Accountability gaps limit state oversight of $694 million in grants to non-profit organizations : final report to the Joint Legislative Program Evaluation Oversight Committee.

              Non- Profit Grants Oversight Policy Report No. 2009- 02
Page 9 of 28
reporting can only be considered “ as good as the paper it is written on,”
according to the State Auditor. 10
As shown in Exhibit 6, nearly half of the 2,758 grantees ( 49%, or 1,337
grantees) received state grants totaling less than $ 25,000 in Fiscal Year
2007- 08. These grantees, however, received only 2% of total grant
dollars. In contrast, a large share of grant dollars ( 79% of the total, or
$ 548.8 million) was awarded to 185 ( 7%) of grantees.
Exhibit 6
Description of Grantee
Reporting Thresholds
State Funds Received or Expended
Within a Grantee’s Fiscal Year
Less than
$ 25,000
$ 25,000 to
$ 500,000
More than
$ 500,000
Certify funds were used for the
purposes for which they were
granted
􀀹 􀀹 􀀹
Provide an accounting of funds
received or expended 􀀹 􀀹
Provide a description of activities
and accomplishments 􀀹 􀀹 􀀹
Provide an audit by a Certified
Public Accountant 􀀹
Number of grantees ( percentage
of all grantees) in FY 2007- 08
1,337
( 49%)
1,236
( 45%)
185
( 7%)
Grant amounts ( percentage of
total amount) in FY 2007- 08
$ 11.0 million
( 2%)
$ 134.1 million
( 19%)
$ 548.8 million
( 79%)
Notes: For grantees receiving or expending $ 500,000 or less in state funds, reporting
requirements must be filed within six months of the end of the grantees’ fiscal year. For
grantees receiving or expending more than $ 500,000 in state funds, reporting
requirements must be filed within nine months of the end of the grantees’ fiscal year.
Source: Program Evaluation Division based on 09 N. C. Admin. Code 03M. 0205( a).
Paradoxically, in interviews conducted for this report, staff at the Office of
the State Auditor and the Office of State Budget and Management
reported grantees receiving more funds provide less detailed financial
information at the grant level. Grantees receiving or expending more than
$ 500,000 in state funds within their fiscal year are required to submit a
Yellow Book audit to meet reporting requirements. Although Yellow Book
audits require a Certified Public Accountant to review a grantee’s
documentation and internal controls, the final audit report does not provide
detail on categories of expenditures at the grant- award level. Therefore,
although an audit provides assurance that an independent entity has
reviewed grantee financial statements, an audit does not provide enough
information to determine how grantees expending more than $ 500,000
have spent these funds for each grant.
Furthermore, although audit reports assure that grantees conform to
reporting requirements, they do not necessarily provide the level of
assurance that one might expect. The Office of the State Auditor reviews
10 B. Wood, Office of the State Auditor ( personal communication, July 30, 2009).