The report prepared by the State Auditor of North Carolina was released Thursday morning.
It said in part that the Department of Transportation did not review lapsed automobile liability insurance records to identify the amount owed to the state.
As a result, $7.3 million in penalties have not been collected and transferred to North Carolina local school systems.
The report also said the DOT did not actively manage the collection of outstanding fines for oversize/overweight vehicle penalties and as a result, another $4.8 million in penalties have not been collected and transferred to North Carolina local school systems.
Auditors recommended the DOT develop policies and procedures to better keep track of what's owed and work with the General Assembly to allow the DOT to take more action against individuals who have not responded to notices their insurance has lapsed.
In its response to the audit, the DOT said it's working to fix some of the problems.