State audit finds 19 issues in review of $28 billion in federal grants

The North Carolina Office of the State Auditor has released its 2025 statewide single audit, reporting 19 findings and $342,093 in questioned costs in its review of $28 billion in federal grants spent by North Carolina entities during fiscal year 2025. The audit says the state spent $43.9 billion in federal awards overall for the fiscal year ended June 30, 2025, with Medicaid accounting for more than half of that total.

According to the auditor’s office, the Department of Health and Human Services received eight federal findings. In two cases, auditors found that DHHS did not report county subawards totaling $138.8 million as required. The release also said an improper payment of $113,115 made by DHHS has since been recouped as a result of the audit.

The audit also identified a financial statement finding involving the Department of Commerce. Auditors said Commerce lacked adequate internal controls and review procedures to ensure accurate financial reporting, leading to significant misstatements that included $873 million in overstatements and more than $260 million in understatements. Additional audit adjustments were required to correct other reporting errors, according to the release.

State Auditor Dave Boliek said the annual audit is meant to identify questionable expenditures and point the state toward areas that may need closer scrutiny, including Medicaid and other major spending categories. The report is likely to draw attention because it combines compliance issues, internal-control concerns, and oversight questions across multiple agencies handling federal money.

Editor’s note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.