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North Carolina Office of the State Auditor Issues Statewide Single Audit Findings and Recommendations



The North Carolina Office of the State Auditor (OSA) released its annual Statewide Single Audit of federal funds received by the state. For fiscal year 2023, the State of North Carolina spent $35 billion in federal awards that were distributed to 618 programs managed by 103 different state entities, including the university and community college systems.


The Statewide Single Audit examines federally funded programs for compliance with federal statute, regulations, and award terms and conditions. The results provide assurances to the federal government, and to taxpayers, on the management and use of federal funds 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 N. Holmes, J.D. “By identifying areas for improvement, the state can serve as better stewards of taxpayer dollars and resources.”


The audit team identified 15 separate opportunities for improvement, referred to as findings. The total amount of questioned costs identified was $467,246. All findings were agreed upon by each entities’ management.


Particularly noteworthy findings and recommendations issued by OSA included:

  • Inadequate monitoring of Community Development Block Grant and Workforce Innovation and Opportunity Act funds by the N.C. Department of Commerce (NCDOC) (see pages 15 and 22). Specifically, NCDOC did not perform risk assessments, complete monitoring activities, and did not adequately review reimbursement requests to ensure federal funds were used for its intended purposes, such as to provide housing and expanding economic opportunities for low- and moderate-income families, and to provide services to individuals seeking employment and training assistance. Questioned costs totaled $426,260 for the Community Development Block Grant.


OSA recommendations included developing and implementing detailed review procedures over expenditures, and prioritizing the development of a contingency plan to ensure annual monitoring is completed when employee turnover occurs.


  • Foster Care Funding Used Incorrectly by the N.C. Department of Health and Human Services (NCDHHS) (see page 33). The audit of Foster Care reimbursement payments found that Foster Care funds were used to reimburse a county for a beneficiary that was also receiving Supplemental Security Income (SSI). According to regulations, a beneficiary can receive only SSI or Foster Care funds but not both. Questioned costs totaled $26,050.


OSA recommendations included an analysis of the reimbursement error to specifically identify why the error occurred and develop additional training or establish other procedures to prevent future errors from occurring.


  • Deficiencies in the Adoption Assistance Eligibility Determination Process by NCDHHS (page 36). Auditors discovered in a sampling of 93 beneficiaries of the program, one did not meet the program’s special needs eligibility requirements. While evaluating the eligibility error, auditors also identified a sibling of the beneficiary that received Adoption Assistance benefits. After reviewing the sibling’s case file, auditors determined that the sibling also did not meet the program’s special needs eligibility requirements. Questioned costs totaled $9,042.


OSA recommended an analysis of each error to specifically identify why the errors occurred and develop additional training or establish other procedures to prevent future errors from occurring.


  • Deficiencies in the Medicaid Eligibility Determination Process by the NCDHHS (page 38). Auditors discovered in a sampling of 111 beneficiaries of the program, two were ineligible because they moved out of state and continued to receive benefits they were not entitled to receive. Questioned costs totaled $5,894.


OSA recommended an analysis of each error to specifically identify why the errors occurred and develop additional training or establish other procedures to prevent future errors from occurring.


  • Inadequate subrecipient monitoring of State Opioid Response and Substance Abuse Block Grant funds by the NCDHHS (pages 42 and 45). Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may reduce the funding available for opioid and other substance abuse treatment and prevention services. NCDHHS indicated monitoring activities were paused due to the COVID-19 pandemic.


OSA recommended that resources be dedicated to review and revise monitoring procedures as necessary in response to the operations impacted by the pandemic to ensure funds are used in accordance with federal requirements, and to follow-up on revised monitoring procedures to ensure corrective action is taken.

To read the full report, click here.

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