NC again lacked oversight of federal COVID-19 money distributed by the state, audit finds

North Carolina failed to properly oversee its spending of federal COVID-19 money — again — during the fiscal year that ended in mid-2022, according to a new report from the State Auditor’s office.

The audit found that the North Carolina Pandemic Recovery Office “did not adequately monitor $159.9 million in federal funds used for expenditures incurred due to the COVID-19 pandemic.”

The Pandemic Recovery Office is part of the Office of State Budget and Management, which is part of Democratic Gov. Roy Cooper’s administration.

It’s not the first time the state auditor found a lack of oversight of federal coronavirus funds.

In 2020, another state audit found that millions of dollars in federal money for food and other programs was not adequately overseen by the N.C. Department of Public Instruction, nor was there a method in place to do so, The News & Observer reported then.

DPI disagreed with most of the audit’s findings, and the auditors disagreed with DPI’s response.

In 2021, it was more than $3 billion in pandemic money that could have potentially been misspent because of a lack of oversight, an audit found. At the time, then-Budget Director Charlie Perusse told The N&O that his office stood by its work tracking the funds.

“We followed state and federal law every step of the way,” Perusse said. “...And the audit did not find any misspending.”

Nor did the 2023 audit, though it took issue with the NCPRO’s lack of oversight.

Here’s what else the audit found about the $159.9 million:

▪ Auditors could find no evidence of the N.C. Pandemic Recovery Office’s monthly reviews of expenditure reports for some recipients of funds, though the office’s monitoring procedures required monthly reviews.

▪ Auditors did not find evidence that a sampling of state agencies’ direct expenditures was reviewed.

▪ Auditors looked at risk assessments and found that nine of 23 total high-risk recipients were not completely monitored.

“Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements,” auditors wrote, “which may have reduced funding available to respond to the COVID-19 pandemic.”

Pandemic Recovery Office managers told auditors that they did not have enough employees to complete the monitoring procedures, according to the report.

State Budget Director Kristin Walker responded to the audit with a letter saying they accept the findings “and have made improvements to ensure future federal funds are adequately monitored.”

The letter does not say what those improvements entail. North Carolina has a 23.4% vacancy rate statewide among state employees.

The N&O has requested comment from the governor’s office about the audit.

Cooper instated many pandemic-related restrictions on North Carolina schools, businesses and events and during the more than two-years-long state of emergency that he ended in 2022. Federal coronavirus relief money has been used at both community and state levels to recover from the impact of the pandemic. A new state law that took effect Jan. 1 prevents Cooper and future governors from issuing long-term executive orders in emergencies without agreement from other statewide leaders and, in some cases, the General Assembly.

President Joe Biden officially ended the United States’ national emergency over COVID-19 this week on Monday, April 10, 2023.