RALEIGH — The North Carolina Office of the State Auditor has released its 2024 Statewide Single Audit report, which found $8.5 million in questioned costs after examining $25.65 billion in federal grants spent by North Carolina entities.
“The majority of federal funds audited in this report were properly administered, but the $8.5 million in questioned costs represents a significant finding,” the auditor’s transmittal letter states. “It is an increase from the $467,246 documented in the 2023 Statewide Single Audit.”
Per the auditor’s office, the single statewide audit covered 22 programs managed by 21 state entities. The audit shows that for the fiscal year ending June 30, 2024, North Carolina spent $36.58 billion in federal awards across 618 programs managed by 103 different state entities.
“These results have been delivered to the governor, agency managers, and the North Carolina General Assembly,” said State Auditor Dave Boliek in a press release. “Moving forward, our office will be following up on these findings to make sure tax dollars are being managed responsibly with an eye on returning a positive investment to all North Carolinians.”
The Department of Commerce’s Division of Employment Security (DES) incorrectly allocated $8.5 million of unemployment insurance administration funds by charging expenditures outside the allowable period for each award.
The audit report recommended that the Commerce Department’s management implement detailed guidance, training and review processes for employees related to processing expenditures during the allowable period. DES concurred with the audit’s findings and agreed on the recommendations but cited staffing shortages and turnover issues, notably in three top financial positions.
The report says the Department of Commerce also failed to monitor $55 million in federal funds related to employment and training programs.
Auditors looked at 20 subrecipients receiving Workforce Innovation and Opportunity Act cluster funds, which require financial as well as program monitoring in an onsite capacity. Of the 20 cases reviewed, 15 had no evidence of the required monitoring.
The audit, which had 11 major findings, also found the North Carolina Department of Health and Human Services (DHHS) did not adequately monitor $106.5 million in federal funds intended for substance abuse prevention, treatment and recovery services addressing the opioid crisis.
Additionally, DHHS’s Division of Mental Health, Developmental Disabilities and Substance Use Services didn’t complete the required monitoring activities for six LME/MCOs that received $40.4 million in substance abuse funds and $37.5 million in opioid abuse funds.
The Department of Public Safety (DPS) was found to have “significant deficiency” in Community Development Block Grant (CDBG) quarterly financial reporting to the U.S. Housing and Urban Development (HUD) agency, per the audit.
Slow response and fiscal management issues related to the hurricane relief efforts of former Gov. Roy Cooper’s N.C. Office of Recovery and Resilience (NCORR) have been a continuing subject of legislative oversight hearings over the past three years.
For Hurricane Florence Disaster reports, DPS underreported by $2.9 million in disbursement despite accurate receipt reporting. Hurricane Matthew Disaster reports showed underreporting of $8.9 million in receipts and disbursements underreported by $13.4 million. Conversely, Hurricane Matthew mitigation reports overreported receipts by $101,800 and disbursements by $5.9 million.
The audit says these inaccuracies impede HUD’s ability to monitor federal funds intended for low- and moderate-income community assistance, and prevent citizens from accessing accurate information and giving feedback about fund utilization in their communities.
DPS management attributed these errors to using figures from HUD’s Disaster Reporting Grant Reporting system without reconciling them against the Department’s accounting records, citing a lack of understanding of federal reporting requirements that mandate quarterly submission of CDBG financial activity, according to the audit report.
