Despite concerns over spending that led to the resignation of Cary’s former town manager in December, town council members received assurance at their regular meeting Thursday that an audit of financial statements from the last fiscal year indicate the town’s financial condition is solid.
But the annual audit, which is nearing completion, found flaws in the town’s internal controls over its financial reporting due to the “tone at the top,” in the auditor’s words, set by former town manager Sean Stegall.
Lee Ann Watters, the engagement director for the team leading the audit of Cary’s financial statements from Fiscal Year 2025 on behalf of the firm Cherry Bekaert, walked the council through the team’s work.
She explained that in the fall while the audit was underway, Cary Mayor Harold Weinbrecht flagged concerns that helped the team find town staff who provided information and areas of concern.
As a result, the auditing team broadened its scope to look at the town’s use of procurement cards (or P-cards, town-issued charge cards given to staff to make work-related purchases) as well as the town’s travel and training expenses for the 2025 fiscal year.
“…The results of those procedures and additional inquiries led us to believe that the town had a deficiency in its internal control, specifically that control environment and the tone at the top,” Watters said.
Stegall “did not always consistently model or reinforce the expected ethical behavior that is laid out in (the town’s ethics policy),” she said, and that his messaging “did not always adequately communicate the importance of compliance with policies and procedures, accountability, and other internal control responsibilities.”
“And unfortunately, we learned that employees did perceive that there was a risk of retaliation if they raised concerns,” Watters said.
The audit team recommended that the town council periodically and anonymously survey “employee perceptions of culture leadership behavior” and strengthen whistleblower mechanisms and anti-retaliation protections.
The team also recommended three best practices for the town council to adopt. Those policies would govern town benefits to elected officials and intercity Chamber visits and delineate a dollar threshold for P-card purchases at which town staff would be required to reimburse the town if they didn’t have purchase receipts.
Following Watters’ presentation, Cary’s finance director Kimberly Branch gave an overview of the town’s “strong financial position” based on the 2025 audit. Spending remains within budget, Branch told the council, and revenue is growing year over year. The town added $23.6 million to its fund balance, increasing it to a total of $106 million.
“With our anticipated clean, unmodified [audit] opinion … we are well positioned to continue to build on our foundation of growth to advance further in our financial management,” Branch said.
Alongside the 2025 audit, three multi-year-spanning investigations into town spending under Stegall are underway, including one by the State Auditor’s Office, an internal investigation by the law firm Womble Bond Dickinson, and a criminal investigation by the State Bureau of Investigation and Wake County District Attorney.
The 2025 audit report is expected to wrap up this month.
“This (audit) is not an investigation,” Weinbrecht said at the meeting. “It’s not an opinion. That will be the state auditor. … They will certainly have an opinion and I have a feeling it won’t be very rosy. But we will hear from them.”
A version of this story ran in the February 9 edition of The Line, a newsletter for Cary and Western Wake County. Sign up here.