A report released Thursday by state Auditor Les Merritt found that financial mismanagement at the nonprofit Autism Society of North Carolina led to a $1.5 million deficit and a shakeup of the organization's leadership.

The organization receives $11 million in government funding. according to the audit report. It has offices in ASheville, Charlotte, Fayetteville, Greensboro, Greenville, Laurinburg, New Bern and Raleigh.

"It's unfortunate to see such a worthy organization that meets so many needs stumble because of poor financial oversight," Merritt said in a news release.

Auditors found that the deficit was caused by an overestimation of contributions, poor planning and false assumptions about what the state mental health program would cover.

The problem surfaced in June 2007 when when organization officials learned they would have trouble meeting payroll. Later that year, the finance director and the executive director were dismissed. Seven employees were laid-off to cut costs.

The auditors also identified what they considered "inappropriate" credit card charges from the former finance director for staff lunches, birthday parties and staff meetings at restaurants.

Auditors recommended tighter financial controls. In a response, officials said they recognized the need to improve.

"Additional improvements and more diligent monitoring of financial performance will be critical for sustained success in fulfilling our mission," wrote F. Whitney Jones, president of the society.