RALEIGH — The North Carolina Office of the State Auditor conducted its annual Statewide Single Audit, examining how $35 billion in federal funds were spent across 618 programs managed by 103 state entities, including the university and community college systems, in fiscal year 2023.
The Single Statewide Audit (SSA) ensures compliance with federal regulations and identifies areas for improvement.
“This is an essential audit to ensure federal tax dollars are being spent appropriately and in the most efficient way possible,” said State Auditor Jessica Holmes in a press release. “By identifying areas for improvement, the state can serve as better stewards of taxpayer dollars and resources.”
Last December, Holmes was appointed as state auditor by Gov. Roy Cooper following longtime State Auditor Beth Wood’s resignation. Wood announced she would resign following an indictment related to her December 2022 hit-and-run while driving a state vehicle that occurred in downtown Raleigh following a Christmas party. Holmes, a Democrat, is running to keep the position this November.
Key findings of the SSA included inadequate monitoring of programs in multiple agencies.
In the N,C, Department of Commerce (NCDOC), issues were found with monitoring of Community Development Block Grant and Workforce Innovation and Opportunity Act funds.
The NCDOC failed to conduct risk assessments, monitor activities and review reimbursement requests properly, resulting in misuse of federal funds meant for housing, economic expansion for low-income families and employment services. This mismanagement led to questioned costs of $426,260 for the Community Development Block Grant.
For the N.C. Department of Health and Human Services (NCDHHS), the audit found incorrect use of foster care funding, deficiencies in the adoption assistance and Medicaid eligibility determination processes, and inadequate subrecipient monitoring of State Opioid Response and Substance Abuse Block Grant funds.
NCDHHS reimbursed counties $28.8 million for foster care costs, but auditors discovered improper use of funds. Foster care money was used for a beneficiary also receiving Supplemental Security Income (SSI), against program rules. This resulted in increased costs for both state and federal governments, with NCDHHS potentially owing $26,050 back to the federal government.
Auditors also found NCDHHS had failed to submit complete and timely subaward information for subrecipients of the Foster Care Title IV-E Program to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Out of 329 subawards totaling $88.5 million, 246 subawards worth $65.2 million were not reported at all, and 83 subawards totaling $23.3 million were reported 134 days late.
NCDHHS was also found to have issued Adoption Assistance Title IV-E benefit payments to adoptive parents based on inaccurate eligibility determinations.
Auditors reviewed a sample of 93 beneficiaries and found one (1.01%) ineligible beneficiary, along with an ineligible sibling. This led to $12,336 ($9,042 federal share) in payments to adoptive parents on behalf of these ineligible beneficiaries, increasing costs for both state and federal governments.
NCDHHS attributed some issues to staff turnover and the pandemic but lacked federal oversight approval.
Recommendations by the auditor’s office included analyzing errors, providing additional training and establishing procedures to prevent future mistakes. Inadequate reporting for subawards and lack of monitoring for opioid and substance abuse funds were also highlighted.
An audit report on the Department of Public Instruction “disclosed no instances of noncompliance that are required to be reported in accordance with the Uniform Guidance,” but some reporting needed correcting.
The Department of Public Instruction (DPI) failed to submit accurate and timely reports under the Federal Funding Accountability and Transparency Act (FFATA) for various educational programs, including ESSER, SEI and Title I grants. Numerous subawards were not reported as required, including 394 ESSER subawards totaling $85.8 million and 140 SEI subawards totaling $63.0 million.
Additionally, errors were found in reported Title I subawards, including some not reported at all, others reported late with insufficient project descriptions and some reported twice.
DPI cited technical difficulties and a lack of experienced staff for the reporting lapses. The FFATA mandates reporting of first-tier subawards of $30,000 or more to the FSRS within a specific timeframe.
The audit says DPI inaccurately reported Education Stabilization Fund — Elementary and Secondary School Emergency Relief (ESSER) data to the U.S. Department of Education. During the annual reporting period, 272 public school units (PSUs) spent $1.5 billion on the program.
Auditors found errors in the reported expenditures for a sample of 60 PSUs, including inaccurate expenditure amounts for 20 PSUs, totaling $69 million in errors, and missing required information for 29 PSUs, such as the number of full-time equivalent positions funded and allocation criteria.
In response to the audit, State Board of Education Chair Eric Davis wrote, “The data inaccuracies noted have been corrected and were submitted via email to the U.S. Department of Education on December 12, 2023.”
