NC failed to ensure $3.1B in federal COVID-19 relief funds were properly spent, audit says

North Carolina news

RALEIGH, N.C. (WNCN) – North Carolina failed to properly monitor how $3.1 billion in federal COVID-19 relief funds were spent, an audit found, leading to what State Auditor Beth Wood called an “increased risk” of misuse.

Wood told CBS 17 News on Thursday that her audit of the state budget office and Pandemic Recovery Office did not find any evidence that money was misspent.

“But I didn’t look for that,” Wood said.


Wood said she is required by the General Assembly “at the end of all this spend to go take a look, personally, and see if any money was misspent.”

This audit found problems with oversight and record-keeping, saying it has “no way to know” how several big-dollar amounts may have been spent.

“This is more about the monitoring,” Wood said.

The audit found the pandemic recovery office handed out the money without making sure those receiving them specified what they would do with it, set goals for accomplishing those things or tracking their progress in reaching those ultimate objectives.

“We’re sort of jumping in and making sure that the monies that come in the door, not only did it go to the right places, but the people that got it, did they spend it on the right things? And did they get everything out of what they spent that they should have?

“What this audit is telling you is that for the most part, the Office of State Budget Management did give the money out where it was supposed to go where the allocations were,” she added. “But what we don’t have in place is a plan of monitoring, to look at this money as it’s being spent all along the way.”

Auditors checked 490 recipients through October and found 43 did not report their specific plans for those funds. Of the ones that did, 302 did not enumerate ways to accomplish those goals. And another 57 did both of those things but failed to measure their progress in meeting those goals.

The bottom line — only 88 of those 490, or fewer than 1 in 5 recipients, met all three criteria, the audit found.

Additionally, Wood said the recovery office failed to independently verify spending from CARES Act funds until November.

“What we found is that there was no consistent and active … even any kind of a plan,” Wood said. “There was no taking the supporting documentation and tying it to what was reported as being spent on the reports and making sure that that was supported and made sense. 

‘So the idea is right, where they were headed is right. But they didn’t follow through with that very critical piece,” she added.

State Budget Director Charles Perusse was not available for an interview, a spokeswoman said. In his written response included in the audit, he said the pandemic office only received half the funding it requested from lawmakers and was understaffed — but is making changes, including hiring additional employees and is seeking longer-term funding from the General Assembly. The office is scheduled to dissolve Dec. 31, by statute.

“They’re going to continue to work on it to make sure that there are safeguards in place,” Gov. Roy Cooper said.

Another possible solution, Wood said, is to ask lawmakers for legislation to require recipients to meet those three criteria.

“Some of the initial kickback that we’ve gotten from some of the agencies is, ‘The law didn’t say we had to do that,’” Wood said. “Give me a break. And I’ve said the legislators should not have to legislate common sense. But if that’s what you’re looking for, for the law to say that, ‘OK, General Assembly, you might want to stick that in the law, because they’re using that as sort of a crutch.’”

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