RALEIGH — The North Carolina Education Lottery violated state law because it failed to collect damages from its primary vendor and allowed that company to accumulate and carry a balance for several years, a report from the State Auditor’s office said Wednesday.

The report said that from May 2006 through June 2011, the lottery assessed liquidated damages totaling $460,804. According to the report, the lottery collected just 60 percent, or $278,432, of the total in the form of goods and services from GTECH. That action violates the state’s Cash Management Policy regarding the collection and deposit of funds owed to the state.

State law requires all money due to a state agency by private parties be promptly billed, collected and deposited.

In addition, the report said the lottery failed to verify and document the value of certain items received in payment for the damages. According to the report, the lottery was unable to provide adequate documentation to support how much 12 Instant Ticket vending machines were worth that were used to offset more than $195,000 of the damages.

The purpose of liquidated damages is to recover potential sales losses from GTECH due to failure to perform under certain portions of its contract with the lottery.

GTECH is a gaming technology and services company, headquartered in Providence, R.I., and has offices worldwide.

The auditor’s report recommended that the lottery comply with the policy and discontinue the accumulation of damages as receivables and collect and deposit all money owed by GTECH to the state. It also called on the lottery to ensure that the items received from GTECH were properly valued with supporting documentation.

Lottery Commission Chairman Robert Farris said in a letter that the lottery has detailed accounting on the damages and said it didn’t fail to collect. Farris said all assessed liquidated damages have been spent by the lottery for goods and services, and he added that the state has complied with the Cash Management Policy.

Farris also wrote that the lottery cannot verify the market value of some GTECH equipment, in part because the company’s contracts vary with each lottery. That makes it impossible, he said, to make an exact comparison on equipment.