RALEIGH — The state auditor has found that a rural nonprofit agency misused more than $350,000 in funds intended for pre-kindergarten education, and she urged better oversight of the $139 million statewide program serving 4-year-olds, according to a report released Tuesday.

State Auditor Beth Wood’s report on Franklin Vance Warren Opportunity Inc. also found an unauthorized salary increase for the group’s former chief executive and money spent on legal services without proper approval by the local agency’s board.

The Henderson-based nonprofit provides services to low-income families and receives more than three-quarters of its funding from the state and federal government.

The report found the nonprofit agency diverted $361,000 of its state pre-kindergarten funding for other purposes ranging from computer equipment to legal services over a four-year period ending in 2016.

“This reduction in resources limited the Agency’s ability to provide high-quality educational experiences to enhance school readiness for its Pre-K students,” the report said.

The report recommended that the nonprofit restore the funds to its prekindergarten program by taking the money from its general fund and make sure its management complies with funding rules in the future.

Based on Tuesday’s findings and a 2014 report on another group, Wood’s office said the state should perform fiscal reviews to ensure the $139 million in yearly state funding for prekindergarten programs is properly used. The findings were sent to the governor and legislators.

However, the nonprofit agency about 45 miles north of Raleigh disagreed with the state’s finding about the use of pre-kindergarten funds in a response letter included in the report. The letter said the state misunderstood its contractual relationships with other entities.

The letter didn’t dispute the findings about the chief executive’s salary and legal expenses. The nonprofit said it had already fired its former chief executive and changed how it deposits money for pre-kindergarten programs, among other improvements.

A lawyer for the group that helped prepare the March 10 letter, James Wrenn, said by phone that the group stands by its response and was going to issue a statement.

In a sharply worded follow-up to the letter, the auditor’s office said the group’s assertion that it had used its pre-kindergarten funding properly was “disingenuous and misleading.”