BELHAVEN — The Office of the State Auditor released the audit report for the Town of Belhaven at 10 a.m. Thursday.

There was no evidence of fraud, but there were areas needing attention.

Among the areas of concern were utility account balances and the lack of a travel policy. According to the report, nearly $430,000 was left uncollected from 629 delinquent utilities accounts, as former Town Manager Guinn Leverett failed to collect them and town officials failed to oversee the decisions, according to the audit.

Utility accounts are classified as active or inactive. Of the 1,294 active accounts, 235 were past due but still had utility services, 77 of which had past due balances greater than $1,000, according to the audit report.

More than 90 percent of the 434 inactive accounts with outstanding balances were more than 60 days past due, and almost all of those accounts were also more than 90 days past due, the report stated.

The audit found that former Finance Director Steve Noble incorrectly recorded the accounts receivable with no adjustments for unpaid account balances, which led to a misrepresentation of the Town’s assets.

“The total amount of delinquent accounts includes 10-plus years of accounts,” O’Neal said. “The reason that number is so high is because we don’t write them off.”

But common protocol for local governments is to either actively collect the money or write off the debt to avoid any misrepresentation.

“The Town’s financial statements overstated revenues and receivables by not reducing them by an estimated allowance for doubtful accounts. The overstatement is misleading to potential users of the Town’s financial statements,” the report reads.

The Town of Belhaven wrote a letter on Jan. 11, signed by current Town Manager Woody Jarvis, contending that Mayor Adam O’Neal and the Board of Aldermen were unaware of the outstanding balances, but the audit report states there is evidence proving they were aware of the situation, including a letter from the Local Government Commission in 2014 explaining a net loss of the water and sewer fund due to leaving the past due balances untouched.

O’Neal said he disagrees with what the audit report states, and maintains that town officials only knew of a handful of outstanding balances.

In the report, Leverett gave three reasons as to why the account balances were not collected: “residents threatened with a cut-off would disrupt town business;” “some residents were financially depressed, and management tried to work with them and not disrupt utility service until the local economy rebounded;” and “some residents had health issues, and the Town should show compassion by providing those with large health care bills more time to pay utility bills.”

The State Auditor’s report reads: “If the Town Manager does not follow the cut-off policy, delinquent balances will continue to increase, and the Town’s utility fund may experience cash shortages and not be able to pay its obligations.”

“We are appreciative and thankful that the auditors did come in,” O’Neal said on Thursday. “The utility issue is something that we’re dealing with.”

The town set up a Utility Hardship Committee in compliance with the audit, consisting of Manager Woody Jarvis, Julian Goff, Robert Stanley and Alderman Amos Wilson.

The State Auditor’s Office also requested the implementation of a travel policy, as the Town of Belhaven did not have one in place until January, and there was potential for abuse of funds. The Town spent $26,587 for travel in the 2014 and 2015 fiscal years, but Belhaven officials said there has never been a need for a policy.

The report reads: “The former Finance Director (Steve Noble) stated he did not personally see the need for a written travel policy because he was not aware of any instance of an employee spending excessive amounts on travel.”

The Jan. 11 letter stated that the town had implemented a travel policy as of that same date. If an employee’s travel is approved, guidelines have been set for reimbursement for meals during overnight travel and days of departure or return on overnight trips. Employees cannot be reimbursed for lunches if not in overnight travel status, but may still be eligible for reimbursement of breakfast or dinner.

The audit report for the Town of Belhaven took about seven months to complete.

Chief Deputy State Auditor J. Wesley Ray Jr. signed a subpoena in June 2015 to gain “access to Town Manager’s computer as well as access to thumb drives, USB drives, CDs, DVDs and any other data storage devices used by the Town Manager.” All of the items had to be delivered before June 29.

“The utility billing is something significant and we’re dealing with it,” O’Neal said. “It was a failure of about three positions, and all three of those positions have been filled by other people.”