Audit of Costs and Reporting of Funds Under the Bioterrorism Hospital Preparedness Program

EXECUTIVE SUMMARY:

Our objectives were to determine whether the North Carolina Department of Health and Human Services (the State):  (1) recorded and reported HRSA Program funds awarded, expended, obligated, and unobligated in accordance with the cooperative agreement; (2) ensured that the Program funds were used for necessary, reasonable, allocable, and allowable costs in accordance with the terms of the cooperative agreement; and (3) supplanted current State or local funding with Program funds.

The State generally recorded and reported HRSA Program funds awarded, expended, obligated, and unobligated by priority area, by critical benchmark, and by funds allocated to hospitals and other health care entities as required by the cooperative agreement.  Costs incurred by the State for administering the Program were necessary, reasonable, allocable, and allowable.  However, the two subrecipients that we reviewed claimed reimbursement from the State for $227,666 in unallowable costs.  We found no evidence that the State supplanted State or local expenditures with Program funds.

We recommended that the State:  (1) reduce Program expenditures by the $227,666 of unallowable subrecipient costs and increase unobligated funds by the same amount when preparing the final Financial Status Report; (2) implement adequate reporting and monitoring policies and procedures in a timely manner; and (3) develop award documents that clearly identify the type of award and related cost principles.  The State generally disagreed with our findings and recommendations.  The State agreed that $40,812 is unallowable and maintained that the balance of $186,854 is allowable.  We continue to believe that $186,854 is unallowable.