Single Audit: 19 Findings, $342,093 in Questioned Costs

The North Carolina Office of the State Auditor (OSA) has released its 2025 Statewide Single Audit, an annual report that examined $28 billion in federal grants spent by North Carolina entities for Fiscal Year 2025.

North Carolina spent $43.9 billion in federal awards for the fiscal year ended June 30, 2025, with Medicaid accounting for more than half of those expenditures. OSA audited $28 billion of those federal grants, resulting in 19 findings and questioned costs totaling $342,093.

The North Carolina Department of Health and Human Services (DHHS) received eight federal findings. In two instances, auditors found that DHHS subawards to counties totaling $138.8 million were not reported as required. Other entities with federal award findings include multiple universities and community colleges.

Of the $342,093 in questioned costs, an improper payment of $113,115 made by DHHS has since been recouped by the agency as a result of the audit. Other questioned costs were referred to the accompanying federal oversight agencies for assessment of whether to pursue the recovery of dollars.

"The federal government administers a massive amount of funding. Look no further than the $24.7 billion flowing through Medicaid. This annual audit gives us a chance to examine at a high level how federal grants are used in North Carolina and where there may be questionable expenditures," said State Auditor Dave Boliek. "It's our duty at the state level to make sure any funds directed to North Carolina are used properly and responsibly. While the single audit provides a high-level financial overview, the work done by our team and the findings and questioned costs will help steer us toward deeper dives into Medicaid and other areas of government spending."

The financial statement finding was with the Department of Commerce. OSA found Commerce lacked adequate internal controls, including review procedures, to ensure accurate financial reporting. This resulted in significant misstatements, including $873 million in overstatements and over $260 million in understatements. Additional audit adjustments were required to correct misstatements in the statement of cash flows and net position balances.