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

              Repo rt No. 2009- 02 Appendix A: General Statutes on Grants to Non- Profits
( c) No Overdue Tax Debts. – Every grantee shall file with the State agency or department disbursing funds to
the grantee a written statement completed by that grantee's board of directors or other governing body
stating that the grantee does not have any overdue tax debts, as defined by G. S. 105- 243.1, at the
federal, State, or local level. The written statement shall be made under oath and shall be filed before the
disbursing State agency or department may disburse the grant funds. A person who makes a false
statement in violation of this subsection is guilty of a criminal offense punishable as provided by G. S.
143C- 10- 1.
( d) Office of State Budget Rules Must Require Uniform Administration of State Grants. – The Office of State
Budget and Management shall adopt rules to ensure the uniform administration of State grants by all
grantor State agencies and grantees or subgrantees. The Office of State Budget and Management shall
consult with the Office of the State Auditor and the Attorney General in establishing the rules required by
this subsection. The rules shall establish policies and procedures for disbursements of State grants and for
State agency oversight, monitoring, and evaluation of grantees and subgrantees. The policies and
procedures shall:
( 1) Ensure that the purpose and reporting requirements of each grant are specified to the grantee.
( 2) Ensure that grantees specify the purpose and reporting requirements for grants made to subgrantees.
( 3) Ensure that State funds are spent in accordance with the purposes for which they were granted.
( 4) Hold the grantees and subgrantees accountable for the legal and appropriate expenditure of grant
funds.
( 5) Provide for adequate oversight and monitoring to prevent the misuse of grant funds.
( 6) Establish mandatory periodic reporting requirements for grantees and subgrantees, including methods
of reporting, to provide financial and program performance information. The mandatory periodic
reporting requirements shall require grantees and subgrantees to file with the State Auditor copies of
reports and statements that are filed with State agencies pursuant to this subsection. Compliance with
the mandatory periodic reporting requirements of this subdivision shall not require grantees and
subgrantees to file with the State Auditor the information described in subsections ( b) and ( c) of this
section.
( 7) Require grantees and subgrantees to maintain reports, records, and other information to properly
account for the expenditure of all grant funds and to make such reports, records, and other
information available to the grantor State agency for oversight, monitoring, and evaluation purposes.
( 8) Require grantees and subgrantees to ensure that work papers in the possession of their auditors are
available to the State Auditor for the purposes set out in subsection ( i) of this section.
( 9) Require grantees to be responsible for managing and monitoring each project, program, or activity
supported by grant funds and each subgrantee project, program, or activity supported by grant
funds.
( 10) Provide procedures for the suspension of further disbursements or use of grant funds for
noncompliance with these rules or other inappropriate use of the funds.
( 11) Provide procedures for use in appropriate circumstances for reinstatement of disbursements that have
been suspended for noncompliance with these rules or other inappropriate use of grant funds.
( 12) Provide procedures for the recovery and return to the grantor State agency of unexpended grant
funds from a grantee or subgrantee if the grantee or subgrantee is unable to fulfill the purposes of
the grant.
( e) Rules Are Subject to the Administrative Procedure Act. – Notwithstanding the provisions of G. S. 150B-
2( 8a) b. rules adopted pursuant to subsection ( d) of this section are subject to the provisions of Chapter
150B of the General Statutes.
( f) Suspension and Recovery of Funds to Grant Recipients for Noncompliance. – The Office of State Budget
and Management, after consultation with the administering State agency, shall have the power to suspend
disbursement of grant funds to grantees or subgrantees, to prevent further use of grant funds already
disbursed, and to recover grant funds already disbursed for noncompliance with rules adopted pursuant to
subsection ( d) of this section. If the grant funds are a pass- through of funds granted by an agency of the
United States, then the Office of State Budget and Management must consult with the granting agency of
the United States and the State agency that is the recipient of the pass- through funds prior to taking the
actions authorized by this subsection.