RALEIGH — The N.C. State Auditor’s statewide audit of federal funding awards has found several noncompliance issues.
According to the auditor’s office, the state spent $39.2 billion in federal financial assistance under various federal programs in 2021. Total questioned costs in the audit come to $1,652,455. The majority of the questioned costs, was attributed to errors in misspending of COVID-19 relief funds totaling $1,341,695.
Some of the audit’s findings included deficient monitoring of COVID-19 relief funding by the North Carolina Pandemic Recovery Office, spending issues by the Department of Public Safety related to the Emergency Rental Assistance Program (ERA), deficiencies in the Medicaid provider enrollment and termination process and inadequate monitoring of local health departments by the Department of Health and Human Services (NCDHHS).
The Department of Public Safety (DPS) oversaw $75.1 million in funding for rent and utility payments, according to the audit. The money was overseen by The N.C. Office of Recovery and Resiliency set up within DPS.
Auditors reviewed transfer payment activity within the ERA program totaling around $21.5 million and “initially found that some expenditures were reimbursed twice, resulting in overpayments of $1,201,030.” Due to the errors found in the ERA program, DPS may have to pay back $1,341,695 back to the U.S. Department of the Treasury.
Two reports ERA was required to submit were reviewed by State Auditor Beth Wood’s office reviewed had significant problems.
An April 2021 report had $633,656 in underreported distributed funds and underreported the number of households getting assistance by 805. The second report looked was in May 2021 and it showed underreported funds of $156,910 and an underreported the number of households of 218.
The N.C. Pandemic Recovery Office (NCPRO), established by Gov. Roy Cooper in May of 2020, failed to properly monitor $2.92 billion in federal funds used for COVID-19 expenditures. The audit says NCPRO did not review subrecipient expenditures or complete separate monitoring activities for high-risk subrecipients. Additionally, NCPRO did not review subrecipient audit reports or direct expenditures of state entities.
NCDHHS was found to have had errors in its Medicaid Provider Billing and its payment process resulting in overpayments. The agency processed more than 46 million original fee-for-service claims totaling $10.8 billion in payments during the fiscal year ending June 30, 2021, according to the audit.
NCDHHS also faced issues with overpayments Medicaid program last year after an audit found $11.4 million was paid out to uncredentialed providers.
There were also deficiencies in the Medicaid eligibility and termination processes identified by Wood’s office.
During the audit period, approximately 2.1 million beneficiaries received $14.1 billion in Medicaid benefits. Auditors redetermined eligibility for a sample of 152 beneficiaries that had benefits totaling $47.1 million paid on their behalf during the audit period and found three (1.97%) eligibility errors. The audit’s findings state that “Although $2,871 resulted from the errors identified, the amount of Medicaid funds paid on behalf of ineligible beneficiaries is likely greater.
The audit also says approximately $14.1 billion in Medicaid funds went to 18,048 providers during the fiscal year ended June 30, 2021.The entities involved or contracted to performed screening and enrollment did so for 4,187 providers that were paid $3.7 billion during the audit period. When auditors looked at its sample of 93 of those paid providers, “one or more errors in nine (9.7%) provider records.”
The audit also cited a monitoring issues by the Department of Public Instruction (NCDPI) pertaining to the Education Stabilization Fund – Elementary and Secondary School Emergency Relief program (ESSER).
During the reporting period cited in the audit, NCDPI awarded $354.5 million to 266 public-school units (PSUs) that incurred $72.6 million in expenditures related to the program.
Auditors reviewed the ESSER Annual Report spending and identified errors for “138 (52%) PSUs.” Major findings included 119 PSUs with inaccurate amounts, resulting $1.89 million in awards errors and $13.89 million in expenditure errors.
In addition, 17 PSUs were included but had no award or expenditure activity, “resulting in overreported awards and expenditures of $1.69 million and $234,764, respectively.”
Two PSUs were left out of the reporting and as a result awards and expenditures were both underreported by over $113,000 each.
Wood’s office issued a stand-alone audit report of NCDPI containing detailed findings of the statewide audit results. State Superintendent Catherine Truitt responded to the audit, agreeing with the findings and recommendations. Truitt cited stagging shortages related to issues with ESSER reporting and in other areas indicated “Processes for future reporting have been amended to ensure additional controls are in place to promote greater accuracy.”