James Sprunt Community College’s incubator kitchen missed out on nearly $100K in revenue due to poor oversight

James Sprunt Community College’s incubator kitchen missed out on nearly $100K in revenue due to poor oversight
The kitchen is designed to help develop food entrepreneurs, create new food businesses, grow existing food businesses and provide workforce development.

DUPLIN COUNTY, N.C. (WECT) - The N.C. State Auditor’s Office found during an investigative audit that James Sprunt Community College missed out on nearly $100,000 in revenue over a three-year period due to poor oversight of its incubator kitchen program’s operations.

An allegation regarding potential misuse of the Eastern Carolina Food Ventures incubator kitchen — a collaborative effort of James Sprunt, Duplin County and Pender County located in the WestPark Business Technology Center in Warsaw — prompted the audit, the results of which were released on Tuesday.

The kitchen is designed to help develop food entrepreneurs, create new food businesses, grow existing food businesses and provide workforce development.

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.”

The director, according to the report, told investigators he had “too many duties to provide proper oversight,” citing the lack of an onsite kitchen technician as a contributing factor.

The report also noted a lack of financial accountability at the administrative level, citing a top college administrator’s statement that the Business Office did not track payment collection because the kitchen revenue was “not material enough.”

In a letter to the auditor’s office, James Sprunt Community College President Dr. Jay Carraway said the college accepted the findings of the report and agreed the oversight over the kitchen incubator was “grossly inadequate.”

“In the case of the Kitchen Incubator, multiple layers within the organization failed to provide the proper oversight,” Carraway’s letter reads. “The program was allowed to operate ‘in a vacuum;’ this provided the opportunity for mismanagement.”

As a result of the report’s findings, Carraway wrote the college had implemented the following procedures:

  • All clients utilizing the facility have been required to sign new contracts outlining new operational procedures to be implemented and utilized moving forward. Additionally, each client with a balance owed are required to start remitting payments on their balance so their account will be paid in full and reconciled within the next twelve months.
  • The newly hired Small Business Center Director will provide programmatic oversight and leadership for the Kitchen Incubator Program.
  • The business office, under the direction and supervision of the Vice President of Fiscal and Administrative Services, will assure that funds related to this program are managed within normal acceptable accounting practices. Invoices and receipts from transactions will be reconciled at the close of each month.
  • A financial report of all transactions regarding the Kitchen Incubator will be presented to the President of James Sprunt Community College at the end of each month.

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

“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,” Carraway said. “The institution has learned from this experience and will endeavor to ensure past mistakes are not repeated.”

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