Audit 410277

U.S. Department of Homeland Security Pass-through Entity: North Carolina Department of Public Safety, Division of Emergency Management Program Name: Disaster Grants – Public Assistance Federal Assistance Listing Number 97.036 Material Weakness, Material Noncompliance – Procurement Finding 2022-005 Criteria: Per Section 200.318 of the Uniform Grant Guidance, a non-federal entity must use documented procurement procedures for the acquisition of services required under a federal or State award. Condition: The Town did not retain documentation of the bid process for contracted services tested as required by Uniform Grant Guidance procurement standards. Questioned Costs: None. Effect: By not having the required documentation and rationalization in the files, the Town could have improperly contracted with a vendor that was not considered eligible to be paid with grant proceeds. Cause: The Town did not ensure documentation was maintained for the bidding process for the grant to evidence that contracts were procurement procedures were in accordance with the Uniform Grant Guidance procurement standards. Recommendation: The Town should maintain records sufficient to detail the history of every procurement. These records must include, but are not necessarily limited to, the rationale for the method of procurement, selection or rejection of contractors, and the basis for the contract price. Management Response: Management agrees with the findings and is implementing corrective procedures, which are further discussed in the corrective action plan.

U.S. Department of Homeland Security Pass-through Entity: North Carolina Department of Public Safety, Division of Emergency Management Program Name: Disaster Grants – Public Assistance Federal Assistance Listing Number 97.036 Significant Deficiency, Nonmaterial Noncompliance – Reporting Finding 2022-006 Criteria or Specific Requirement: Per Section 200.303 of the Uniform Grant Guidance, a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per 2 CFR 200.334 the recipient must retain all federal award records for three years from the date of submission of their final financial report. Condition: During the audit, we tested ten reports and noted the following: a) There were 10 instances out of 10 reports tested where the Town was unable to provide evidence that the reports were reviewed prior to submission. b) There were 5 instances out of 10 reports tested where the Town submitted the reports after the due date. Questioned Costs: None. Effect: The absence of documented review controls increase the risk that reports may contain errors or omissions that are not detected prior to submission, and reports may be submitted late, resulting in potential noncompliance with federal reporting requirements. Cause: The Town did not have a formal policy or practice to ensure documentation was retained to evidence review and submission of all reports. Recommendation: The Town should ensure these policies and best practices are adhered to ensure all submitted reports and underlying data are retained in accordance with the Uniform Grant Guidance requirements. Management Response: Management agrees with the findings and is implementing corrective procedures, which are further discussed in the corrective action plan.

U.S. Department of Homeland Security Pass-through Entity: North Carolina Department of Public Safety, Division of Emergency Management Program Name: Disaster Grants – Public Assistance Federal Assistance Listing Number 97.036 Significant Deficiency, Nonmaterial Noncompliance – Allowable Costs/Costs Principles Finding 2022-007 Criteria: Per Section 200.303 of the Uniform Grant Guidance, a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, sufficient to ensure that only costs incurred for allowable activities that adhere to all appropriate cost principles are charged to federal grants. Condition: There was one out of 10 transactions tested where clear and consistent documentation of a control over allowable costs and activities was not present. Effect: Without consistent documentation and adherence to departmental policy for approving allowable costs, there is an increased risk that unallowable expenditures may be charged to the program, potentially resulting in noncompliance with federal requirements and questioned costs. Questioned Costs: None. Cause: The departmental policy to approve expenditure documents as an allowable cost for the program was not followed. Recommendation: The Town should consistently follow departmental policy by ensuring all expenditure documents for the program are properly reviewed and approved as allowable costs before being approved for payment and maintain clear documentation of controls over program activities to support compliance with federal requirements. Management Response: Management agrees with the findings and is implementing corrective procedures, which are further discussed in the corrective action plan.