RALEIGH — The N.C. auditor said the vast majority of the $3.6 billion in COVID-19 relief funds the state received from the federal government was distributed with limited monitoring and controls.
State Auditor Beth Wood’s office released a report Thursday that said the Office of State Budget and Management’s N.C. Pandemic Recovery Office needs to improve its procedures for distributing the relief funds. Examiners found that $3.1 billion of the money was distributed without the office ensuring all recipients had a method to measure results.
“As a result, there was an increased risk that recipients could have misused the funds without the misuse being detected and corrected timely,” auditors wrote. “Additionally, NCPRO was limited in its ability to know whether funds were achieving legislatively intended results and take timely corrective action if necessary.”
The state’s General Assembly enacted the 2020 COVID-19 Recovery Act on May 4, 2020, which established the Coronavirus Relief Fund. The act tasked the OSBM with establishing the NCPRO to distribute the federal relief money. State agencies received $1.67 billion, education got $524 million, nonprofits received $341 million, local governments got $317 million, hospitals received $102 million; and $645 million went to offset state general fund expenditures.
Auditors found that NCPRO didn’t independently verify recipient spending by comparing supporting documents such as invoices and receipts to expenditures reported by recipients until November, after most of the money was already spent.
Additionally, examiners tested all Recovery Act disbursements to 490 recipients through October and found that 9% did not report what they planned to do with the funds, 68% reported objectives but not goals for how they would accomplish those objectives; and 39% failed to measure their progress toward meeting their goals.
Wood’s office said that NCPRO should perform independent verification of recipients’ self-reported spending to ensure the money is spent in accordance with the Recovery Act. NCPRO should also develop procedures for ensuring recipients develop objectives for the use of the money and ways to measure progress toward those objectives.
NCPRO told auditors it didn’t ensure all recipients had a method to measure results because it chose to prioritize coordinating and distributing funds and providing technical assistance to recipients instead. Changing guidance from the Treasury Department on allowable use of the money also delayed developing policies, that office said.
In its response to the audit report, State Budget Director Charles Perusse and NCPRO Executive Director Stephanie McGarrah wrote that, “we take the findings presented in this report very seriously, and we have already begun making changes to address them and to ensure that the North Carolina Pandemic Recovery Office will be well-equipped to handle the additional federal recovery dollars that the State will receive to recover from the pandemic.”