resident, Briana Allen, said, "It seems like our government keeps getting richer and doing shady stuff, and we just get sacked with the bill pretty much."

Zebulon is the latest central North Carolina community to undergo a state audit.

In Cary, auditors reported what they described as a culture of extravagant spending, including high-end meals, travel and $1,600 spent on 10 pairs of custom Ray-Ban sunglasses for council members.

State Auditor Dave Boliek said one Cary retreat cost more than $120,000, including $30,000 for "a documentary-style video on putting on a lip-sync dance routine." He added, "some of this stuff you just can't make up."

Rocky Mount also faced an audit focused on utilities billing after earlier spending concerns. The review found two city council members accumulated thousands of dollars in unpaid utility bills during a temporary billing adjustment period, including one bill totaling more than $27,000. The auditor's office said both were "continuing to receive utility services."

Rocky Mount officials said they appreciated the review, which confirmed customers were not improperly billed, and said improvements will continue.

Boliek said Rocky Mount was "within one fiscal quarter of being dead out of money," adding, "so our audit team was there just in time."

The State Auditor's Office said all towns involved will now be monitored.

Zebulon leaders issued a statement Tuesday saying it "takes the State Auditor's findings seriously" and has launched a dashboard for residents to track improvements.

A lack of sufficient internal controls over finances, and excessive expenditures on travel expenses are just some of the issues described in a Rapid Response Special Report released by the North Carolina Office of the State Auditor (NCOSA) on the Town of Zebulon.

The report released on Monday, came about after the office received a tip alleging lack of sufficient internal controls over the town’s finances, excessive expenditures on travel expenses for town commissioners and administrators, and excessive, unsupported payments to consultants in connection with preparation of the town’s budget.

Zebulon, which has a population of 12,237, has had a high turnover of leadership in recent years, according to auditors.

Among the findings:

The town could not provide an executed contract supporting its payments to the former interim town manager at a rate of $250 per hour for consulting services in January 2025. Vendor records indicate the town paid $4,500 to the former interim town manager’s firm. The services were billed for 18 hours of services during January 2025 at $250 per hour.

Auditors recommended that the town should make sure that fully executed contracts or agreements support compensation rates prior to payment, approval of invoices should not be used as a substitute for formal contract authorization, and documentation should be retained to support payments.

The second finding involved not maintaining adequate documentation to support the town’s payments to consultants for budget preparation activities for FY 2026.

On Feb. 17, 2025, the town executed a professional services contract of $39,500, paid in eight equal semi-monthly installments of $4,937.50. Payments were contingent upon the receipt of invoices detailing the consultant’s work product and approval by the town manager and assistant town manager. The town had paid $22,630.22 before terminating the contract on April 24, 2025, following the resignation of the town manager and assistant town manager, stating that the external consultant’s services were no longer needed.

The town was unable to produce invoices or any documentation other than the contract and its termination upon NCOSA’s request.

Recommendations from auditors include retaining invoices for professional services provided to the town that clearly describe the services performed and explain the basis for all charges and ensure that contractors have performed billed services in accordance with contract terms before issuing payment.

NCOSA also found that checks that were outstanding for more than one year were not investigated in a timely manner or reported as required by the North Carolina Unclaimed Property Act.

Auditors found nine checks that had been outstanding for over a year during an investigation of the town’s April 2025 bank reconciliation. Town officials told NCOSA stated that they had voided and reissued all nine checks, but couldn’t produce supporting documentation except for one check.

Recommendations include conducting a monthly stale-check aging review, promptly investigate items which are outstanding for more than 90 days, and assign responsibility for documenting the resolution of each item. Additionally, the town should file any required unclaimed property reports in the future and should remit amounts for checks meeting the one-year dormancy rule.

The fourth finding shows that the town processed duplicate and invalid payments due to insufficient invoice entry controls and the absence of an effective accounts payable reconciliation process.

Auditors gave two examples including the issuing of five checks totaling $130 to the Wake County Register of Deeds for cemetery lot purchases that were later deemed unsuccessful, and a check for $844.92 to pay a vendor invoice that had already been paid.

Auditors recommend strengthening invoice entry controls by configuring its accounting system to require entry of an invoice number or other unique identifier before approving or paying invoices; implement an effective accounts payable reconciliation process that periodically reconciles invoices, accounts payable records, and the check register to ensure that issued checks correspond to valid and unpaid obligations; and document and assign responsibility for accounts payable review procedures, including the investigation and resolution of aged outstanding checks, and provide training to finance staff on invoice processing and reconciliation responsibilities.

Auditors also discovered that the town’s internal controls didn’t detect a finance staff member’s personal bank account was linked to the town’s credit card account, resulting in the inadvertent use of personal funds to pay a town credit card balance and an urgent reimbursement from the town of $16,668.87.

NCOSA recommends that the town develop and enforce written procedures for handling payment errors or exceptions, require independent verification before processing any reimbursement, and prohibit self-reimbursement; ensure that town obligations are paid exclusively from authorized town bank and credit card accounts and prohibit the use of personal funds to satisfy liabilities in routine operations; and implement and document internal controls to prevent personnel from linking personal bank accounts to town bank or credit card accounts, including training finance staff in prohibited payment practices.

The sixth finding involved the lack of effective internal controls and governance related to oversight and documentation for executive-level compensation and reimbursement.

An example is the overpayment of $6,100 to the former interim town manager that was returned, but shows, according to auditors, weaknesses in payment review controls, specifically the lack of adequate verification procedures prior to disbursement of town funds.

Recommendations including strengthening pre-payment review procedures for payroll and contract-related payments to verify accuracy prior to disbursement, including verification of hours worked, pay rates, and supporting documentation to reduce the risk of overpayment; and establishing and documenting procedures requiring independent review of contracted executives’ compensation, timesheets, and expense reimbursements, making sure that no individual reviews or approves their own compensation or reimbursement requests.

Auditors also found that the town’s General Fund unrestricted fund balance didn’t meet the minimum level required by the Fund Balance Policy described in the town’s FY 2025 Annual Comprehensive Financial Report (ACFR) which states that “the town has a fund balance policy that is to maintain an unrestricted fund balance in the General Fund of no less than 50% of total projected expenditures. An unrestricted fund balance in excess of 50% is available for general appropriation during the budget year, as approved by the governing body.”

For FY 2025, the town reported an unrestricted fund balance of $13,672,910, representing 48.48% of the town’s final expenditure budget of $28,144,189, below the 50% threshold required in the town’s fund balance policy.

NCOSA recommended that the town the town maintain its unrestricted fund balance and unassigned fund balance at the thresholds set out in its ACFR and in the town’s Resolution 2023-20, and should refrain from appropriating funds from these balances when the applicable thresholds are not met.

The eighth and final finding is that the town’s budget-to-actual variances were significant and recurring for FY 2022 through FY 2025, reducing budget reliability in the General Fund.

For example, in FY 2025, actual expenditures were $21,328,375 while final budgeted expenditures were $28,144,189, a difference of $6,815,814, or 24.22%.

Auditors recommend that the town monitor budget-to-actual revenue and expenditures throughout the fiscal year and investigate and resolve significant variances in a timely manner; use historical trends, actual operating results, and current-year conditions to endeavor to develop General Fund budgets with smaller variances between budgeted and actual revenue and expenditures; and consider requiring town departments to provide documented explanations of significant budget-to-actual variances, and recommend budget amendments or other corrective actions as needed during the fiscal year.

Town officials agreed with the findings and said either new measures addressing the concerns have already been implemented or will be in the near future.

The town of Zebulon lacked internal controls to effectively manage its finances, according to an audit released on Monday by the State Auditor's Office.

The town of Zebulon lacked internal controls to effectively manage its finances and overspent from its general fund, according to an audit released on Monday by the State Auditor's Office.

The report from the State Auditor's Office said that the town spent more money from its unrestricted funds that what was initially budgeted. According to the auditor's office, the town's unrestricted fund balance was $13,672,910 for fiscal year 2025, which they said represented 48% of the town's total budget expenses.

The state said the town is supposed to keep the percentage of unrestricted funds at 50% or higher of the town's total expenses for the fiscal year, and that it had dropped by more than 30% in four years.

"Because this ratio was below the 50% threshold, the Town’s fund balance policy dictates that the Town should not have appropriated General Fund balance in its FY 2026 budget," the state auditor's office wrote. "However, the Town appropriated $4,638,409 fund balance in its FY 2026 adopted Budget Ordinance."

In the audit, the state auditor's office said the town "lacked effective internal controls and governance" related to oversight and documentation for executive level compensation and reimbursement.

The audit pointed to a service period in 2025 to highlight oversight issues. In that period, the town overpayed an interim town manager by $6,100. The audit said that while the issues of overpaying reimbursments were promptly corrected, they highlighted a problem for the town's finances.

"While some errors were ultimately corrected, better controls would have prevented these problems from occurring in the first place," the auditor's office said.

The audit also found that:

The State Auditor's Office said they began looking into the town after receiving a referral from its tipline.

The town is currently facing a $2.4 million budget deficit. Town staff say the deficit is a result of rising personnel costs, healthcare expenses, infrastructure obligations, and continued growth-related service demands.

In June, the town approved a new budget. Several residents spoke out against the budget becaused it had pay raises for the town's board of commissioners. The budget doubled the salary for town commissioners from $8,000 a year to $16,000.

The Town of Zebulon sent WRAL News a statement in response to the findings of the audit, which read in part:

"The $2.4 million figure is separate from the audit and does not represent missing funds. It reflects an operating gap identified during the annual budget process. Through the recently adopted budget, approximately $2.25 million in remaining balances from completed capital projects or projects that were no longer moving forward was returned to the General Fund and reallocated to help address the gap. The remaining amount was addressed through reductions to operating line items.

The Board of Commissioners is scheduled to begin discussing financial priorities for the next fiscal year in September. The Town will continue closely monitoring revenues and expenditures and remains committed to transparency, responsible stewardship and serving our community well."

In a statement to WRAL News, the State Auditor's Office said the town is being cooperative throughout the audit process, and "recognized the importantce of sound government practices."

"As the taxpayers’ watchdog, the State Auditor’s Office will continue to engage with local governments when needed, providing transparency and accountability to all corners of North Carolina.”