RALEIGH — An audit report published by the N.C. State Auditor’s Office says the N.C. Department of Public Instruction had changed certain vendor information without proper documentation that resulted in an improper disbursement of over $165,000 to a fraudulent bank account.
According to the audit report, the disbursement made by N.C. Department of Public Instruction (NCDPI) involved federal Emergency Assistance to Non-Public Schools (EANS) program funds. EANS funds were established by the U.S. Department of Education to deal with the impact of the pandemic as well as educational disruptions. The EANS Program provided $5.5 billion in total funding, of which North Carolina received $167.7 million.
NCDPI had received an email in August 2021 from someone pretending to be the head of Liberty Christian Academy that included a request for the agency to change the school’s bank account information. The school had already been approved to receive EANS funds.
The bank information was apparently changed by an NCDPI official without going through the existing process. The fraudulent bank account received a total of $165,431, but the auditor’s office also discovered the payment was $16,569 more than requested in the email from the impersonator.
The auditor’s report recommended seeking repayment of the funds that were disbursed in excess of what was requested and that NCDPI should review all other EANS disbursements.
NCDPI’s response letter informed the auditor that the agency “was made aware of the fraudulent bank and email account on September 25, 2021,” and that the agency “took direct action” to recover the funds.
The letter goes on to say NCDPI worked with the FBI and the U.S. Department of Education on the matter and was able to recover $164,317 of the $165,431 of the EANS funds that were disbursed.
Additionally, NCDPI states in its letter that the remaining outstanding amount was paid by NCDPI and it took “immediate action” to require vendor electronic payment forms for any change in bank accounts, as well as adding another layer of protection by requiring verification of phone numbers when a bank change occurs.